By Tanishka Tiwari

Published on: January 11, 2024 at 22:11 IST

Law has always lent a helpful hand to everyone. Laws are created to protect the rights of individuals. Many branches of law have taken on the role of assisting a person. A person can earn a living in any way that is not illegal. To prosper and emerge efficiently in the market, every person must compete. However, that competition should be distant and non-arbitrary.

Every country should appropriately control market competition so that it does not result in unfair competition. Only if a country has strict Competition legislation can it exert control over unfair market circumstances. However, a country’s strict competition law should also foster fair market competition, allowing every market participant to survive.

One corporation or enterprise should avoid destroying other people in the market to meet its expectations and accomplish its destination quickly. Competition law originated as a separate field of law to govern and conduct market competition and suppress anti-competitive market activities. This article aims to outline the international history of competition law.

Competition law is the corpus of legislation designed to prevent market distortion caused by anti-competitive business conduct. Competition law is also known as antitrust law in the United States, North American countries, and international organisations.

Competition law Aims to provide a good marketplace for customers and producers by forbidding unethical methods to get a higher market share than what honest competition can achieve. The effects of anti-competitive behaviours include difficulty for smaller enterprises entering or prospering in a market, more significant shopper expenses, inferior service, and less innovation.

Historical Development of Competition Law

People have turned to the law for any kind of problem. Therefore, legislators worldwide have developed various laws for the well-being of their citizens, regardless of whether they are natural or juristic citizens. All citizens have the right to earn a living by whatever legal methods. Everyone must compete in the market to be successful and efficient. However, such competition should be non-arbitrary, reasonable, and fair, which has resulted in a massive increase in the adoption of Competition laws over the last few years.

Various geographical regions worldwide have adopted competition law and brought their economy under the provisions of competition law. Market failures, abuse of dominance, and other ill- practices in the form of any anti-competitive policy, for example, gradually become subject to competition laws and regulations. It is recognised that applying competition legislation is a need, not a luxury.

The need was to govern market rivalry so that no corporation or enterprise could damage any other individual in the market to meet its desires or attain the pinnacle of success. Finally, a separate and new branch of legislation, namely Competition Laws, has risen to the forefront to conduct and control market competition and to draw a sword to any anti-competitive practices.

The underlying concept of competition dates back to the 18th century and was initially introduced in legal terms by Adam Smith in his book ‘Wealth of Nations,’ published in 1776. However, a modern economic theory may be traced back to the late nineteenth century, specifically 1890, when the Sherman Act was drafted in the United States and became recognised as the first anti-trust legislation.

Gradually, the US inspired every country, took the experience from the legislation that had been established, and worked on crafting their law in this sector, which resulted in a productive result; today, practically all countries have adopted their competition law to manage the market efficiently.

The United States can claim the label of “cradle of anti-trust laws” since it has supplied the globe with a coherent framework of competition law.

Competition Laws in the United States

The present competition law originates in US laws, where the Sherman Act was enacted in 1890 in response to growing concerns about establishing trusts by firms regulating the American market. The United States Congress enacted three laws: the Sherman Act in 1890, the Clayton Act in 1914, and the Federal Trade Commission Act in 1914. Despite its short and simple form, the first legislation, the Sherman Act of 1890, has emerged as the most influential.

America’s anti-trust statute had emerged not just as law, but also as a socio-political portrait of our civilization. The significant concentration of rivalry among American companies was mitigated by political consensus, which was reflected in the law for a long time. The Anti-trust Act was enacted to defend the essential republican values of accessible business in America. It was referred to as a “Charter of Freedom” by the US Supreme Court.

The essential idea that the Sherman Act introduced into the market was that it prohibited the establishment of agreements by one or more competitors that impede market competition. The Act also rejected the concept of market monopolies if such a corporation is not competing honestly or has resorted to deceit. The Act also provided substantial monetary fines or imprisonment for anyone who disobeyed its terms.

In 1914, the Clayton Act was passed. America’s business methods were highly dynamic. The Act protected customers in America from mergers and acquisitions to limit market competition.

