Corporate Law contributing to a rival firm's facility

[azimiid]

Dear Sir
Could you please advise if it is illegal that a firm financially contribute to a rival firm's facility or infrastructure to improve rival firm's safety? The concern of the contributing firm is that the consumers' reaction to the rival's safety event might negatively affect its own demand or sales.
Thank You
Alireza azimian

 

[Michael Wechsler]

If there is a reason to invest in helping a competitor because it helps your own company more than it harms it's viability then you have your answer. This means that, for the long term benefit of the company you run, working with a competitor is the best course of action to to take.

 

[army judge]

Dear Sir
Could you please advise if it is illegal that a firm financially contribute to a rival firm's facility or infrastructure to improve rival firm's safety? The concern of the contributing firm is that the consumers' reaction to the rival's safety event might negatively affect its own demand or sales.
Thank You
Alireza azimian

It depends in how you contribute. If you're anything other than a benefactor or lender, you could end up being financially liable for their misdeeds, if you're obtaining any type of ownership interest. By helping them, it could hurt your business and your finances more than their financial failure or ruin.

How?

By sweeping you away in their financial tsunami.

 

[Michael Wechsler]

That's a good point, army judge. In this instance the decision probably needs to be clearer than the normal decision, which is an important distinction. The flip side of such a decision has the potential for serious harm and the decision must not be taken lightly.

 

[azimiid]

Thank you thelawprofessor and army judge.
The contributor has no advantage in contributing other than a safer business environment. So you mean that under certain circumstances such contribution is permitted. right?
Could you tell me if there is any reference that I can cite. My prof. believes that this is a collusion and legally forbidden.
Thanks

 

[army judge]

Thank you thelawprofessor and army judge.
The contributor has no advantage in contributing other than a safer business environment. So you mean that under certain circumstances such contribution is permitted. right?
Could you tell me if there is any reference that I can cite. My prof. believes that this is a collusion and legally forbidden.
Thanks

I'm simply laying out a common law principle.
If the funds are an investment as a common stockholder, you aren't liable for the misdeeds of the corporation.
Your investment is all that you could lose, as well as your potential returns on said investment.

If you loan the corporation money, that also incurs no liability, other than the potential to not be repaid on the loan.

It could be considered collusion if ENTITY A and ENTITY B entered into a secret accommodation to gain something illegally over other competitors in their business line, potentially defrauding other competitors of their rights, or conspiring to corner a commodities market (Hunt Brothers and silver, two oil companies colluding to fix prices, or secret pact to appear to be quarreling while obtaining an unfair advantage against their competitors.

In any particular set of circumstances, OP, you both could be correct.
Its a very thin line that could cause great grief or great reward for A & B.