What Is a Competition Law

According to laissez-faire doctrine, antitrust law is considered useless because competition is seen as a dynamic, long-term process in which companies compete to dominate the market. In some markets, a company can successfully dominate, but that`s because of superior skills or innovation. However, according to laissez-faire theorists, when it tries to raise prices to exploit its monopoly position, it creates profitable opportunities for others to compete. A process of creative destruction begins, which undermines the monopoly. Therefore, the government should not try to break the monopoly, but let the market work. [57] In many developing countries in Asia, including India, competition law is seen as a tool to stimulate economic growth. In Korea and Japan, competition law prevents certain forms of conglomerates. In addition, competition law has promoted fairness in China and Indonesia as well as international integration in Vietnam. [1] The Hong Kong Competition Ordinance entered into force in 2015. [43] Any company, regardless of its legal form, size and sector, must therefore be familiar with competition law, firstly in order to be able to fulfil its obligations while avoiding heavy penalties, but also to be able to assert its own rights and protect its position on the market. The CMA and industry regulators have broad powers to investigate alleged anti-competitive behaviour.

These powers can be used to enter and search commercial and private premises with an arrest warrant in so-called „dawn raids“. They also have the power to impose fines on undertakings found to have infringed competition law. Criminal sanctions for the most serious violations of competition law are prosecuted by the CMA in collaboration with the UK Serious Fraud Office. 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. The Competition and Markets Authority (CMA) is the UK`s leading competition law enforcement agency, although there are a number of regulators in the sector that are simultaneously empowered to enforce competition law in their respective sectors. These include fca for the financial services sector, Ofgem for the electricity sector and Ofwat for the water sector. While the development of competition law in Europe stalled in the late 19th century, Canada passed the first competition law of modern times in 1889. The Combination Prevention and Removal Act, which was created to restrict trade, was passed a year before the United States passed the most famous competition law law, the Sherman Act of 1890. It was named after Senator John Sherman, who argued that the law „does not announce a new legal principle, but applies old and recognized principles of the common law.“ [31] Modern competition law has historically evolved at the national level to promote and maintain fair competition in markets that are primarily within the territorial boundaries of nation-states.

National competition law generally does not apply to activities outside territorial borders, unless they have a significant impact at national level. [2] Countries may allow extraterritorial jurisdiction over competition on the basis of the „doctrine of effect“. [2] [8] The protection of international competition is governed by international agreements on competition. In 1945, during the negotiations that led to the adoption of the General Agreement on Tariffs and Trade (GATT) in 1947, the Charter of an International Trade Organization proposed limited obligations with regard to international competition. These commitments were not included in the GATT, but in 1994, with the conclusion of the Uruguay Round GATT multilateral negotiations, the World Trade Organization (WTO) was created. The AGREEMENT ESTABLISHING THE WTO contained a number of limited provisions on various cross-border competition issues on a sectoral basis. [9] The course covers topics that are fascinating to explore and are of great practical importance to consumers and businesses. Companies found to have infringed EU law may be subject to heavy fines (10% of their global turnover). may face actions for damages (by those who have harmed them); and may also find that the trade agreements they conclude are unenforceable. The principles of EU competition law will remain crucial for UK businesses, even after Brexit. Not only will many UK companies have to continue to comply with EU competition law, which applies to behaviour that affects trade between EU Member States and/or has a European dimension, but important aspects of UK competition law (like many other competition law systems around the world) are guided by EU competition law.

In fact, while not identical, UK competition law has moved closer to EU competition law over the past 20 years. Anti-competitive practices include, among other examples: predatory pricing, where a monopoly or oligopoly charges an exorbitant price for something the consumer has little choice but to buy; price-fixing involving agreements between potential competitors to set similar prices for products; Quotation agreements in which agreements are made to select in advance the winner of an order; and dumping, when a product is sold at such a low price that small businesses are unable to compete and can be excluded from the market. Although specific legislation varies from country to country, these practices are generally prohibited by competition law. India has responded positively by opening up its economy by lifting controls during economic liberalization. In an effort to increase the efficiency of the country`s economy, the Indian government has recognized the era of liberalization and privatization of globalization. [39] This led to the need for strong legislation on trade case law, and the Competition Act of 2002 was passed. The history of competition law in India dates back to the 1960s, when the first competition law, the Monopolies and Restrictive Business Practices Act (MRTP), was enacted in 1969. But after the economic reforms of 1991, this law was deemed obsolete in many respects and, as a result, a new competition law was enacted in 2003 in the form of the 2002 competition law. The Competition Commission of India is the quasi-judicial authority established to enforce the provisions of the Competition Act. [40] According to Mill, there has been a shift in economic theory that has emphasized a more precise and theoretical model of competition. A simple neoclassical model of free markets states that the production and distribution of goods and services in competitive free markets maximizes social prosperity. This model assumes that new companies can freely enter markets and compete with existing companies, or to use legal language, there are no barriers to entry.

By this term, economists mean something very specific that competitive free markets offer allocative, productive and dynamic efficiency. Allocative efficiency, also known as Pareto efficiency, according to Italian economist Vilfredo Pareto, means that in the long run, the resources of an economy go to those who are willing and able to pay for it. Since rational producers will continue to produce and sell, and buyers will buy up to the last possible marginal unit of production – or rational producers will reduce their production to the margin with which buyers will buy the same quantity as that produced – there is no waste, the greater number of desires of the greatest number of people will be satisfied and the profit will be perfected, because resources can no longer be redistributed to make someone better. without aggravating anyone else; The company has achieved the efficiency of allocation. Productive efficiency simply means that society earns as much as it can. Free markets are meant to reward those who work hard, and therefore those who push society`s resources to the limit of their possible production. [61] Dynamic efficiency refers to the idea that companies that are constantly competing must research, create and innovate in order to maintain their share of consumers. This goes back to the idea of the Austro-American political scientist Joseph Schumpeter that an „eternal storm of creative destruction“ always sweeps through capitalist economies and leaves corporations at the mercy of the market. [62] This led Schumpeter to argue that monopolies did not need to be broken (as with Standard Oil) because the next storm of economic innovation would do the same. At the national level, competition law is enforced by competition authorities as well as by private enforcement. .