Essay About Competition Law And Market Power        8Lecture

Competition Law – Lecture Notes
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Competition Law  – Lecture NotesLecture 1 – Introduction to competition law        2Lecture 2 – Concepts and Economics of the Market and Market Power        8Lecture 3 – Anticompetitive Practices – Misuse of Market Power –s46        18Lecture 4 – Misuse of Market Power (‘take advantage of”) and Cartels        33Lecture 5 – Cartels – horizontal agreements continued        44Lecture 6 – Vertical Arrangements – RPM        58        Lecture 1 – Introduction to competition law Definition: “Competition” under Australian Competition LawThe term “competition” of fundamental importance; however, the term is not defined in the CCA (Competition and Consumer Act 2010) and there is no exact definition in cases.Trade Practices Tribunal: Re Queensland Co-operative Milling Assoc., Defiance Holdings Ltd (1976):“Competition” is such a very rich concept that we should not wish to attempt any final definition…. Competition may be valued for many reasons as serving economic, social and political goals… It is a mechanism, first for firms discovering the kinds of goods and services the community wants and the manner in which these may be supplied in the cheapest possible way…Competition is a dynamic process; but that process is generated by the market pressure from alternative sources of supply and the desire to keep ahead…Competition is not static; it is a process.protects and promotes effective competition among competitors.deals with anticompetitive practicesCompetition law protects and promotes effective competition among competitorsWhat is ‘effective competition’?Competition law protects and promotes effective competition among competitorsEffective competitionIncreases (maximises) economic efficiency – total welfare of the public and of their state (innovation, productivity, prosperity)simultaneously, it has impact on individuals namely on companies/entities and consumers.THEORIES – HISTORICAL BACKGROUNDEurope:Classical Liberalism (started in the 18th century): Adam Smith: the ‘invisible hand’ of the market (An Inquiry into the Nature and Causes of the Wealth of Nations)The Laissez-faire doctrine: a free marketNeo-liberalimsOrdoliberalism (the Freiburg School, before WWII) Freedoms, social justice – USA (the 1950s):The Harvard School: structure-conduct-performance paradigmThe Chicago School & Post-Chicago School: economic efficiency (free market)WHERE ARE WE?Welfare EconomicsThe Chicago School & Post-Chicago School (welfare economics):Economic efficiency Consumer welfare (v. total/social welfare)(output restriction)The theory of harmConduct which causes economic harm should be prohibited Anticompetitive harm occurs if welfare and efficiency decrease.THEORIES / OTHER DEFINITIONSThe objective of competition law is not unified:consumer welfarelimitation of the power of big businesseconomic efficiencyIs there a provision on objective(s) of competition law in the CCA? – YES > s2 – Objective of Australian Competition LawAustralian Competition Law – Part IV of the Competition and Consumer Act 2010Section 2 of the CCA:The Object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.(Both, competition-law and consumer-law objectives.)COMPETITION LAW DEALS WITH ANTICOMPETITIVE PRACTICESRe Media Council of Australia (No 2) (1987) 88 FLR 1; 82 ALR 115; 11 IPR 162; ATPR 40-774 at 32 (FLR):[O]ur general concept of anti-competitive conduct : any system… which gives its participants power to achieve market conduct and performance different from that which a competitive market would enforce, or which results in the achievement of such different market conduct and performance.‘stop’ competing and start colluding or misusing your power…What anticompetitive practices do we have in Australia?1. Misuse of market power (abuse of dominant positions; monopolization) – ex post2. Horizontal arrangements (cartels) – ex post3. Vertical restrictions / arrangements1. Exclusive dealing – ex post2. Resale price maintenance – ex post4. Anti-competitive mergers and acquisitions – ex ante (stop the conduct before the conduct starts)Enforcement1) Public enforcement2) Private enforcementAUSTRALIAN COMPETITION LAW: HISTORICAL BACKGROUNDAustralian Development: Difficult PathTWO ISSUES:CONSTITUTION: Understanding and interpretation of Commonwealth power [s. 51(xx) of the Constitution]COMMON LAW:Section 51(xx) of the Constitution:“Legislative powers of the ParliamentThe Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth”Australian Industries Preservation Act 1906 (Cth) inspired by the USA Sherman Act, similarly, prohibiting monopolies and combinations (mainly to protect the Australian market from overseas corporations engaged in anti-competitive conducts).challenged in Huddart Parker & Co Pty Ltd & Appleton v Moorehead (1909) 8 CLR 330 – state power v. Commonwealth power (‘reserved powers’ doctrine) – this was rejected in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 (further see constitutional law)The reserved powers doctrine reserved for the states as much power as possible. Any power not explicitly given to the Cth, was given to States. the consequence of the case law: the Act remained largely unused => flourishing of monopolies, market-sharing and price-fixing practices also at the vertical levelin 1958, most of trade associations were engaged in horizontal price fixingTrade Practices Act 1965 (Cth)In Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468 => the Act was invalidatedhowever, the corporations power in section 51(xx) of the Constitution entitles the existence of this kind of actss 51: includes intrastate trade for corporations!Trade Practices Act 1974 (Cth) – now CCA 2010Competition Law and Power of the Federal Government in the Constitution1974: Competition and Consumer Act 2010 (Cth) (‘CCA’) – at that time entitled the Trade Practices Act 1974 (Cth)