Return to Main Menu.
- The uses and application of economics in competition law.
- Applied focus
- Analyses how economics has shaped competition policy
Competition Law – Definition.
'Modern competition law can be viewed as a basic system of rules which are designed as far as possible to allow markets to function properly. It is designed to prohibit abuses of market power, whether by an individual firm or by a group of firms acting collectively, but otherwise to allow markets to operate unhindered.'
Scherer and Ross (1990) Industrial Market Structure and Economic Performance.
'Antitrust in this modern form is a North American invention.' (Scherer and Ross).
'Strains of American antitrust can be discerned, in varying measure, in competition policies of nearly every nation.' (Ahdar, 1991, American Antitrust in New Zealand, Antitrust Bulletin, 36(1)).
- Certainly reflected in EU law both in its origins and recent reforms.
- A legacy of WWII
- Vertical Restraints
- Regulation/1/2003 – Most Dramatic Overhaul of EU competition law in its 40 year history.
- Concentration Measures
- SSNIP Test
- Merger Analysis
- Leniency
- Case for competition rests mainly on economic grounds.
- That competition increases economic efficiency and welfare.
- Competition policy essentially an attempt to implement economic policy by legal means.
'Competition law is about economics and economic behaviour, and it is essential for anyone involved in the subject – whether as a lawyer, regulator, civil servant or in any other capacity – to have some knowledge of the economics concerned.' Whish, (2001, Competition Law, 4th ed.).
- US – Restraining political power.
- Imposed on Germany for political reasons.
- EU – Market integration – traditionally more important.
- Fairness v. Efficiency.
- Often fundamental difference in approach between lawyers and economists.
'Competition by its nature is deliberate and ruthless. Competitors jockey for sales, the more effective competitors injuring the less effective by taking sales away. Competitors almost always try to ‘injure' each other in this way... these injuries are the inevitable result of the competition section 46 [of the Australian Trade Practices Act] is designed to foster'.
Queensland Wire Industries Pty. Ltd. v. The Broken Hill Proprietary Company Limited, [1989] ATPR 20-925.
- Historic differences between US and EU
- US traditionally more of an economics focus.
- Sylvania
seen as representing the coming of age of economics in antitrust.- EU traditional focus on legal form rather than economic impact.
- Commission 1998 Green Paper on Vertical Restraints – acceptance of Sylvania.
- Function is to assist the court.
- Not to be partisan.
- Australian ‘hot tub' regime.
- Judges (and juries) unfamilliar with economic concepts.
- Keep it simple.
'With the greatest respect to Mr. Fingleton…the argument reads like the theory of economics. It is quite correct that in theory if one does something that has a restrictive effect there will be an implication, but in a court case there must be evidence.' Judge Brennan in Drogheda district court dismissing charges of engaging in an agreement that had the effect of preventing, restricting or distorting competition in summary prosecution brought by Competition Authority against several farmers.
Return to Main Menu
Return to Top