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THIS WEEK'S ARTICLES
EU Files Formal Antitrust Charges Against Google
U.S. Tobacco Companies File Suit Against FDA Over Label Regulations
Spain's Court Voids Layoffs at Coca-Cola Bottler
Today's Personality Tests Raise the Bar for Job Seekers

EU Files Formal Antitrust Charges Against Google
by: TOM FAIRLESS
Apr 15, 2015
Click here to view the full article on WSJ.com

TOPICS: Antitrust Law, Business Ethics, European Union, Google

SUMMARY: Europe escalated its five-year antitrust probe of Google Inc., filing formal charges against the U.S. search giant for the first time in a move that reopens the prospect of hefty fines and injunctions that could severely restrict how it does business in Europe. In a parallel move, Europe's competition regulator formalized an investigation that had been simmering for months into Google's business practices around its Android operating system for mobile phones. The charges are a blow for Google due to the potential fines and adverse publicity, but also because they "just put [Google] in a worse position, by reducing their leverage in bargaining" with European Union regulators, said Keith N. Hylton, a law professor at Boston University. It is the first time any regulator has filed formal antitrust charges against Google. U.S. regulators closed their own investigation into Google two years ago after the company agreed to some voluntary changes to its practices. At issue is whether the California company uses its overwhelming share of online searches in Europe, which exceeds 90% in most EU countries-much higher than in the U.S.-to squeeze competitors in related markets where it also competes. That European regulators decided to move against Google when their U.S. counterparts held back reflects in part the company's higher market share on the continent, but also Europe's more demanding competition laws relating to dominant firms, and lower hurdles to a decision-given that EU regulators don't initially need to argue their case before a judge.

CLASSROOM APPLICATION: Europe has decided to file charges against Google based on complaints that its search engine favors its own services over those of rivals. The EU has limited its scope to the area of Google favoring its commercial site competition practices and Android services. The U.S. reached an agreement with Google and did not press antitrust prosecution. Google has about 90% of the market across Europe and does not have as much competition as it has in the United States. Many observers feel that Google is being indicted simply because it is successful, and regulators may feel that it will be easy to obtain large fines. Regulators in Europe are being criticized because Google is possibly being penalized because of its success, not because it is intentionally trying to destroy competitors.

QUESTIONS: 
1. (Introductory) Is Google's dominant market share in the European Union anticompetitive?

2. (Advanced) Why do you think Google is facing so much trouble in Europe versus in the United States?

3. (Advanced) Is it possible EU regulators are targeting Google because of its success?

Reviewed By: OC Ferrell, University of New Mexico


U.S. Tobacco Companies File Suit Against FDA Over Label Regulations
by: TRIPP MICKLE
Apr 14, 2015
Click here to view the full article on WSJ.com

TOPICS: Business Ethics, cigarette, FDA, packaging

SUMMARY: The biggest U.S. tobacco companies filed a federal lawsuit against the Food and Drug Administration, challenging an alleged effort to assert authority over labels on tobacco products. Tobacco subsidiaries of Altria Group Inc.,Reynolds American Inc. and Lorillard Inc. argue a recent FDA requirement violates free speech by requiring them to submit labels for approval. The FDA in March issued an update regarding new tobacco products and said changing the background color of an existing product from green to red, changing its logo or adding words such as "premium tobacco" would make it a new product requiring agency approval. The cigarette makers claim the 2009 Tobacco Control Act, which gave the FDA authority to regulate tobacco, restricts the FDA from preapproving tobacco labels of Marlboro, Camel and Newport cigarettes. As a result, the manufacturers say they should be able to change the color or look of tobacco packaging as they wish. The lawsuit doesn't challenge the Surgeon General's Warning labels, which are required by law and warn about the health risks of smoking. "We disagree that FDA's new requirements that manufacturers must obtain agency authorization before changing certain product labels when the actual physical tobacco product remains exactly the same," said Brian May, an Altria spokesman. "We're asking the court to resolve these issues."

CLASSROOM APPLICATION: Major U.S. tobacco companies have filed a federal suit against the FDA's authority over packaging. The tobacco companies maintain that they should have commercial freedom of speech, and while required to provide warning labels, believe that they can change packaging and labels, including colors of the package, at their own discretion. This is the latest skirmish between tobacco companies and the FDA over labels. Interestingly, the U.K. has voted in favor of a so-called plain-packaging law that would require cigarettes to be sold in uniform packs and stripped of their logos and colors that make brands easily identifiable. Tobacco companies are trying to stand their ground and prevent more regulation of their packaging and labeling.

QUESTIONS: 
1. (Introductory) Should the FDA have authority to dictate and approve changes in cigarette packaging?

2. (Advanced) Why might changing the colors or logos of cigarette packaging be a concern to the FDA?

3. (Advanced) What are the ethical implications regarding business rights if the FDA is given authority to approve all cigarette packaging changes?

