COMPETITION LAW IN DIFFERENT COUNTRIES

QUESTION

SOLUTION
Human beings are doing business since the evolution of civilization. They are always looking for better market to sell their product to the demanding consumers for profit. Gradually the market is dominated by the rich traders and they began to exploit the small traders. They used to fix prices according to them harming the small scale businessmen. Governments and traders with the aim to curb these practices adopt the many laws formally known as, Competition Law. This was called Competition Law because the main purpose was to bring fair competition in the market without the monopolization of one strong trader of the market. The history of competition law can be traced back to Roman Empire. The trade practices became the matter of scrutiny and sometimes sanctions for the unfair practices. It’s only in 20th century that these competition laws have become a global issue, and now all developed nation has their competition laws. Two of the most influential laws are of United States and European Union’s competition laws. The national competition laws have the cross border effect it do not cover the activities operated beyond the state borders but the countries may allow for the extraterritorial jurisdiction. Firstly let us have a look on this competition law.
Competition Law
The main objective of Competition laws are to protect and promote competition in the market. Some of the strong companies try to create unfair competition to establish their monopoly; the Competition Law is a solution for all these. This helps in the best of everything that consumer can get, the best quality of product, best lower prices and best product from the market for their use.  This prompts the businessmen for producing the better products. It’s been proven fact that competition is good for the trade. It forces them to work honestly and produce the product useful to the consumers at their affordable price. If we talk about the definitional part then, Competition Laws are:
•    The rules to protect and promote competition in the respective markets with the competitive price and gives freedom to the consumers to have the product of their choice.
•    This is the result of all changes in political and economical system across the nations. There are as many as 100 competition laws.
Benefits of Competition Laws:
Like every other laws, competition law has also its benefits such as:
Economic benefits- Competition law in every state helps in the economic benefits of the state, such as, with the production of best quality of products on lower possible price for it. These lower prices for such products attract more and more consumers which increases the demand in market, resulting in economic profit.
The competition Law provides for the infrastructure for the competition in the markets of developing countries. This helps the developing countries because they are suffering from the monopoly of big financial companies from the developed nations. Hence, the business today needs the competitive atmosphere which can only be brought through the proper Competition Law with their actual implementation.
The competition law is the legal approach of the economic policy. To understand it better we have to understand the Laws, such as the Law of contract also to look into the wrongful agreements between the traders. The competition policy compels the traders not to bind themselves in any kind of agreement between the enterprises to restrict or limit their access to market. A competition Law policy must be very clear and specific with complete compliance with the statute and must show a commitment to the governing body for the effective compliance. This procedure needs to be fully complied through assigning the responsibility. This includes adopting the whole management and officers teams. In this way the program officer will be responsible for the developing operating and monitoring the program and report directly to the CEO and board. By adopting a strict compliance program the competition in the market can be developed and the behavior that compromises in any way with these rules should not be tolerated.
Many economists, Like Robert Bork, were of the opinion that it can also produce adverse affect as it reduces competition by protecting the inefficient competitors. Also when for the competition costs are higher than the reach of consumers.
The content and practices of Competition Law can be different in different jurisdictions but their objectives are same. Countries adopt these laws according to the condition of their own markets.
Practices controlled by Competition Law
Let’s have a look on the practices controlled by the competition law:
The competition law restricts few agreement, those agreements that restricts or control the competition of the market. For example, agreement for fixing the price or restricting the output. These practices have many severe punishment and some countries have imprisonment for the individual who are responsible for it. The agreement may be of two kinds, the horizontal and vertical agreement. Horizontal agreement as described earlier is the fixing of price and product output. The vertical agreements are the agreement between the trade firms, where the suppliers instruct the retailers not to sell the goods below a certain price which they have fixed.
Many times the dominant firms reduces the price lesser than that of the actual market price just to drive the competition away from the market and they can subsequently charge higher to the customers according to them in absence of any competition, this is known as predatory practices. This abusive behavior is also restricted by the competition Laws.
