Legislative Regulatory Frameworks and MNC Operations

This assignment provides an analysis of the legislative regulatory frameworks that impact Multinational Companies (MNCs) operating in Australia. The report delves into corporate tax laws, pharmacy regulations, product liability regulations, and environmental regulations, highlighting their implications on MNC operations. It also touches upon international trade agreements such as the South Pacific Regional Trade and Economic Cooperation Agreement and Australia's trade free agreement, demonstrating how these frameworks influence business practices beyond borders.

LEGAL ASPECTS OF
INTERNATIONAL
BUSINESS AND
ENTERPRISE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Walgreens Boot Alliance Inc...........................................................................................................1
Legislative Regulatory frameworks affecting the MNC..................................................................1
Impact of Treaties, conventions or agreements...............................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In this report the legal aspects that a multinational company have to face while operating
in a certain country is been studied. The impact of various legislative regulatory frameworks that
affects the multinational company have been identified and determined its impact on the
company. Treaties, conventions or agreements are being identified and their impact on their
products or services and its impact on the provisions of these products and services.
1.WALGREENS BOOT ALLIANCE INC.
Walgreens Boots Alliance Inc. is the first global health, well-being and pharmacy-led
enterprise. It belongs to Pharmaceutical retail industry. Through community pharmacy care and
pharmaceutical wholesaling, company have a heritage of trusted healthcare services, both
Walgreens and Boots have experience which dates back to more than 100 years. After Walgreens
purchased 55% stakes of Alliance Boots, on 31 December 2014, company was formed.
In Australia company has about 15,000 employees. Walgreen Boots Alliance have
operations in more than 25 countries and employees around 385,000. That includes staffs of
pharmaceutical retailers, store in-charge, supervisors, distributors, etc. They all work together for
success of organisation. Company offers innovative and optimal efficiencies through unmatched
pharmaceutical supply chain and expertise staffs or employees.
Walgreen Boots Alliance headquarters are at Deerfield, Illinois, United States. It has a
total revenue of US$118.214 billion. Walgreens Boot Alliance sells both prescribed and non-
prescribed drugs and a variety of household products, which includes beauty and personal care
goods. They have more than 390 distribution centres around the globe delivering to more than
230,000 doctors, hospitals, health centres and pharmacies. They are also one of the world's
largest purchasers of prescription drugs and many other well-being and health products.
2.LEGISLATIVE REGULATORY FRAMEWORKS AFFECTING THE
MNC
The Australian government have recognised necessity of regulatory framework to keep
pace with development of financial market. Foreign investment is being encouraged and
welcomed by the government, consistent with community interests. Screening process of
1

Australia's foreign investment is very liberal and transparent. Australian government and its state
and territory government legislation is being implemented to protect consumers, community and
the environment to promote fair competition and trading. How business interact with their
customers, suppliers and other businesses are governed by these laws. At the time when conflicts
arise, they outline businesses and their owners' rights (Picciotto, 2017).
Following are some legislative regulatory frameworks that would affect Walgreens Boot
Alliances: Corporate Tax laws: All companies are subjected to corporate tax rate of 30% on their
taxable income as, under law which is been enacted recently. Except for small enterprises
which are subjected to tax rate of 27.5%. Under corporate tax laws, Australian Taxation
Office (ATO) have taken actions by closing international loopholes, which resulted in
more tax collection from multinational corporations and invested, benefiting Australian
economy and community. Diverted profits tax is being penalised with tax of 40% for
large multinational corporations who transfer undeclared profits overseas. For
investigating multinational companies and to enforce tax laws new taskforce is being
constituted by ATO (Buckley and Casson, 2016). To ensure that fair share of tax on
profits earned in Australia is been shifted by large multinational companies, the
Multinational Anti-Avoidance Law has been established. Because of this Walgreens Boot
Alliance have to follow the rules and regulations regarding corporate tax. They can't take
all their share to their home country and have to contribute tax rate of Australia. Australia's Pharmacy regulations: Pharmacies under Australian law must be owned by
pharmacists and can't by any corporations. Recently an independent review of pharmacy
regulations has been commissioned by government. Due to this regulation there were
some restriction for Walgreens Boot Alliance on entering Australia's market, but after
government’s review some concessions were given to the company for operating in
Australia. Competition Laws: For ensuring fair trading with businesses and consumers, Australia
has a national statutory framework. This framework is being enforced and administered
by Australian competition and Consumer Commission (ACCC). This law is being
implemented for ensuring the businesses are free from unfair trade practices and help
protect business and customers. This law ensures that pricing of products is appropriate
2

