Understanding Competition Law

(A brief overview)

You may have come across the term ‘competition law’ a couple of times while reading about the market or any organization/firm or law for that matter. Every individual or professional working in a market-related organization must be familiar with competition law regardless of its nature.

Competition law or Anti-trust laws ensures that there is free and fair competition in the market. Firms are prohibited from manipulating competition using unfair tactics under competition law. It promotes competition in a free, fair, and just manner.

Well, you may be wondering, what is the role of a Competition Lawyer?

In their profession, a competition lawyer might perform a variety of responsibilities. Consider the following cases:

• Clearance for acquisitions, mergers, and joint ventures is negotiated.
• Provide advice on the agreements to ensure that they can survive a challenge from the competitors.
• In the Competition Appeal Tribunal, you can file a claim or defend a claim.
• Provide cross-border trade advice
• Conduct inquiries into a client’s business practices.

A competition lawyer should also be well aware of the commercial affairs transpiring at both the national and international levels.

Let us understand competition law from a different perspective.

Without competition law or in the absence of any law closely related for that matter, the economic situation of the world would go haywire. Monopolistic markets would be a common phenomenon and the public would be paying a huge amount even for the most basic of services. It would be almost impossible or highly improbable for any startup to make any substantial presence in the market unless it deals in a product or service completely novel.

Monopoly would thrive with the lack of competition which would ultimately result in a dearth of innovation. It’s terrifying even to imagine a world without competition law/antitrust law.

What if all the cement companies of a particular nation enter into an agreement and decide to increase the price, or limit/control the production of cement. The public will be left with no choice but to buy the goods at the specified rate or rather give in to the demand of the behemoths. This brings us to our next question. What are cartels?

Cartels are horizontal agreements that are assumed to have a significant detrimental effect on competition by fixing prices, allocating customers or geographical markets, or manipulating bids under the competition act.

What is a Cartel Agreement?

When two or more enterprises/firms attempt to limit market competition by entering into an informal or formal agreement to set prices, restrict production and supply, decide market share or sales quotas, or engage in collusive bidding or bid-rigging in one or more markets, this is known as a ‘cartel agreement’. To go ahead of the competition and secure a monopolistic position in the market or typically establish agreements with other enterprises in the same business lines to fix pricing or decrease output, among other things.

Getting back to the present state of affairs, if a company fails to adhere to competition law policies, the concerned authorities can either penalize them via fines or a custodial penalty can also be enforced depending upon the nation. It is enforced either through civil litigation or criminal litigation varying from country to country.

Microsoft Antitrust Case — Overview, Charges, Verdict (corporatefinanceinstitute.com)

* You can also refer to the abovementioned case for more insight.