Competition Laws also directs its authority working or it to investigate mergers between the firms. If one competitor in the market merges its business with the other firm it will result in no competition remaining the consumer with no choice but to pay higher prices of that big firm.
Countries having competition Laws
Sovereignty of nation state is the fundamental source for the potential conflict which necessitates the cooperation for the effective competition policy and its enforcement. States adopt competition policies for the benefits of their own. No one can expect the other nation to come and protect their businesses. There are more than 100 systems of Competition Law across the world. Some systems have the law more than a century ago. The early example of competition Law can be found from the Roman Empire where Lex Julia de Annona was adopted about 50 B.C to protect the grain trade. In England the legislation to control monopoly over the trade exists there before Norman Conquest. So we can say that the English competition Law is the direct predecessor to all the laws.  The formal law was adopted by the treaty of Rome in 1957. The German law against the unfair trade practices was also adopted in 1957. Later on it was developed in US through the Sherman Act in 1890. First Act of Prohibition of private monopoly and maintenance of fair trade in Japan was adopted in 1947.  With the beginning of 20th century, now competition Law exists in all countries and economy whether small or big, developing or industrial. International Bar association’s Global competition Forum provides all the account related to the different competition laws across the globe, very helpful in understanding of the system. Let’s have look and analyze the competition laws of some important nations such as European Union, United states and Australia.
Competition Law in EU
Since 16th century, trade in Europe was changing very fast. The trade from out of state was pouring wealth into country and the interest of the traders was shifting from internal markets to the market outside the country. The queen of that time Queen Elizabeth declared state protection to those traders who will trade in the markets of England. State gave sole rights to the businessmen engage in the trade of particular products. During the reign of Queen Elizabeth the system was much abused and traders are preserving rights and nothing new to promote the trade. The actions were shown by the English Courts by developing the case laws to restrict the unfair business practices. In the most celebrated case of Darcy v Allen  where the King’s Bench declared the right given to Darcy to import playing cards to England is void.
The competition law in England and Europe was influenced by the work of Adam Smith on the monopoly in Trade. Also the Industrialization replaces the local artisans with the machine based production. The development of big capital companies maximized the production with minimizing the costs to its lowest. On this many European countries responded by enacting many laws to regulate the conduct of these big sized companies.
European Union is based on the open market competition with free competition. The European Union Competition Law came into existence out of the desire to maintain the fair competition in the market but not in the distorted way. It specifically deals with the agreement between the competing business, acquisition, and mergers. This also limits the state action in favor of businesses in their state which can give it advantages in dealing with their competitors in other states. The EU competition Law works in consumer welfare by promoting the businessmen to produce the goods and services which helps the customers. They can produce the innovative products with lower prices. The main provisions of EU Competition Law are under Article 81 and 82 of the Amsterdam Treaty. Article 81 of the treaty prohibits all agreements between undertakings and concerted practices which may affect trade between the member states which may restrict the competition in common market. Clause two of the article says such agreements as a void agreement. Article 82 prohibits any kind of abuse by one or more traders in dominant position for any good and service. These two Articles have the aim or objective of promoting trading market and prohibiting the unfair practices that restricts the competition in the trade. The
Directorate General for Competition of the European Commission enforces Competition Law with the help of National Competition Authorities across all the member states. It can work on investigating the business and industries and start court proceedings against any of the member states or businesses. It can also find those businesses acting uncompetitive and can give opinion on proposed mergers that have effect on its members.   They can also impose a fine of 10 % of the profit turnover on finding any violation of Article 81 and 82 by any member business.
Later on in year 2003, a regulation came into effect, which is the most radical overhaul in the forty years of the EU competition Law. The regulation involves the statuette designed to tackle serious breaches of competition Law and is designed to allow the deployment of resources in area of expense of more traditional. This regulation provides that all the completion authorities may apply EU competition Law. It also provides that the provisions of the Act may be applied by the courts and competition authorities. Earlier, only the commission had the power to declare that whether an agreement satisfies the requirement of the Act or not. This regulation enables the efficient working of competition authorities and national authorities work in co-operation. The courts in Europe have given decisions restraining these kinds of unlawful trade practices to gain profits.