and for regulating import and export of the firm. This law helps to make strategies for
pricing of different products and services (Shenkar, Luo and Chi, 2014). These laws help
the company to understand various quarantine and custom requirements before import
and export function. From these laws and regulations Walgreens Boot Alliance have to
make their strategies according to the law and have to maintain a fair business and can't
use such pricing strategies which could create a high competition in economy. Consumer laws: Regulations on unfair contract terms, lay by agreements and penalties,
unsolicited consumer agreements, product safety laws, consumer rights guarantee and
other areas are provided by the Australian Consumer law (ACL). This law prohibits a
business from engaging in unreal or misleading conduct. This law affects business of
Walgreens Boot Alliance regarding the protection of consumer from misleading
activities. They have to maintain a standard for their products and services, to ensure
protection and safety of their customers. They have to follow certain rules laid down by
the government for safety of consumer or health related goods and services related to
them. They have to ensure whether the products supplied by them is of minimum
required standards and prescribed drugs are not of expiry date, etc. Product liability regulation: For regulating product safety and standards for information,
a national statutory framework is being implemented by Australian government. For
ensuring that harmful products are not marketed in Australia, these regulations or
standards are designed by government. Australian Competition and Consumer
Commission (ACCC) have enforced these standards. It is being enforced to control unfair
or illegal business practices in Australia and protect the interest of customers (Subedi,
2016). Company have to make standards regarding their products viewing the safety of
their customers. They have to avoid any unfair trade practices like false advertisement of
their products for more customer base. Company have to make their marketing strategies
according to the rules or regulations. They can't sell expired or out of date products to
their customers considering their health and safety. They have to make sure that their
products are not damaged or defective. Environmental legislation: Environmental protection is being jointly administered by the
Australian government, state, territory and local governments. Company have to obtain
planning and subsidiary environmental approvals, licences or permits at state or local
3

level in certain situations. They have to do proper waste management for their medical
products. Company have to ensure that their products are not harmful for the nature or
environment, whether it is biodegradable or not, or they contaminate water resources, etc.
 Privacy laws: How a business’s collects, stores and access personal information and
communication is regulated by national privacy legislation enacted by Office of the
Australian Information Commissioner (OAIC). For the management of sensitive
information, such as medical records, there are some specific requirements applied to a
number of various sectors and activities. Businesses in each jurisdiction are affected as
states and territories in Australia have individual laws regarding privacy. Privacy laws in
country prevents company from misusing personal information of their customers
(Sornarajah, 2017). For direct marketing use of personal information is prohibited unless
exception is been given. They have to take consent of the person before using their
personal information for a specific cause.
Impact of legislative frameworks on Walgreens Boot Alliance:
 Due to corporate tax laws company have to pay 30% tax to government and restricts
company to take their earnings or profits to their home country.
 Country's pharmaceutical regulations would restrict operations of company. They have to
regularly maintain their standards for their products considering health and safety of
citizens.
 Consumer laws have been enacted by Australian government for protecting interest of
customers. Company have to follow all consumers laws and have to compensate them in
case of any misconduct. Company have to ensure their products are environmental friendly and have to manage
medical wastes properly.
3.IMPACT OF TREATIES, CONVENTIONS OR AGREEMENTS
Treaty refers to an international agreement that have been done between states or
countries in written form and international law governs this. To guide nations in their relations
with each other, treaties, conventions or agreements act as a landmark for them. Through treaties
it normally appears to contain mutual advantages, promises and express intentions. While
4

conducting international affairs treaties symbolizes the attempt for reducing measure of uncertain
inherent. Before government takes binding action for all treaties and related actions, consisting
amendment and withdrawal from treaties are been tabled for at least 15 sitting days in Federal
parliament.
Following are some treaties or agreements that have impact on the products or services of
Walgreens Boot Alliance: World Trade Organisation Agreements: WTO agreements consists of goods, services
and intellectual property. These agreements permitted liberalization and globalisation.
Which includes Australia to lower their customs tariffs and other trade barriers, for open
market for foreign companies. For settling disputes in international trading certain
procedures are been set by WTO. Special treatment is being prescribed for developing
countries (Anderson and Muller, 2015). Australian government by notifying WTO about
enforced laws and adopted measures, are required to make their trade policies
transparent. Regular reports have to be made by secretariat on trade policies of the
country. There are some broad principles of World Trade organisation agreements that
are the general agreement on Tariffs and trade, general agreement on trade in services,
and Trade related aspects of intellectual property rights. This agreement has permitted
liberalization and globalisation due to which company can easily do business in Australia
and sell their products. They have less trade restrictions on them to enter the market and
supply their goods and services in the country. Walgreens Boot Alliance can import their
products on low customs duties or tariffs. South Pacific Regional Trade and Economic Cooperation Agreement: This agreement
provides a mutual benefiting framework for trade among South Pacific countries and
contributes in stability and prosperity of the region. With this treaty trade between south
pacific regions are been promoted more. Due to which trade and businesses from those
regions are encouraged, which develops their provinces (Fry and Tarte, 2016). As these
counties are developing they don't have high prices, which benefits the customers from
Australia. The product of Walgreens is being impacted as the competition is been raised
due to this agreement and their products have to face competition from goods imported
from South pacific regions, which have low prices. And because of this their products
would have to be priced low in order to survive in market.
5

