Competition law regulates anti-competitive behavior to promote market competition. The EU and US have influential systems, with three main elements: prohibiting agreements that limit competition, preventing monopolies, and supervising mergers. The US antitrust law and EU competition law are important systems. International organizations have become involved in competition law as the global economy has developed.
Competition law, also known as antitrust law, is made up of laws that regulate anti-competitive behavior and thus seek to promote market competition. Competition law of the European Union and antitrust law of the United States are the most influential systems of this type of regulation. Governments have always sought to control the practices of companies and other businesses domestically, but in the 20th century competition law became international. In response to a global economy, networks of support and enforcement have formed regionally across borders.
There are three main elements in most competition law systems. The first prohibits any agreement or practice that limits competition between companies and free trade. Cartels or colluding firms that suppress free trade are often at the heart of this aspect of competition law. Preventing a cartel from forming isn’t always possible as companies rarely put such deals on paper, but this type of law works to identify and dismantle them.
Preventing a company from establishing a monopoly is another important aspect of this type of law. Competition law seeks to limit anti-competitive practices that could lead to a monopoly and to regulate dominant firms from abusing their positions. Such practices may include price gouging and predatory pricing.
A third aspect of competition law is the supervision of mergers and acquisitions. A merger or acquisition that could threaten a competitive market can be avoided altogether. In most cases, a merger involving large companies will only be approved if part of the business is then divested or if other measures are implemented to ensure continued competition within the market.
One of the most influential competition law systems is the US antitrust law. At one time, large corporations used trusts to conceal the details of their business dealings, and as a result, trusts became associated with monopolies. In response to this threat to the nation’s free market economy, the federal government passed the Sherman and Clayton Acts. These stringent antitrust laws have been relaxed since the mid-1980s, but remain an important tool against cartels and monopolies.
Another important system of competition law is that of the European Union. Maintaining a market without many trade restrictions is seen as dependent on fierce competition between companies and countries. This system is described in a number of articles dealing with monopolies, price fixing and mergers. Fines, fines, and prison sentences are all possible punishments for violations of union competition law.
International organizations have become increasingly involved in competition law as the global economy has developed. The United Nations Conference on Trade and Development was founded in 1964 and remains a dominant international force on trade and investment issues facing member countries. The World Trade Organization is another organization that attempts to control international trade and has more than 150 members. International agreements form the core of international competition law.
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