Improper business practices related to competitors
Below are the details of the operational risks covered within this selected sub-risk category:
Co-operation with competitors resulting in warnings or actions by antitrust regulators
Risk Description: -
Firm may undertake initiatives to cooperate with competitors, which may result in warnings or actions by antitrust regulators. Examples of such cooperation may include: -
- Agreement which covers locations where cooperating firms will open new branches.
- Agreement which covers sharing of information related to pricing of certain products/services.
- Agreement which covers blocking access to certain market segment for new market entrants.
Expansion of business activities through organic growth or mergers/acquisition resulting in warnings or actions by antitrust regulators
Risk Description: -
Firm's business activities may expand through organic growth or mergers/acquisition and reach a market threshold, which may result in warnings or actions by antitrust regulators. Examples of such market thresholds may include: -
- Level of market share.
- Number of customers.
- Number of branches.
- Number of issued mortgages.
- Number of employees.
Improper poaching of employees from competitors
Risk Description: -
Employees may adopt practices to improperly poach employees from competitors. Examples of such practices may include: -
- Poaching employees from competitive firms with false promises of rewards or bonuses.
- Encouraging employees from competitive firms to resign from their jobs without intending to hire them.
- Using criminals to threaten employees from competitive firm to join the firm.
Improper poaching of customers from competitors
Risk Description: -
Employees may adopt improper practices to poach customers from competitors. Examples of such practices may include: -
- Using hackers to hack customer account details in competitor's IT system and using this information to offer competitive products or services encourage customers move to the firm.
- Poaching customer advisors from competitors, with intention of acquiring customers managed by such advisors.
- Spreading false information in the media targeting a specific market segment of a competitive firm, where such information encourages customers to cancel their relationship with competitive firm and initiate relationship with the firm.
Acquiring competitive intelligence through improper practices
Risk Description: -
Employees may adopt improper practices to acquire competitive intelligence. Examples of such practices may include: -
- Using corporate espionage to acquire competitive intelligence.
- Using hackers to hack into competitive firm's IT system to acquire information on competitive firm's business strategy.
- Hiring employees from competitive firm, where such employees are willing to share confidential information regarding the competitive firm.
Incentives or reward structure offered to intermediaries, resulting in warnings or actions by antitrust regulators
Risk Description: -
Incentives or reward structure offered to intermediaries may result in warnings or actions by antitrust regulators. Examples of such incentives or reward structure may include: -
- Offering incentives to intermediaries to recommend firm's products/services over competitor's products/services.
- Offering incentives to intermediaries to stop selling competitor's products/services.