Competition Law

Competition Law

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Introduction

Over the past decades and centuries, a lot has changed. The way of living for the most part has changed. Since the days of old, commerce has been the driver of economic development. From elements like simple barter trade, to the modern concepts of electronic commerce (eCommerce) commerce has been a vital aspect in economies. Commerce has plaid a large part in the lives of people for a long time. It is believed that commerce was the main reason for war both in the ancient eras and even in modern times.

People have always looked for an upper hand when it comes to business in order to make as much money as possible. Over the years, it became apparent that regulation is in order to keep trade going on and protect the population who are the consumers of trade wears. Competition law also referred to as antitrust law in the United States of Americaand the law maintains competition in the market through regulation of anticompetitive conduct by industry players (Whish, 2003).

With any venture, there is bound to be competition. In commerce, this is viewed as a natural and healthy way that enables the business environment to thrive. However, business practices have been abused over the years there was a need to ensure that sound practices are upheld.

Competition laws can be traced as far back as the time of the Roman Empire. Laws were put to protect the grain trade against those who would disrupt its supply for their own good. Fines were imposed on those that did not follow the set laws on trade (Whish, 2011). During the middle ages, in Europe, legislations were put in place to control monopolies and the rulers at the time granted royal decrees that granted businesses certain rights and privileges and at times protecting the population against unscrupulous dealers. This was a time when the European continent was shading the concept of individualism and corporations and organizations were being formed to protect the interests of the elite in the society. The new world was being discovered and ripped of its resources and taken to other parts of the developing world. Trade was thriving, and there was a necessity to guarantee that certain aspects of commerce were regulated. Things like monopoly and unfair competition eliminated (Goyder, 1993).

In the 19th century, trade was the driver of most European counties. The amount of territory that a nation controlled was notable as that dictated the amount of resources that they had access to which gave them bargaining power. Germany had an influence in the trade of commodities at the time giving them a lot of power and bargaining tools. Critics believe that this was the main aspects that fueled the Second World War. The advancement of competitive law, stalled in Europe during this time, but in North America, Canada enacted The Act for the Prevention and Suppression of Combinations formed in restraint of Trade in 1889 in a move that many see as the first modern competition legislation. In 1890, United States followed suit and enacted the Sherman Act named after Senator John Sherman who was of the opinion that the act seeks to apply old and recognized principles of common law to modern times (whish, 2011).

Over the years, laws have evolved to in response to the changing times and the prevailing conditions that exist. Business nowadays is not only conducted within the borders of the country in question but globally(Collins, 2008). Technology has made it possible to conduct business across the globe at the click of a button. Technology has made trade a global aspect that can be done at any time and with ease. Laws existed that regulated trade and commerce within a region, however, over time, it became necessary to make sure that there is legislation in place that addressed the growing international commerce. This was vital so as to ensure that international merchants do not take advantage of loopholes that existed for an unfair advantage. Thus, modern competition laws have evolved from just covering markets that are in the territory, which does not typically cover international trade.

Two main competition regulation systems are the most influential, the European Union competition law, and the United States antitrust law. Across the world, national and local authorities have used these two sets of law as a basis for their regulations.

Treaties and agreements govern international competition. An example is the General Agreement on Tariffs and Trade (GATT) agreement of 1947, which was a multilateral agreement that regulated international trade after the war. It was negotiated during a United Nation conference on trade and employment and was conceived after governments that were participating in the negotiation on the International Trade Organization failed to make a breakthrough. GATT lasted until 1993 but was replaced by the World Trade Organization (WTO) in 1995. However, parts, though limited, of GATT are still in effect until today as they were incorporated in the WTO (Rodger, 1998).

After the First World War, Europe started to adopt competitive laws. Germany was the first of the European countries that came up with the anti-cartel law in 1923, followed by Sweden in 1925, and Norway in 1926. In the late 20s, there was a great depression and the economies of most countries were performing badly, and most of the competitive legislation that existed vanished. However, post World War II, at the insistence of the United States, Germany, and England became the first European countries to espouse competitive laws.

However, locally European Union competitive law is said to have its origins from the European Coal and Steel Community (ECSC) in 1951, which was an agreement between Italy, Netherlands, Germany, France, Belgium, and Luxembourg. This was in an effort to stop Germany from establishing the dominance it had before the war that aided in the outbreak of war. Cartels were banned through Article 65 and the provision for concentrations, mergers and the exploitation of a dominant position in Article 66 by any organization. The Treaty of Rome established the Treaty establishing the European Economic Community (TEEC) in 1957 also referred to as the EC Treaty, which in effect helped form the European Economic Community (EEC). This treaty enacted competitive law ensuring the competition in the common market was not interacted and that market forces are left to play out (Greaves, 2003).

The European Community Act 1972 officially made the United Kingdom a member of the European Community subjecting them to European Community competition law. In 1992, through the Maastricht Treaty, the European Community was renamed the European Union (EU) where competition law was brought under the social and economic pillar of the treaty. However, when the Lisbon treaty came into effect, the structure was cast off, and all the competition laws were subsumed in the Treaty on the Functioning of the European Union (TFEU). This treaty gave the Commission of the European Union enforcement power if a British company or business were found to be part of a cartel or involved in the acquisition or mergers that would disrupt the competition that exists across Europe.

In competitive law, three main areas need to be addressed. There are different articles, in modern competitive legislation, that address the various aspects of competitive law. It is pertinent to note that not all the loopholes that may be exploited may be covered adequately as individuals will always seek to break or bend the law. However, it is necessary to note that strides have been made to make sure that the market economy is as prosperous as possible.

First, barring agreements and arrangements that would put a ceiling on free trading and competition. This is mainly in relation to cartels that may form and influence the market in one way or another. In any economic environment, cartels are particularly harmful for business as they form and get a grip on the industry. Once this happens, they will do whatever they please in order to profitof the backs of the hardworking businessmen. Therefore, this needs to be addresses.

Article 101 of the TFEU addresses the issue of cartels and agreements that may be deemed restrictive. Article 101(1) states that;

"The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:

(a) Directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) Limit or control production, markets, technical development, or investment;

(c) Share markets or sources of supply;

(d) Apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) Make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts."

Examples are given on restrictive business practices that people may engage