Competition Law in United States
By the end of 1976 United States entered into a series of bilateral competition enforcement agreements. The competition law in United States is known as the antitrust Law. This law as any other law also prohibits the unfair trade practices and promotes competition in the market. Formally this Act is also known as Sherman Antitrust Act 1890 passed by the congress. It was named after the senator John Sherman. It was the first federal statute to restrict the cartels and monopolies and after a decade also this statute serves as the basis of all the antitrust laws in US.
The US Lawyers working on antitrust usually have to deal with three statutory provision: Sherman Act which prohibits agreement restraining trade second Sherman Act Section2 which restricts the monopolization and attempts to monopolize and lastly Clayton Act section 7 which restrains mergers and acquisition that may lessen the competition in the market. In crux this is all a person need to know about the competition law of United States. It seems very simple but in another sense it is bit tough. These few sections answer only few questions. But it is difficult for the courts to deal with the cases related to the changing economic policies day by day. Economics and law in involved in each other. The enforcement agencies and the attorneys are working hard to shape its evolution.
Despite of its name related to trust, the Act has very little to do with trust. According to its authors, this Act has been designed to stop the unlawful mixing of trades to harm the market with their monopoly. Whereas the Act is not about to effect the market gains due to the honest trade practices.  The law tries to prevent artificial price rising by restricting the trade and supply.
The new era and technologies have bought many changes to the market and economy.  The big companies started to dominate the market with meeting the demands.
Enforcement of Competition laws in United States
In United States the Antitrust competition law works on both the state and federal anti trust law. The federal government through the two branches of anti trust law; United States department of justice and Federal trade commission (FTC) and file the civil law suits for the enforcement of law. In addition to this the federal government can also review the potential mergers to prevent the market concentration. As mentioned by Hart Scott Rodino Anti trust Improvement Act that larger companies attempting to merger have to notify the Federal Trade Commission and the Department of justice prior to the merger starts. The Government agencies then investigate into the terms of mergers that these mergers should not be for the purpose of creating the power over market. The state government can enforce the law by simply filing suits by the state attorneys in both state and federal system.
Private suits can also be brought to enforce the federal as well as state antitrust law. Most of the anti trust law provides for the triple damage. For example, if a company issued under anti trust law and it is proved that the customer is being charge more, then the automatic damage that the customer will get is the three times of that surplus charge taken by the company.
The United States Anti trust law provides for many exemptions from the enforcement, like labour Unions, agricultural activities and banks. Mergers and joint agreement in major sports such as hockey basketball and football leagues are exempted. It is not the hard and fast rule, government never stops any company from free trading but only restricts from wrongful practices harming the competition.
Competition Law of Australia
Like the other countries, Australia also constituted its competition Law with the name of Competition and Consumer Act 2010. The Act was previously known as the Trade Practices Act 2010 but on January 1st the name was changed to this. The changing of name of the Act has no impact on the contents and matters of the Act. This Act is the key Act for the Australian competition Law. The Act aims at the protection of the consumers and restrictive trade practices although there is no object clause in the Act. This law also gives some rights for the private action. Since the enactment of this Act it has been claimed to enhance diversify the objectives of this Act for some special interest. The Australian Act declares the Cartel conducts as prohibited. It will attract both as criminal and civil action. The Cartel conduct is defined under section 44ZZRD of the Act which includes the actions such as price fixing, restricting outputs, market division and bid ridding. This also prohibits all kinds of contract, agreement or any understanding between the competitors which is results in the above activities. The Act also provides for the punishment for the person found involved in such conduct of cartel with a fine of $220, 000 per offence and also the imprisonment for 10 years. Australian law on Merger is very clear. Under section 50 CCA, it prohibits mergers only if it is shown that they effect or likely to effect the competition in any form in the market. Under this Act it is possible to take clearance or authorization from the proper administration but not the notification is needed.  Merger can only be granted only if the Australian competition committee believes that the merger will not result in substantially lessening competition in the market.  Australian competition tribunal can grant the authorization for merger when it is demonstrated that the merger will result in large benefit to the public. Section 50A of the Australian Competition Act deals with the merger occurring outside Australia. Previously the trade practice Act 1974 provides for substantial lessening of competition test, where it prohibits any kind of acquisition of assets and shares which can result in substantial lessening of competition in market for goods and services. On this merger issue, Australian law has been modified several times till Dowson Report in 2006 where it got 212 submissions related to process of merger and acquisition. Australian law is also very much specific about the remedies available for the consumers. Before 2009, division 2 of part IV only deals with civil actions but after that new division 1 is added into part IV where the Act prohibits cartel conduct and attracts civil and criminal actions both.
