Competition law is a law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement.
In Korea and Japan, the competition law prevents some special form of conglomerates. In many of the Asia’s developing countries such as India, competition laws are considered as a tool to stimulate economic growth; solve some problems of the lack of effective institutions and regulations in Indonesia, and monetary problems in Israeli. They also promote fairness in China and Indonesia as well as international integration in Vietnam.
Competition law is a branch of law that promotes or seeks to maintain market competition by regulating anti-competitive conducts by companies. The primary purpose of competition law is to remedy some of the situations in which the free market system breaks down.
Competition law provides a framework for maintaining an atmosphere of healthy competition amongst the business entities engaged in that trade.
Competition law is known as antitrust law in the United States and European Union, and as anti-monopoly law in China and Russia. In previous years it has been known as trade practices law in the United Kingdom and Australia.
The history of competition law reaches back to the Roman Empire. The business practices of market traders, guilds and governments have always been subject to scrutiny, and sometimes severe sanctions. Since the 20th century, competition law has become global. The two largest and most influential systems of competition regulation are United States antitrust law and European Union competition law. National and regional competition authorities across the world have formed international support and enforcement networks.
Modern competition law has historically evolved on a country level to promote and maintain fair competition in markets principally within the territorial boundaries of nation-states. National competition law usually does not cover activity beyond territorial borders unless it has significant effects at nation-state level. Countries may allow for extraterritorial jurisdiction in competition cases based on so-called effects doctrine. The protection of international competition is governed by international competition agreements. In 1945, during the negotiations preceding the adoption of the General Agreement on Tariffs and Trade (GATT) in 1947, limited international competition obligations were proposed within the Charter for an International Trade Organisation. These obligations were not included in GATT, but in 1994, with the conclusion of the Uruguay Round of GATT Multilateral Negotiations, the World Trade Organization (WTO) was created. The Agreement Establishing the WTO included a range of limited provisions on various cross-border competition issues on a sector specific basis.
An inherent danger of competition is that prominent companies may have already achieved such positions in the market that they are able to prevent others from competing or even deterring market penetration.
Thus, they may damage the process of competition as a whole. Unless steps are taken to regulate the conduct of this company, it too may act to the detriment of the economy.
In general, competition law has three main elements:
- Prohibiting agreements or practices that restrict free trading and competition between businesses. This includes, in particular, the repression of free trade caused by cartels.
- Banning abusive behaviour by a company dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others.
- Supervising the mergers and acquisitions of large corporations, including some joint ventures.
Competition law, or antitrust law, has three main elements:
- prohibiting agreements or practices that restrict free trading and competition between business. This includes in particular the repression of free trade caused by cartels.
- banning abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others.
- supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to “remedies” such as an obligation to divest part of the merged business or to offer licenses or access to facilities to enable other businesses to continue competing.
Substance and practice of competition law varies from jurisdiction to jurisdiction. Protecting the interests of consumers (consumer welfare) and ensuring that entrepreneurs have an opportunity to compete in the market economy are often treated as important objectives. Competition law is closely connected with law on deregulation of access to markets, state aids and subsidies, the privatization of state owned assets and the establishment of independent sector regulators, among other market-oriented supply-side policies. In recent decades, competition law has been viewed as a way to provide better public services. Robert Bork argued that competition laws can produce adverse effects when they reduce competition by protecting inefficient competitors and when costs of legal intervention are greater than benefits for the consumers.
The functions of the Commission are as follows:
1. To eliminate practices having an adverse effect on competition in the market, to promote and to sustain competition and to ensure freedom of trade;
2. To inquire into, either on receipt of any complaint or on its own initiative. All anti-competition agreements, dominant position and practice of the enterprises;
3.To inquire into other offences specified under this Act and to sue and conduct them accordingly;
4. To make rules, policy, instructions of notifications or administrative directions relating to competition, and to give advice and to assist the Government for implementation thereof;
5. To take the necessary plan of actions for developing awareness among the people about the matters relating to competition by way of dissemination, publication and any other means;
6. To develop mass awareness by way of conducting research, seminar, symposium, workshop and other similar means about the anti-competition agreement and activities and to publish and disseminate the result of such research and to give recommendations to the Government for their effective implementation.
7. To implement, follow or consider any matter relating to competition sent by the Government; and
8. To review the actions taken under any other law for consumer rights protection and implementation.
An early example of competition law can be found in Roman law. The Lex Julia de Annona was enacted during the Roman Republic around 50 BCE. To protect the grain trade, heavy fines were imposed on anyone directly, deliberately, and insidiously stopping supply ships. Under Diocletian in 301 CE, an edict imposed the death penalty for anyone violating a tariff system, for example by buying up, concealing, or contriving the scarcity of everyday goods. More legislation came under the constitution of Zeno of 483 CE, which can be traced into Florentine Municipal laws of 1322 and 1325. This provided for confiscation of property and banishment for any trade combination or joint action of monopolies private or granted by the Emperor. Zeno rescinded all previously granted exclusive rights. Justinian I subsequently introduced legislation to pay officials to manage state monopolies.
Legislation in England to control monopolies and restrictive practices were in force well before the Norman Conquest. The Domesday Book recorded that “foresteel” (i.e. forestalling, the practice of buying up goods before they reach market and then inflating the prices) was one of three forfeitures that King Edward the Confessor could carry out through England. But concern for fair prices also led to attempts to directly regulate the market. Under Henry III an act was passed in 1266 to fix bread and ale prices in correspondence with grain prices laid down by the assizes. Penalties for breach included amercements, pillory and tumbrel. A 14th century statute labelled forestallers as “oppressors of the poor and the community at large and enemies of the whole country.” Under King Edward III the Statute of Labourers of 1349 fixed wages of artificers and workmen and decreed that foodstuffs should be sold at reasonable prices. On top of existing penalties, the statute stated that overcharging merchants must pay the injured party double the sum he received, an idea that has been replicated in punitive treble damages under US antitrust law. Also under Edward III, the following statutory provision outlawed trade combination.
In continental Europe competition principles developed in Lex Mercatoria. Examples of legislation enshrining competition principles include the constitutiones juris metallici by Wenceslaus II of Bohemia between 1283 and 1305, condemning combination of ore traders increasing prices; the Municipal Statutes of Florence in 1322 and 1325 followed Zeno’s legislation against state monopolies; and under Emperor Charles V in the Holy Roman Empire a law was passed “to prevent losses resulting from monopolies and improper contracts which many merchants and artisans made in the Netherlands.” In 1553 King Henry VIII reintroduced tariffs for foodstuffs, designed to stabilize prices, in the face of fluctuations in supply from overseas. So the legislation read here that whereas,
Around this time organizations representing various tradesmen and handicrafts people, known as guilds had been developing, and enjoyed many concessions and exemptions from the laws against monopolies. The privileges conferred were not abolished until the Municipal Corporations Act 1835.