Competition law and anti-trust policy, universally referred to as anti-trust law, is an integral part of economic regulation which, with its ongoing development, criminalises anti-competitive behavior, thereby promoting competition and protecting consumers. The purpose of the law is to ensure that the consumers have access to the best possible prices and products by preventing cartels, monopolies and unfair trading practices in the market.
Competition law and anti-trust policy varies from country to country but the fundamentals of such policy are the same across the globe. Generally, there are three types of anti-competitive practices which are prohibited: cartels, monopolies and abuse of market power.
Cartels are agreements between two or more companies to reduce competition in the marketplace through setting prices or output and controlling the market. Such agreements create an artificial barrier preventing new entrants into the market, allowing the participating companies to reap the benefits of a monopoly. Consequently, cartels are illegal in almost every country and considered to be one of the most serious anti-trust violations.
Monopolies occur when a single enterprise controls the entire market for a particular product or service. Most countries, including the U.S., have laws prohibiting the existence of a monopoly due to the potential for abuse of economic power. Monopolies also become problematic in markets where, due to the lack of competition, prices increase and the quality of products or services decrease.
The third type of anti-competitive practice is the abuse of market power. This includes the use of predatory pricing or excessive pricing, or the refusal to deal, which is the refusal to provide goods or services to certain customers. The purpose of such practices, which try to prevent competition, results in unreasonable prices and reduces consumer choice.
The world of ecommerce and digital business is increasingly guided by competition law and anti-trust policy. Over the last decade or so, there has been a major shift in the way in which businesses operate and the way in which competition is regulated.
The goal of competition lawe is to ensure that companies compete fairly and to maintain a level playing field for all businesses. It is therefore important for companies to understand the requirements of competition law and the implications of anti-trust policy in order to ensure that their business practices remain fair and legal.
Currently, competition law and anti-trust policy is an essential component of business regulation and companies must be aware of their obligations to the law and how to comply.