Comparison between US, EU and Australian Competition Laws
As we observed above, Australian, United States competition law and European Union law on competition are common. We can roughly match Article 81 of treaty of Rome to Section 1 of Sherman Act. Both of them restrict the agreement, and promote competition. Likewise Article 82 of the Rome treaty is nearly similar to the Sherman Act section 2 which prohibits the monopolization of the market. Whereas, the Australian competition law is the result of changing statutes. Trade practices Act in Australia is modified several times to get the picture of a full competition law which is also associated with the welfare of consumers. It also prohibits those agreements and any understanding between the firms which result in substantial lessening in price under section 44ZZRD.
In general, EU and US competition law has the same objective of promoting trade in the interest of consumers and free flow entry of goods in the competitive economies and Australian law has the major part dealing with the consumer issue. If we talk about EU and US, both the systems arose from different condition and different histories. Hence on close examination we can find some significant difference. It’s true that both are similar in many aspect but have their unique features. EU competition law is derived from the market integration and is closely related to principle of free movement of goods and services across the member states. It s aim is to protect the small and middle sized business but the motivation comes from the large business.  The US competition policies derived its origin from the statutes enacted in different times. Hence the goal of the statutes cannot be similar at all times. Previously the US antitrust law was enacted to protect the interest of consumers.  The enforcement agencies in US are not very sensitive. It is complicated and legislative oriented. The thing that makes it complicated is the multiple enforcement agencies such as at federal level, United States department of justice and Federal commission of trade both are working. The enforcement mechanism in EU has never been as technical as in US law. It is more regulatory and beurocratic. Competitor’s complaint and notification of agreement is the principle trigger for the official actions.  While analyzing the cases on these matters the EU courts easily presume the existence of dominance and increasing of dominance without any factual records which may be needed by the United States courts.  But both systems’ approach is similar in the enforcement of hard core cartel behavior. US law treats price fixing and related affairs illegal per se which is similar to EU law under section 85(1) of the Rome treaty.   In Australia, it is sufficient if the conducts comes under the sections of Act, the effected person can bring a civil as well as criminal suit against the person harming his business or preventing a fair competition in the market.
Restriction on the behavior of acquiring dominant power in the market is included in both the systems but when we look closely to each of them we will find some significant difference in assuming that what are the factors which constitute the dominance and which is a dominant firm. US statute is somewhat silent on this issue and only relies on the case laws but the case laws may be very ambiguous some times. From leading case laws it appears that the firm in dominant power can only be said when it is acquiring two third of the business of the relevant market. Those conducts which goes beyond the acceptable behavior can be said as predatory practices. Whereas EU specifically describes the dominating behavior under Article 86 of the treaty. The members of European committee never oppose the big size of the firms. They wanted the big firms to maximize profit and compete big firms across the border especially with US. That is why they never concerned about merger of big companies at the beginning. The founders do not consider bigness of the firm as a problem but they were worried about the in competitive behavior of the small business firms. It was only after many years that they passed a regulation on mergers unlike US.   While in Australia, the term which is used is substantial market power instead of dominance power. Under section 46(1) it prohibits the substantial powers of the market from taking wrong advantage of their position and for any of the prohibited purpose mentioned in the section. The prohibited Acts are preventing or harming its competitor, stops any new person to enter the market or preventing any other person engaged in competitive practices.  The vast difference between the above two systems on competitive law and Australian law is that the Competition and Consumer Act defines everything related to the subject. They have provision for everything reducing or preventing the competition. By this it doesn’t mean the others do not. But the EU laws much rely on the decisions of their courts on these issues, whereas the US law is much technical for normal understanding. Hence by these three systems having difference and similarities as well we can concentrate on the harmonization of law with the things common not just pushing them to remove the difference. The law today needs harmonization of law in these economic issues.
