Goals of Competiton Law and the Need for Competition Law in Developing Countries

Topics: Competition law, Monopoly, Economics Pages: 7 (2507 words) Published: January 19, 2013
INTRODUCTION: According to Barry Rodger and Angus Macculoch,competition law concerns intervention in the market place, when there is some problem with the competitive process or when there is market failure. This includes public authority intervention and is based on different concerns of the principal legal systems. They go on to state that monopolies, cartels and mergers are the three principal issues of interest for most competition law systems, the major concern with cartels and mergers being that, eventually they will achieve a monopoly position, dominate the market and exploit their position. Generally, the fundamental purpose of competition law is to ensure that markets for producing and selling products are effectively contestable.Competition law therefore exists to regulate the conduct of businesses, by preventing them from entering into anticompetitive agreements and abusing a dominant position, to ensure open and fair competition for both consumers and businesses. Nations adopt competition laws for various reasons hence it is important to state expressly if possible, in the legislation the goal that it seeks to achieve for easier implementation. Various goals have been put across to justify the existence of competition law which are discussed in the ensuing discussion at length. DISCUSSION: The consumer interest and protection from anticompetitive behaviours by cartels and firms with market power, has been stressed as the primary goal of competition law. In any economy there are competing interests between industry and consumers hence the former wish to amass wealth at the expense of the latter. It is therefore necessary for competition law to protect the ignorant consumer from the gluttony competitive tendencies of firms. Under the UK Enterprise Act 2002, section 11, the importance of the consumer is seen where super complaints are made to the Office of Fair Trading (OFT) by designated consumer bodies. Also, the OFT fined Manchester United, and other football clubs for their role in harming the consumer by resale price maintenance, of replica football strips. Another goal is to ensure preservation of liberty and prevention of the concentration of economic power. R. Whishcharacterized this as “the promotion of economic equity rather than economic efficiency”. It is a political ideal that relates to the pure competition objective, that economic power should be fairly distributed and is based on the idea that economic corporations should not become more influential than elected democratic governments.Jones and Suffrin therefore argue that competition law may serve the purpose of upholding the foundation of liberal democracy, by precluding the creation of excessive private power and that it decentralizes and disperses private power and protects individual freedoms, in a competitive market structure, where individual sellers and buyers are insignificant in relation to the size of the market. Competition law also aims at protecting competitors and ensuring fair competition. The argument behind this goal is based on the premise that, competition law should be applied to foster the ability of smaller companies to compete more directly with established larger companies. R.Whish argues that the competiton authorities should, ‘hold the ring and ensure that the “small guy” is given a fair chance to succeed’. That competition law should be concerned with both competitors and the process of competition. This is also known as the “populist goal” and has been heavily criticized by the Chicago school of antitrust analysis, who argue that antitrust intervention to protect competitors from their more efficient rivals is harmful to consumer welfare, since small inefficient firms may take wealth from consumers. I subscribe to the view that where a smaller firm is equally or more efficient than a rival but because of its financial resources it cannot survive a price war, competition law should protect it. Creation of unified...
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