Multifaceted Goals of Competition Law Flashcards
(15 cards)
What is Competition Law??
Competition Law exists to regulate competition in a free market economy, achieved through:
– Art 101 TFEU
– Art 102 TFEU
– The Merger Regulation
– State Aid
What are the Goals of Competiton Law??
*Regulation of competition
* Economic efficiency and welfare
* Protection of economic freedom
*Protection of Competitive Process
*Protection of Competitors
* Fairness
*Equality and Redistribution
* Public policy/ the public interest
Clearly, Competition Law is not monothematic
What is a free market economy?
To regulate competition in a free market economy it is first important to understand what a free market economy is.
An economic system in which the
allocation of resources is determined by
supply and demand in free markets and is not directed by government regulation.
The lynchpin of a free market is the competition between firms for customers/market share.
Debate about the Goals of CL…
Tension between economic efficiency (Welfarist Approach) and the wider range of other goals.
Chicago School (post 1970s) believed it should solely aim for economic efficiency and welfare.
Contrarily, many believed it should serve other socio-political goals including “public interest”.
Welfarist Approach
Believes aim of CL is to maximise welfare by promoting efficient markets. e. USA (Antritrust Law) and Canada.
But is welfare consumer or total welfare?
Typically the consumer welfare standard is preferred as it is a politically acceptable way of arguing for the economic approach, evokes feelings of fairness etc.
ICI v Dyestuffs (1972) safeguarding consumers by stopping price increases/fixed prices
Protection of Economic Freedom and the
Dispersal of Economic Power
Competition Law is aimed at securing economic freedom and
the maintenance of a system which protects individual economic freedom of action.
It allows all citizens to participate in the market and protects smaller undertakings from the undue economic power of
others.also seen as upholding
liberal democracy because it is claimed that economic power can lead to political power and undermine democratic
institutions.
e.g MCI v AT&T (1983)
Protecting the competitive process or,
protecting competition generally
Competition Law can be concerned primarily with protecting the process of competition.
It does this by facilitating environments with rivalry
E.g stopping abuse of dominance or anti-compeititve mergers.
Aston Flooring (2017) safeguarding competition process as a whole by stopping complementary bidding
Goal of Protecting Competitors
Competition Law may aim to protect
competitors for their own sake.
e.g smaller firms from dominant firms with lower pricing to encourage market entry.
or larger firms being forced to give resources/facilities to smaller firms e.g Commercial Solvents v Commission (1974) refusal to supply essential input to smaller rival company.
government may wish to nurture small
business, and encourage citizens to open their own businesses.
Magill (1995) and IMS (2004) EF cases concerned with IP rights.
Why Protect Competitors?
Necessary to protect some competitors to prevent welfare loss sometimes. E.g Microsoft v Commission (2004) interoperability info, denied to share
government may wish to nurture small
business, and encourage citizens to open their own businesses.
Goal of Fairness
Notion of fairness is nebulous. Protection of smaller firms may lead to over-protection of inefficient undertakings. Popular goal due to fears of wealth inequality.
Margrethe Vestager (former Competition Commissioner) mentioned fairness frequently. but this can conflict with welfarist approach e.g state aid for smaller firms.
Is Fairness an Important Goal?
NO: A. LaMadrid de Pablo “Competition Law as Fairness” (2017) CL doesn’t need to focus on fairness as it is “already about fairness”
“application of competition law has a good chance of resulting in a
fairer society”
YES: United Brands v Commission (1978) (27/76)found to be charging “unfairly high prices” in some MS for bananas. Demonstrates fairness as an important goal….
Equality and ReDistribution: Fixing Wealth Inequality?
Suggestion that market power (a few companies dominating a market) leads to inequality so even stricter competition laws are needed to stop this.
Other public policies and the ‘public interest’
CL can be used to promote public interest (1) Merger may be blocked if job losses are likely as a result.
(2) Anti-Competitive agreements may be exempted if they promote “economic progress”
(3) Jones & Sufrin’s EU Competition Law, p. 34 ‘In respect of the environment, the recent recognition of climate change as the greatest threat facing the planet will doubtless lead to increasing calls for
competition policy to take account of it as a major consideration’
CL and Public Interest in other countries…
South Africa CL has 6 purposes outlined in Competition Act No.89 (1998) e.g “to promote the greater spread of ownership” especially to historically disadvantaged people.
China: “promoting the healthy development of the socialist market economy” Chinas Anti-Monopoly Law (2007) Art 1
EU approach is not limited by defining its specific goals.
Conflicting Goals of CL
Efficiency v Fairness e.g state aid for smaller firms
Protecting competition v Protecting Competitors
Market Integration v Public Interest
Price Competition v Innovation
