Why Do We Need Competition Law

If companies break existing laws to protect competition, those same consumers can lose. Then we step in and take action using our enforcement powers. Second, national competition laws should not be discriminatory, both prima facie and in the way they are enforced. However, it is difficult to promote competition in each country, precisely because the benefits of competition are long-term and widely distributed among all consumers, while the benefits of protection are immediate and concentrated on a few recipients. As a result, powerful and well-organized lobbies tend to prevent the emergence of competition. But it is precisely where these lobbies are most powerful – in smaller, developing markets with narrow economic bases and concentrated industrial sectors – that anti-competitive practices are most likely to flourish and where the need to promote competition through privatisation, deregulation and the adoption of competition law is greatest. Eighth, nations should commit to the principles of comity in the application of their competition laws and, where appropriate, to enter into positive comity agreements. If there is insufficient competition, dominant firms can use their market power to charge higher prices, offer lower quality and prevent potential competitors from entering the market – meaning that entrepreneurs and small businesses cannot participate on an equal footing and new ideas cannot become new goods and services. Research has also linked market power to inequality. In an economy without adequate competition, corporate prices and profits rise while workers` wages fall. This means that big companies and their shareholders get richer, while consumers and workers bear the costs. The pandemic has further highlighted the dangers of an economy that depends on a few companies, as evidenced by the supply chain issues we face when a small handful of companies create shortages for an essential product. Secondly, international history shows that cross-border cartels tend to operate in countries without competition law in order to enhance their immunity from prosecution; They also tend to avoid countries that actively enforce competition law.

I also doubt that other anti-competitive actors are reluctant to impose the costs of their behaviour on consumers in countries where competition law does not exist. The adoption of competition law is therefore an important means of protecting one`s own consumers against cross-border anti-competitive practices by companies. The Autorité de la concurrence et des marchés (CMA) was established in April 2014 and since then we have been relentlessly focused on competition law enforcement. Over the past year, we have significantly increased the scope and timeliness of our work in this area. Thirdly, competition authorities, through their role as competition promoters, can promote change in market opening in their countries. Several competition authorities in Latin and South America have recently contributed significantly to the removal of restrictive rules in sectors not previously open to competition by advocating privatization or deregulation. We, too, continue to vigorously defend competition principles with the Federal Electricity Regulatory Authority, the various state utility commissions, the Federal Communications Agency, and entities involved in intellectual property policy-making. A lesson in humility that we must maintain if we want to promote competitive markets in the best possible way is that competition policy is not and cannot be the answer to all social and economic problems.

Unemployment insurance, retraining of workers and other forms of social assistance will be necessary to ensure an acceptable level of social cohesion and an internal consensus in favour of opening markets. For me, it also suggests that the development and enforcement of antitrust law must be based on a choice between different social, political and economic objectives. Healthy competition in the marketplace is essential to the proper functioning of the U.S. economy. Basic economic theory shows that when firms have to compete for customers, it leads to lower prices, better quality goods and services, greater variety, and more innovation. [1] Competition is crucial not only in product markets, but also in labour markets. [2] When companies compete for labour, they must raise wages and improve working conditions. My gut tells me that increasingly divided economic thinking is leading most countries to adopt relatively similar competition laws. Nevertheless, I believe that competition law must, to some extent, be adapted to the economic, legal and political needs of the countries for which it is designed.

The needs of a small country with few resources, a concentrated industrial base, and a historically and consistently large public sector will not necessarily be the same as the needs of a fully developed economy with a tradition of free enterprise. Without adapting one`s own law to these realities, and perhaps initially to alleviate the pain of adapting a system relatively immune to competition, a political basis for competition law and policy will never develop. Although I believe that national competition law should deal with restrictive horizontal cartels, abuses of dominance, exclusive vertical practices and mergers, I will not tell you to adopt a law identical to ours. I would just ask you to learn from our experience. If our laws do not have to be identical twins, how can we best deal with competition issues, both within our borders and across borders? First of all, we continue to share our ideas and experiences. Perhaps it is just as important to reflect on whether there are certain basic principles and procedures – not detailed rules – to which we can all subscribe. I call in part to prevent the proliferation of competition laws around the world — which should be a good pro-competition event — from becoming a tangle of inconsistent, overlapping and comprehensive regulatory systems. But these common principles are designed to operate at a level of universality sufficient to ensure that any well-intentioned market-based competition law, if applied neutrally, would follow the model. In addition, GSK (among other companies) was fined £37 million for paying other companies to delay their entry – and thus potential competition – into the UK paroxetine market. In both cases, the NHS can use our decision to claim damages from companies – as it has done before. Having insisted that you cannot do everything with competition law and policy, I will now urge you to do more than you can do. Privatization, deregulation, the removal of unjustifiable barriers to trade, and the promotion of competition law and policy are complementary means of achieving our common goal of open and competitive markets.

Government officials must draw a thread through all these policies, and much of this daunting task falls to you. I hope that almost all of us can agree on the benefits of adopting and enforcing transparent and non-discriminatory competition law. First, the application of competition rules at national level prevents monopolisation and collusive and exclusionary practices that allow companies with significant market power to unfairly confiscate the benefits of an economic activity that should accrue to consumers and competitors. However, prevention is better than cure and it is not just about punishing. While ignorance of the law is no excuse, we want to ensure that businesses of all sizes are aware of competition law and the need to comply with it. Our own research has shown that many companies need to be better informed about the law in this area, which is why we also work very hard with businesses, trade organizations and other groups to spread the word. In this regard, we have created a series of documents to help companies explain the law in a simple and accessible way. For more information, check out our four-step antitrust compliance process and guidance on how your business can comply.

What would those principles be? First, countries should have and enforce competition laws and have a competition authority with appropriate staff and funding capable of achieving a certain level of meaningful enforcement.