History and Development of Competition Law
This article, ‘History and Development of Competition Law,’ will give a deep insight into the history of Competition Law and how it developed from a global perspective.
This article, ‘History and Development of Competition Law’ will give a deep insight into the history of Competition Law and how it developed from a global perspective. It will also provide how the Competition Law grew worldwide by looking into some countries such as the US, UK, Australia, Russia and China.
History and Development of Competition Law
People have resorted to the law for any sort of problem, pursuant to which legislatures all over the world has framed various laws for the well-being of their citizens, irrespective of whether them being a natural citizen or juristic citizen. All the citizens are free to earn their livelihood with the help of any lawful means. Everyone has to face competition in the market to emerge as successful and efficient. But such a competition should be non-arbitrary, reasonable and fair in nature, leading to tremendous growth has been seen in the adoption of Competition Law during the past few years.
Various geographical regions all over the globe are seen to adopt the competition law, and they brought their economies under the provisions of the competition law. Gradually, market failures, abuse of dominance and other ill- practices in the form of any anti-competitive policy and so on are made subject to competition laws and policies. It is realized that implementing the competition law is a need of the hour and not a privilege.[1]
The necessity was to regulate the competition in the market so that any company or any enterprise is not able to destroy any other person in the market to satisfy its own demands or reach the zenith of success. And eventually, to conduct and regulate competition in the market and to put a sword on all the anti-competitive practices in the market, a separate and new branch of law has come upfront, namely Competition Laws.
Such a separate branch of law has been drafted to put a halt to all activities focusing on the distortion of the market with the help of any anti-competitive practice. This law is also known as Antitrust legislation in the North American part of the world.[2]
History of Competition Law
The basic concept of competition can be dated back to the 18th century and was first brought merely as an absence of any type of restraint on trade in legal terms by Adam Smith in his book ‘Wealth of Nations’, which was published in 1776. However, modern economic theory can be dated back to the late 19th century, i.e. 1890, which led to the drafting of the Sherman Act in the US and became known as the very first anti-trust legislation.[3]
Gradually every country got inspired by America, took the experience from the legislation so drafted and worked on drafting their own law in this field, which gave a fruitful result. For now, almost all countries have adopted their own competition law to regulate the market efficiently. Since it has given the world a coherent competition law system, the United States can be given the title of ‘cradle of Anti-trust laws’.[4]
Now, let us have a look at the various competition laws or anti-trust legislation which are followed at different parts of the globe because in order to get a proper understanding of any of the subjects, its important to know its roots and from where and how it has emerged.
Competition Laws in the US
Modern competition law finds its roots in the legislation of the United States, where the Sherman Act was brought in 1890 due to the rising concerns regarding the formation of trusts by the companies regulating in the American market. The US Congress had drafted three different legislatures: Sherman Act in 1890, the Clayton Act in 19 14 and the Federal Trade Commission Act in 1914. Though short and simple in nature, the very first legislation i.e, the Sherman Act of 1890, has emerged as the most important one.
The Anti-trust law of America emerged as law and gave a socio-political picture of our society.[5] The high concentration of competition amongst the American industries was diluted for a considerable period with the help of the political consensus which got reflected in the law.[6] The Anti-trust law found its application for the protection of the core republican values with respect to free enterprise in America and was as a “Charter of freedom” by its Supreme Court.
The fundamental principle that the Sherman Act had thrown into the market was that it had put a bar on the formation of agreements by one or more competitors that restricted competition in the market. The Act had also rejected the idea of monopolies in the market if such a company is not competing fairly in the market or has resorted to cheating. The Act had also provided heavy monetary fines or even jail for anyone who had violated its provisions.
The Clayton Act got passed in 1914. Business practices in America were very dynamic in nature. The Act gave protection to customers in America from mergers or acquisitions that aimed at restricting competition in the market.
However, with the implementation of the Federal Trade Commission (FTC) Act in 1914, a completely new administrative body was set up to regulate all the unfair business practices in the market. Not only this but the new Act had also empowered the Authorities to go with the investigation and to stop all the deceptive practices and unfair strategies of competition.[7]
Competition Law in the United Kingdom
The competition laws in the UK have seen a lot of changes in the past 15 years, and the current law was drafted in two different statutes, namely the Competition Act of 1998 and the Enterprise of 2002. The earlier system of regulating competition in the UK came out to be ineffective, confusing to handle and difficult to understand. The Competition Authorities were not granted the power and sufficient resources for the enforcement of the law in an effective manner, and politics deeply influenced the land. Hence, many of the practices dealing with anti-competitive business were undetected, unpunished and flourished.
