Competition Law. Unfair Competition
The primary purpose of competition law is to remedy some of the situations in which the free market system breaks down. The invisible hand that Adam Smith identified in 1776 ensures in most situations that the free market economies left to their own devices will produce results more beneficial tan ban be realized by intervening in the market . The process of competition is seen as being of value and meriting protection. Protection is needed when undertakings look forward to restrict competition or when they behave in a reproachable way, using unfair methods to attract clients and consumers.
We, then have two different aspects of competition law.
In the first place, we talk of maintaining the competition, and States interferes in the market to guarantee the existence o free competition establishing regulations to prevent the restriction of competition in the market by the agreements between enterprises that arrange prices or divide the markets between them. It also includes mergers and prevents dominant companies from abusing its position through excessive pricing or discrimination against costumers. The interference with the free market is in the interests of the consumers.
Competition is a basic mechanism of the market economy and encourages companies to provide consumers products that consumers want. It encourages innovation, and pushes down prices. In order to be effective, competition needs suppliers who are independent of each other, each subject to the competitive pressure exerted by the others.
In the second place, competitors may have the temptation of using unfair practices and this occurs when the enterprise employ “any” method to attract consumers and get rid of competitors, such as denigration, misleading advertising or induce competitor’s employees to breach of contract or other similar practices. We then talk of Unfair Competition.
In Spain we have a double regulation of economic competition. On