 Multilateral Convention to implement Tax treaty: In November 2016, around 100
jurisdictions have signed on the Multilateral Convention to implement tax treaty related
measures to prevent profit shifting and base erosion. Under this treaty a series of tax
treaty measures are implemented for updating international tax rules and diminishing the
opportunity by multinational companies for avoidance of tax. By transposing results from
OECD/G20 BEPS project into worldwide bilateral tax treaties for closing gaps in
international tax rules as a solid solution for government offered by this tax treaty
(Tandon, 2018). As a result, for this treaty products and services offered by Walgreens
Boots Alliance will be affected as they can't take their undeclared profits earned from
their products and services without paying the fair value of tax share from their income or
profits. Due to which they would increase their prices in order to get higher profits to
compensate the tax charged. Australia's free trade agreements (FTAs): These are treaties between two or more
nations that profits Australian exporters, importers, investors and producers through
reducing and get rid of certain international trade and investment barriers. Australia have
entered into 10 free trade agreements with group of countries and individual countries.
Australia - United States Free Trade Agreement have been framed in January 2005.
Imported products from United States into Australia, most tariffs are being eliminated
(Anderson and Yotov, 2016). Under Australia – United States Free trade agreement
products of Walgreens Boot Alliance products must be considered as originating good to
get the benefit of tariff elimination. If it meets Australia – United States Free Trade
Agreement's Rules of origin, then only the products of company would be considered as
an originating good. If the products met under originating good, then its price would be
low as they are benefited by elimination of tariffs and the price or cost of product or
services of company would be high if they are not considered as “originating” goods.
Impact of these treaties or conventions on provision of products and services:
 World Trade organisation agreements have enabled company to follow international
policies or regulations for conducting business or trade beyond borders.
6

 South Pacific Regional Trade and Economic Cooperation Agreement provides a mutual
benefiting framework for trade among South Pacific countries due to which, business
with companies of south pacific regions are promoted more.
 Australia's trade free agreement reduces trade and investment barriers that would
removes restrictions from organisation to operate in country.
CONCLUSION
From this report it can be concluded that there are various legislative regulatory
frameworks which would affect the MNC that is operating in Australia. Such as corporate tax
laws for implementing various taxation on the company and takes actions for closing loopholes
in international trading. Laws regarding pharmacy regulates the entry of pharmaceutical
company in country, it allows only pharmacists to establish pharmaceutical businesses instead of
corporates. Government have reviewed this law and provided some flexibility in this. Product
liability regulations would ensure that the products offered by company is safe for customers and
no unfair trade practices are involved in marketing the product. Company also have to consider
other legislative regulations also like environmental regulations, privacy laws, consumer laws,
etc. There is certain impact of treaties, conventions or agreements on the products and services of
company. Such as free trade policy etc.
7

REFERENCES
Books and Journals
Anderson, J.E. and Yotov, Y.V., 2016. Terms of trade and global efficiency effects of free trade
agreements, 1990–2002. Journal of International Economics, 99, pp.279-298.
Anderson, R.D. and Muller, A.C., 2015. The Revised WTO Agreement on Government
Procurement as an Emerging Pillar of the World Trading System: Recent
Developments. Trade L. & Dev., 7, p.42.
Buckley, P.J. and Casson, M., 2016. The future of the multinational enterprise. Springer.
Fry, G. and Tarte, S., 2016. The new Pacific diplomacy. anu Press.
Picciotto, S., 2017. Rights, responsibilities and regulation of international business.
In Globalization and International Investment (pp. 177-198). Routledge.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Sornarajah, M., 2017. The international law on foreign investment. Cambridge University Press.
Subedi, S.P., 2016. International investment law: reconciling policy and principle. Bloomsbury
Publishing.
Tandon, S., 2018. The Multilateral Legal Instrument: A developing country perspective (No.
18/220).
Online
About- Walgreens Boots Alliance. 2017. [online] Available through:
<http://www.walgreensbootsalliance.com/about/>
Walgreens-boots-alliance. 2018. [online] Available through:
<https://www.forbes.com/companies/walgreens-boots-alliance/>
8