The Competition Act of 1998 went on repealing many of the earlier legislation to provide the land of the UK with a more efficacious and efficient legal system. It led to the creation of new powers for the Office of Fair Trading (OFT), which helped the department to fight illegal and harmful anti-competitive practices such as abuse of market dominance and cartels, to name a few.
The Enterprise Act, which was passed in 2002, had been drafted with a focus on putting a halt to mergers and replacing the old provisions of the Old Fair Trading Act of 1973. The Act also brought the punishment of a maximum of 5 years for all those individuals who were responsible for serious cartel offences.[8] The Act also empowered the system to disqualify all those individuals to act as directors, who have been found guilty of infringing any relevant provision of competition law. Both laws provided a world-class system of Competition law.
Competition laws in Australia
The competition law prevailing in Australia is Part IV of the Commonwealth Trade Practices Act, 1974(TPA). However, the law implemented in Australia's states and union territories is known as the Competition Code of (the State or Territory) and the Competition Policy Reforms Act.
The TPA was brought with the objective of enhancing and improving the welfare of its citizens with the help of provisions for consumer protection, fair trading and promotion of competition.[9] It also provides for a particular form of conduct, remedies for the proposed or past contraventions and detailed enforcement provisions.
Competition laws in Russia
Russian laws have seen a lot of changes during the past few years. EU competition law has been a major source for all the changes happening in Russian competition law. Russian laws provide insight into areas such as municipal or state tender procedures, the special requirement of anti-trust laws for tenders or any other non-discriminatory and non-arbitrary rules for the natural monopolies prevailing in the market.
Federal Monopolies Service majorly focuses on international cooperation[10], pursuant to which Russia shares close relations with the Commonwealth of Independent States (CIS) and Competition Authorities and the Eurasian Economic Union (EAEU). Not only this but Russia had also signed about 58 multilateral and bilateral agreements for getting cooperation with various foreign Competition Authorities.
Competition laws in China
The Chinese Government has been working on strengthening the fundamental position of all the policies with respect to the competition in its natural policy system. The Competition system of China has developed rules for supporting anti-trust monopoly law with the help of an honest competition review system. The government regularly works to revise and improve the antitrust laws governing the land of China.
The Ministry of Commerce devised a plan to revise the Measures for the Centralized Examination of Operators to improve their standards and procedures for enforcing them in 2017. This has been done with a view to incorporating the provisions of guidelines, methods and regulations with respect to the multiple operators.[11]
Conclusion
The motto of the competition law is to make a good marketplace for not only customers but also the producers by making all the unethical practices aimed at garnering large market share that can be made out by honest competition illegal in nature. The result of the anti-competitive practice came, and it not only solved the problems faced by the smaller corporations in the market but also regulated the market by ousting all the illegal means to restrict or limit the competition in the market.
[1] Speech by Vinod Dhall at a workshop conducted on “Competition assessment analyses; Instrument for competition advocacy”
[2] 7, Journal of European Competition Law & Practice, William H. Rooney et al., Getting Closer? The Application of Competition Laws to Regulatory Bodies in the USA and the EU, 2016, 267-273
[3] Canada had its first competition law in 1889 and some other states of the US too had adopted such laws
[4] Suresh T. Vishwanathan, Law and Practice of Competition Act, 2002, I” cd, 2003,p.3
[5] T. Sullivan, The Political Economy of the Sherman Act: The first one hundred years, 1st ed, 1991, p.3
[6] Barry J. Rodger and Angus MacCulloch, Competition Law and Policy, 2nd ed. 2006, p.15.
[7] Csongor István Nagy, EU and US Competition Law (Taylor & Francis) (2016)
[8] Amended by the Robinson-Patman Act.
[9] Sec 2 of TPA.
[10] Hg.org, https://www.hg.org/legal-articles/infamous-antitrust-cases-6025 (last visited Sep 7, 2019)
[11] (1613) 2 Bulstr. 136