Why Is It Necessary to Have Competition Legislation?

Why is it necessary to have Competition Legislation.

Discusses about Monopolies, Cartels, State-Aids and Invalid Mergers and how the legislation plays a critical role in makeing sure that market dynamics work for the common man and how it ensures the price is always competitive.

Introduction

The field of competition law has seen remarkable changes and developments over the past two decades, the extent of which can be rivalled by few other areas of law. At the end of 1980’s there were only about ten systems of competitive law. ”Now, Around 100 jurisdictions with a variety of economic systems and in different states are there in competition law” (Maher, 2008)

Competitive law has showed the signs that market systems deliver better outcome than that yielded by state control, planning and national monopoly management. This belief has resulted in shift towards liberalisation and privatisation of domestic economies and showed the world that competition acts as a force which can bring in innovation and economic growth and supports the social development of countries and its citizens.

This report discusses roles of Competition Commission (CC), Office of Fair Trading (OFT), and European Commission and why it is becoming increasingly important for every country to adopt competition legislation and fight against distortions in competition.

Competition Commission and Office of Fair Trading

The Competition Commission (CC) is an independent public body in the UK which conducts in-depth inquiries into mergers, markets and the regulation of the major regulated industries. “Competition Commission helps to ensure that healthy competition exists between companies in the UK for the benefit of companies, customers and the economy” (Competition Commission, 2008)

The Office of Fair Trading (OFT) is a non-ministerial government department of the United Kingdom and its goal is to make markets work well for consumers, ensuring vigorous competition between fair-dealing businesses and prohibiting unfair practices such as rogue trading, scams and cartels. OFT acts as the UK's economic regulator and is responsible to initiate the initial investigation and, if necessary, refer to Competition Commission for detailed investigation.

Competition Legislation

Open competition is good for consumers because it results in lower prices, new products of better quality and more choice. It is also good for fair-dealing businesses, which flourish when markets are competitive. In UK, Competition Act 1998 and Enterprise Act 2002 provide an updated framework for identifying and dealing with restrictive business practices and abuse of a dominant market position.

“Completion Law has four main policy areas i.e. Monopolies, Cartels, Mergers and State Aid” (EU Business. 2006). Competition law regulates the exercise of market power by large companies, governments or other economic entities and European Competition