Competition Law in the United Kingdom

The UK’s competition rules have changed dramatically over the last 15 years, and the present law was created in two separate acts, the Competition Act of 1998 and the Enterprise Act of 2002. The previous system of regulating competition in the UK proved ineffectual, challenging to manage, and difficult to understand.

The Competition Authorities needed to be given the necessary authority and resources to enforce the law effectively, and the land was heavily influenced by politics. As a result, numerous anti-competitive business practices went unnoticed, unpunished, and proliferated.

The Competition Act, 1998 repealed numerous prior legislation to provide the United Kingdom with a more effective and efficient legal framework. It resulted in the development of new authorities for the Office of Fair Trading (OFT), assisting the department in combating illegal and detrimental anti-competitive behaviours such as market dominance abuse and cartels, to mention a few.

The Enterprise Act passed in 2002 was written to halt mergers and replace the existing Fair-Trading Act of 1973 provisions. The Act also mandated a maximum sentence of five years for anyone found guilty of significant cartel violations. The Act also enabled the system to bar persons from serving as directors who had been found guilty of violating any relevant component of competition law. Both statutes established a world-class system of competition law.

Competition Law in the European Union

The Treaty of Paris 1951, which formed the European Coal and Steel Community, included the first community competition controls. However, these restrictions only apply to a few marketplaces and will not be addressed further in the test.

The Treaty of Rome in 1957 included the primary regulations governing competition. This resulted in the formation of the European Economic Community (EEC). Following the passage of the Treaty of European Union in 1992, this is now known as the European Community (EC).

Community law is a distinct legal order that operates throughout the European Union. As a result, both governments and private persons, including businesses operating inside the Community, are compelled to adhere to the legal regulations established by Community law.

Since 1962, the European Commission has been the primary vehicle for enforcing competition in trade and commerce in Europe under the provisions of the EC Treaty. The enforcement powers were exercised by a centralised authority, which proved ineffective during its operation. As a result of the European Union’s enlargement, the EC Modernisation Regulation is being considered for application of Articles 81 and 82 of the EC Treaty beginning on May 1, 2004.

The Modernisation Regulation has resulted in a significant shift in the enforcement of competition law in Europe. The notification procedure for individual exemption agreements was eliminated, and in its stead, articles 81 and 82 are directly applicable without prior approval from the European Commission.

The Commission collaborates with national competition authorities and national courts to apply Articles 81 and 82 of the EC Treaty. Articles 81 and 82 influence member states’ rights and obligations to enter agreements, including the EC Treaty’s competition provision. The EC’s competition guidelines are included in articles 85 to 94. They are the first chapter of the first title of Part Three, which is on Community policy. The objectives of the competition laws, as drawn from Court of Justice decisions, are to promote fair competition in a primarily free market economy and to create a single market.

The goals of such laws include:

• Keeping costs as low as feasible and facilitating the movement of commodities between member countries.
• The interpenetration of national markets and, as a result, direct consumer access to the entire Community’s production sources.
• The introduction of workable competition creates a single market with conditions comparable to those of a domestic market.
• Making sure that structural stiffness isn’t reinforced.

Competition laws in Australia

Part IV of the Commonwealth Trade Practices Act, 1974 (TPA) governs competition law in Australia. However, the laws in Australia’s states and union territories are known as the Competition Code of (the State or Territory) and the Competition Policy Reforms Act.

The TPA was enacted to strengthen and improve the welfare of its residents through provisions for consumer protection, fair dealing, and competition promotion. It also specifies a particular type of behaviour, remedies for proposed or previous violations, and precise enforcement mechanisms.

Competition laws in Russia

Russian legislation has seen significant modifications in recent years. EU competition law has influenced all of the modifications in Russian competition law. Russian laws maintain an eye on areas such as municipal or state tender procedures, the unique requirements of anti-trust laws for tenders, or any other non-discriminatory and non-arbitrary norms for the market’s natural monopolies.

