Competition law or antitrust law has three main elements: today, the Treaty of Lisbon prohibits anti-competitive agreements in Article 101(1), including prices. In accordance with Article 101(2), such agreements are automatically null and void. Article 101(3) provides for exceptions where the collusion is intended for distribution or technological innovation, gives consumers a `fair share` of the benefit and does not include unreasonable restrictions that could eliminate competition anywhere (or that are compatible with the general principle of Union law on proportionality). Article 102 prohibits abuses of a dominant position[37], such as price discrimination and exclusive distribution. In accordance with Article 102, European Council regulations may regulate mergers between companies (the current Regulation is Regulation (EC) No 139/2004). [38] The general test is whether a concentration (i.e. a merger or acquisition) with a Community dimension (i.B affects a number of EU Member States) could significantly impede effective competition. Articles 106 and 107 provide that the right of Member States to provide public services is not impeded, but that, otherwise, public undertakings must respect the same principles of competition as undertakings. Article 107 establishes a general rule according to which the State may not assist or subsidize private parties in the distortion of free competition and provides for exceptions for charitable organizations, regional development objectives and in the event of a natural disaster. [Citation needed] Section 45 of the Competition and Consumer Act prohibits contracts, agreements, collusion or concerted practices that have as their object, effect or effect that is likely to result in a significant lessening of competition in a market, even if such conduct does not meet the stricter definitions of other anti-competitive practices such as cartels.
Free and open markets are the foundation of a dynamic economy. Aggressive competition between sellers in an open market offers consumers – individuals and businesses – the benefits of lower prices, better products and services, greater choice and greater innovation. The FTC`s competitive role is to enforce the rules of the competitive market – antitrust laws. These laws promote strong competition and protect consumers from anti-competitive mergers and business practices. The FTC`s Competition Bureau, in partnership with the Bureau of Economics, enforces antitrust laws for the benefit of consumers. The Chicago School of Economics argues that vertical mergers, usually formed with anti-competitive intent, can be pro-competitive to eliminate double marginalization. [12] A chain of monopolists can result in prices that exceed the consumer`s surplus, because wholesalers increase prices, retailers have the power to transfer this cost price to the retail price. Competition law is a law that encourages or seeks to maintain competition in the market by regulating the anti-competitive behaviour of companies. [1] [2] Competition law is implemented through public and private enforcement.
[3] Competition law is historically known as antitrust law in the United States and antimonopoly law in China[1] and Russia. In recent years, it has been known as Commercial Practice Law in the UK and Australia. In the European Union, it is called both antitrust law[4] and competition law. [5] [6] The Sherman Act of 1890 was intended to prohibit the restriction of competition by large companies that worked with competitors to determine output, prices and market shares, first through pools and then through trusts. Trusts first appeared in U.S. railroads, where the capital requirements of railroad construction excluded competitive services in sparsely populated areas at the time. This trust has enabled the railways to discriminate against the tariffs and services imposed on consumers and businesses and to destroy potential competitors. Different trusts may be dominant in different industries. The Standard Oil Company Trust controlled several markets in the 1880s, including the heating oil, lead, and whiskey market. [31] Many citizens became sufficiently aware and publicly concerned about how trusts were negatively affecting them that the law became a priority for both major parties. A major concern of this law is that competitive markets themselves should ensure the primary regulation of prices, products, interest and profits.
Instead, the law prohibited anti-competitive practices and codified the common law trade restriction doctrine. [32] Prof. Rudolph Peritz argued that competition law in the United States has evolved around two sometimes contradictory concepts of competition: first, that of individual freedom, free from state interference, and second, a fair competitive environment without excessive economic power. Since the passage of the Sherman Act, the application of competition law has been based on various economic theories adopted by the government. [33] Legislation in England to control monopolies and restrictive practices was in place long before the Norman Conquest. [15] The Domesday Book reported that “pre-steel” (i.e., prevention, the practice of buying goods before they were put on the market and raising prices) was one of three confiscations that King Edward the Confessor was able to carry out across England. [16] However, concerns about fair prices have also led to attempts to directly regulate the market. == References == A law was passed in 1266[17] to fix the prices of bread and beer according to the prices of cereals set by the assessors. Penalties for violations included ditching, pillory and tumbrel. [18] A 14th-century law described foresters as “oppressors of the poor and the community at large and enemies of the whole country.” [19] Under King Edward III, the Workers` Statute of 1349[20] set the wages of craftsmen and laborers and decreed that food should be sold at reasonable prices. In addition to existing penalties, the law provided that excessive fees imposed on dealers would have to pay the injured party double the amount they received, an idea that resulted in triple punitive damages under U.S. antitrust law.
Also under Edward III, the following legal regulations prohibited the merging of trade. [21] Unilateral effects. The FTC will frequently challenge mergers between competing companies that offer tight substitutes on the grounds that the merger will eliminate beneficial competition and innovation. In 2004, the FTC did just that by challenging a merger between General Electric and a competing company because the competing company manufactured non-destructive testing equipment. To advance the merger, GE has agreed to divest its non-destructive testing equipment business. It is generally difficult to engage in anti-competitive practices unless the parties concerned have significant market power or State support. This debate about the morality of certain business practices described as anti-competitive continued both in the study of economic history and popular culture, as well as in the European performances of Bruce Springsteen in 2012, who sang bankers as “greedy thieves” and “robber barons.” [14] During the 2011 Occupy Wall Street protests, the term was used by populist Senator Bernie Sanders of Vermont in his attacks on Wall Street. He said, “We believe in this country; we love this country; And we will be damned when we see a handful of robber barons controlling the future of this country. [15] The business practices and political power of Silicon Valley billionaires have also led them to be identified as robber barons.
[16] [17] The history of competition law dates back to the Roman Empire. The business practices of market traders, guilds and governments have always been subject to controls and sometimes severe penalties. Since the 20th century, competition law has become global. [7] The two most important and influential competition regulatory systems are U.S. antitrust law and European Union competition law. National and regional competition authorities around the world have formed international support and enforcement networks. When companies have large market shares, consumers risk paying higher prices and receiving products of lower quality than competitive markets. However, the existence of a very high market share does not always mean that consumers pay excessive prices, as the threat of new entrants can hinder the price increases of a company with a high market share. Not only does competition law make the existence of a monopoly illegal, but rather abuse the power that a monopoly can confer, for example through predatory practices.
Many countries have general laws that protect consumers and regulate how businesses conduct their business. The aim of these laws is to create a level playing field for similar companies operating in a particular sector, while preventing them from gaining too much power over their competitors. Simply put, they prevent companies from gambling dirty in order to make a profit. These are called antitrust laws. Let`s take a quick look at the major antitrust laws in the United States. The heart of the United States…