Reviewed By: OC Ferrell, University of New Mexico


Spain's Court Voids Layoffs at Coca-Cola Bottler
by: CHRISTOPHER BJORK
Apr 15, 2015
Click here to view the full article on WSJ.com

TOPICS: Spain, Business Ethics, Coca-Cola, Employment

SUMMARY: Spain's Supreme Court said it had upheld a lower court decision to void the layoffs of 1,190 workers at Coca-Cola Co.'s Spanish bottler, saying it infringed on workers' right to strike as the bottler didn't present workers with a detailed plan of its decision to close down some of its factories in 2014. The ruling follows a dispute ongoing for more than a year and means workers at four out of 11 bottling plants that were scheduled to close can return to their jobs with back salaries. Coca-Cola Iberian Partners said in statement it respected the ruling and will abide by it. Atlanta-based Coca-Cola doesn't own a stake in the bottling company. The dispute, which has featured strikes, street protests and threatened boycotts of Coca-Cola products, has played out against some relatively good news in the long-depressed Spanish job market. Spain's economy has grown for seven straight quarters, and the unemployment rate has fallen to 23% from a peak of just under 27%. Coca-Cola Iberian Partners, the product of the 2013 merger of several bottlers, had announced the layoffs in January 2014. The soft-drink bottler said the reorganization was necessary because some plants were operating at half of their capacity, a consequence of overexpansion and weak demand in Spain's slumping economy. But a June ruling by Spain's National Court said that Coca-Cola Iberian had failed to ever present the union negotiating committee with a detailed plan of the reorganization. "That information was relevant to judge the causes and negotiate over the possibility of avoiding or reducing the layoffs and their effects," the court wrote.

CLASSROOM APPLICATION: Workers of a Coca-Cola bottling plant have won a court decision to void the layoffs of 1,190 workers at Coca-Cola's Spanish bottling factories. Coca-Cola Iberian Partners was attempting to close bottling plants that were being used at only half capacity. In turn, the courts claimed that the bottling company had infringed on workers' right to strike. The courts want to look into other claims related to irregularities of procedures. The bottom line is that the Spanish bottling company cannot lay off workers even though it claims its other plants provide all the volume needed. A key concern is whether governments should force businesses to employ people when the employees are not needed to make products at the current level of demand.

QUESTIONS: 
1. (Introductory) Do you believe it is right for the courts to rule that Coca-Cola Iberian Partners cannot lay off workers, even if they are working at factories operating at below capacity?

2. (Advanced) In this case, does the social good (employing workers) outweigh the benefits to the organization?

3. (Advanced) Is Coca-Cola Iberian Partners at fault for not adhering to worker rights according to Spanish law?

Reviewed By: OC Ferrell, University of New Mexico


Today's Personality Tests Raise the Bar for Job Seekers
by: LAUREN WEBER
Apr 14, 2015
Click here to view the full article on WSJ.com

TOPICS: personality test, Business Ethics, hiring procedures

SUMMARY: The Delaware North Cos., a hospitality company whose customer-service representatives help people plan vacations at national parks, sometimes struggles these days to keep 80 or so seats filled at its call center in Fresno, Calif.-a city tied for the 9th-highest unemployment rate in the U.S. The company has no shortage of job applicants. But finding the right candidates has gotten tougher since the company started using a customized assessment last year to see how applicants stack up against top call-center workers in such traits as friendliness, curiosity and the ability to multitask. Managers said the new test, administered online, has reduced turnover and allowed Delaware North to more accurately select applicants who best fit the job. "Now we understand better what makes a great reservation sales applicant," said Andy Grinsfelder, vice president of sales and marketing for the Buffalo, N.Y.-based company's parks and resorts division. Pre-hire assessments have been used for years, but never have such tests been deployed so widely at companies across the U.S. The automation of the job application process, combined with powerful data tools and inexpensive online software, have led to falling costs, more accurate results and a surge in use. Eight of the top 10 U.S. private employers now administer pre-hire tests in their job applications for some positions. These tests have, in effect, raised the bar for U.S. job seekers: With more companies holding an alleged formula for workplace success, fewer are willing to take a chance on anyone who doesn't measure up.

CLASSROOM APPLICATION: More companies are using tests and formal assessments for hiring new employees. Often companies will rely on personality tests to gauge an applicant's job worthiness. There has been a tremendous increase in the number of companies using these tests that have become more statistically sophisticated utilizing modeling as well as computing power available for statistical analysis. A single test can appraise everything from technical and communication skills to personality. Some tests can determine if there is a good match with workplace culture or even compatibility with a particular work team. Many critics feel that reducing individuals to narrow quantitative measures is highly questionable. The attempt to eliminate diversity and individuals who may fall outside the parameters of the test is certainly questionable in building an organization when people have different skills and abilities that they can contribute. If everyone in the organization is the same, it goes against much management theory that supports the idea that a wide diversity of employees can create the best work environment.

QUESTIONS: 
1. (Introductory) What are the ethical implications of using personality tests to screen job applicants?

2. (Advanced) Can you think of any disadvantages to relying so heavily on personality tests in the hiring process?

3. (Advanced) Is there a possibility that a company may not hire a good applicant because he or she does not fit preselected criteria of being a "good fit" for the job?

Reviewed By: OC Ferrell, University of New Mexico


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