Conclusion
On competition every nation has a unanimous opinion that it is very important and good for the neo economic policies. This comes from the belief that the competitive market gives the consumer a wide range for their choices. In a competitive market there is no fear of un natural price hike and bad quality of the products, hence the maximum satisfaction of the consumers. Almost every country in the world has law to prohibit such practices which harm competition in the market may be in the form of trade practices Acts. We have seen these three, US EU and Australian system of competition law, which are almost common in dealing with competition and consumer welfare. But the main concern is the developing and underdeveloped countries, where there exist a gap between the actual Act and the enforcement of them. Hence the Competition Laws for developing countries specially, must be very clear and transparent. A competition law will be much valuable if it shows its educational value by advocating the benefits of fair competition in the markets.
REFERENCES
1.    Bowman Gilfillan, ‘The benefits of Competition Law compliance Program’, 17 March 2010, http://www.bowman.co.za/LawArticles/Law-Article~Content~THE BENEFITS OF A COMPETITION LAW COMPLIANCE PROGRAMME.asp
2.    Asian development Bank, ‘Overview of competition Law practices’, 2012, http://www2.adb.org/Documents/Others/OGC-Toolkits/Competition-Law/complaw020000.asp
3.    Business Link, ‘An Overview of the European Competition Law’, 2012, http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1083400149&r.l1=1074404796&r.l2=1084109577&r.l3=1084109500&r.l4=1083400026&r.s=sc&type=RESOURCES
4.    Calkins, Stephen, ‘Competition Law in the United States’, 2012, (Oxford University Press), 2007,  http://ssrn.com/abstract=978787
5.    Australian Competition Law, Competition Law policy, 2012, http://www.australiancompetitionlaw.org/index.html
6.    Eleanor M Fox, ‘US and EU competitive Law: A comparison’, Global competition Policy, (Institute for International Economics) [339], http://www.google.co.in/url?sa=t&rct=j&q=competition+law+in+united+states&source=web&cd=3&ved=0CDsQFjAC&url=http%3A%2F%2Fwww.iie.com%2Fpublications%2Fchapters_preview%2F56%2F10ie1664.pdf&ei=1YmFT8D8K46qrAe4oo3kBg&usg=AFQjCNGHOLhalm4sVZOiUVoAnr71V4B99Q&cad=rja

7.    United Nations Conference on trade and development, Objectives of Competition Law and policy: Towards a coherent strategy for promoting competition and development, [9]-[10], http://www.google.co.in/url?sa=t&rct=j&q=competition+law+oin+different+countries&source=web&cd=3&ved=0CDgQFjAC&url=http%3A%2F%2Fwww.ifc.org%2Fifcext%2Ffias.nsf%2FAttachmentsByTitle%2FConferences_CompetitionPolicyTanz_Hassan%2BQaqaya.prn.pdf%2F%24FILE%2FConferences_CompetitionPolicyTanz_Hassan%2BQaqaya.prn.pdf&ei=RPSDT_WILsfmrAff38W3Bg&usg=AFQjCNGCXiu3J0wXgBEnqxDuFHbDkVyRtA&cad=rja

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