The Federal Monopolies Service is primarily concerned with international cooperation, as a result of which Russia maintains close links with the Commonwealth of Independent States (CIS), Competition Authorities, and the Eurasian Economic Union (EAEU). In addition, Russia has signed approximately 58 multilateral and bilateral agreements for cooperation with other international Competition Authorities.

Competition laws in China

In its natural policy framework, the Chinese government has been attempting to strengthen the fundamental stance of all policies concerning competition. With the assistance of an honest competition review mechanism, China’s competition system developed rules to support anti-trust monopoly law. The government works on revising and improving the antitrust rules that regulate China regularly.

In 2017, the Ministry of Commerce announced plans to revise the Measures for the Centralised Examination of Operators to strengthen their standards and methods for enforcing them. This was done to incorporate the provisions of guidelines, techniques, and regulations about the many operators.

History of Competition Law in India

The Monopolies and Restrictive Trade Practices Act (MRTP) was India’s first competition law, passed in 1969. In 1967, the Monopolies and Restrictive Trade Practices Bill was proposed in Parliament and referred to the Joint Select Committee. The MRTP Act went into effect on June 1, 1970.

The MRTP Act, 1969 was founded on the socioeconomic philosophy stated in the Directive Principles of State Policy incorporated in the Indian Constitution. The 1969 MRTP Act was amended in 1974, 1980, 1982, 1984, 1986, 1988, and 1991. The revisions enacted in 1982 and 1984 were based on the recommendations of the Sachar Committee, which was established by the Government of India in 1977 under the chairmanship of Justice Rajinder Sachar.

The Sachar Committee stated that, while marketing and sales promotions have become well-established modalities of modern business techniques, representations to consumers through such advertisements should not become false. The Committee also stated that fictional bargaining was a prevalent form of deceit, with several tactics used to trick customers into thinking they were obtaining anything for free or at a low value for their money. The Committee proposed that the seller be required to communicate the truth while advertising and to avoid half-truths to prevent fraudulent or misleading marketing.

As the country’s economy liberalised and became more global, it became evident that a more comprehensive legal structure was required to govern the rapidly changing economic environment. In October 1999, the Government of India established a High-Level Committee chaired by Mr. SVS Raghavan [‘Raghavan Committee’] to advise the country on modern competition law in line with international developments and to suggest a legislative framework, which may include a new law or appropriate amendments to the MRTP Act, 1969. In May 2000, the Raghavan Committee delivered its report to the government.

The committee highlighted, among other things, that in an environment of effective competition, rivals have equal opportunities to compete for business based on the basis and quality of their products, and resource deployment follows market success in meeting consumer demand at the lowest possible cost.

The Competition Act, 2002 arose from the need for a modern and comprehensive competition law. This Act established the Competition Commission of India (CCI) as the principal regulatory authority responsible for enforcing ethical behaviour. By focusing on anti-competitive agreements, misuse of dominant positions, and combinations that potentially restrict competition, the Competition Act provided the groundwork for a more robust and proactive approach. By focusing on these crucial areas, the Act aimed to foster innovation, level the playing field, and protect consumer interests. As a result, the Monopolies and Restrictive Trade Practices Act, 1969 was abolished and replaced by the Competition Act, 2002 on September 1, 2009.

Conclusion

Following a thorough examination of all the laws in various jurisdictions, we may infer that competition laws worldwide share some characteristics. Overall, the essential ideas regulating competition laws are nearly identical and have been incorporated into all legislatures. However, each law has a separate provision for implementing these specific concepts. After reviewing the laws, one can conclude that they all implement the fundamental principles of anti-competitive agreements, abuse of dominant position, and combinations in various ways.

The goal of competition law is to create a good market place for customers and producers by making all unethical acts aimed at gaining a larger market share than that which may be obtained via honest competition illegal. The outcome of the anti-competitive practice not only remedied the challenges encountered by smaller firms in the market, but it also regulated the market by eliminating any illegal means of restricting or limiting competition in the market.

References

• exploring-evolution-scope-competition-law-india-uncovering-wagh/
• The%20history%20of%20the%20competition,of%20the%20entire%20European%20Market.
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