Competition law

• 1. Roman Grain And Death Penalties

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  In 50 BC, during the time of Julius Caesar, Roman authorities imposed heavy fines on anyone who deliberately stopped supply ships from reaching markets. This legislation aimed to protect the grain trade and prevent traders from insidiously blocking goods. The practice of buying up goods before they reached the market was known as forestalling. Under Emperor Diocletian in 301 AD, the law became even harsher. An edict declared that anyone violating a tariff system by concealing or contriving scarcity of everyday goods would face the death penalty. Later, under Zeno in 483 AD, laws mandated confiscation of property and banishment for any trade combination forming monopolies. Justinian I subsequently introduced rules requiring officials to manage state monopolies directly.

• 2. English Courts And Monopoly Licenses

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  King Edward the Confessor used the Domesday Book to identify forestalling as one of three forfeitures punishable by royal decree. By 1266, Henry III passed an act fixing bread and ale prices according to grain costs laid down by assizes. Breach of these price controls resulted in penalties including amercements, pillory, and tumbrel. A fourteenth-century statute labeled forestallers as enemies of the whole country. In 1414, Judge Hull J. heard a case involving a dyer who gave a bond not to exercise his trade in the same town for six months. The court denied collection of the bond because the agreement restricted trade. Queen Elizabeth I later granted monopoly licenses similar to modern patents, but these were heavily abused to preserve privileges rather than promote innovation. The Case of Monopolies in 1602 declared void the sole right granted to Darcy to import playing cards into England. This ruling established that monopolies caused price increases, quality decreases, and unemployment among artificers.

• 3. Adam Smith And Creative Destruction

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  Adam Smith published The Wealth of Nations in 1776, establishing the concept of the market economy. He pointed out cartel problems but did not advocate specific legal measures to combat them. John Stuart Mill wrote On Liberty in 1859, laying down an approach where restraints on trade were judged permissible or not based on changing business circumstances. Joseph Schumpeter introduced the notion of creative destruction in 1942, arguing that a perennial gale of economic innovation sweeps through capitalist economies. This theory suggested that monopolies might not need breaking up because future innovation would erode their power anyway. Neo-classical economists developed models showing that competitive free markets maximize social welfare when new firms can freely enter markets without barriers. Allocative efficiency means resources go precisely to those willing and able to pay for them. Productive efficiency implies society makes as much as it can with available resources.

• 4. Sherman Act And Trusts

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  The Sherman Antitrust Act passed in 1890 attempted to outlaw restrictions on competition by large companies cooperating to fix outputs, prices, and market shares. Trusts first appeared in US railroads where capital requirements precluded competitive services in unsettled territories. The Standard Oil Company trust controlled several markets including fuel oil, lead, and whiskey during the 1880s. Section 1 declared illegal every contract in restraint of trade or commerce among states. Section 2 prohibited monopolies or attempts to monopolize. Courts applied these principles to business and markets from 1890 onward. In 1914, the Clayton Act complemented the Sherman Act by prohibiting exclusive dealing agreements and interlocking directorates. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 required parties to make pre-merger notifications before completing transactions. As of the 2nd of February 2021, the Federal Trade Commission reduced reporting thresholds to $92 million in combined assets.

• 5. Treaty Of Rome And EU Rules

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  Competition law gained new recognition in Europe following World War II when Germany enacted its first anti-cartel law in 1923. Sweden and Norway adopted similar laws in 1925 and 1926 respectively. The European Coal and Steel Community agreement between France, Italy, Belgium, the Netherlands, Luxembourg, and Germany in 1951 aimed to prevent German dominance in coal and steel production. Article 65 banned cartels while article 66 made provisions for concentrations and abuse of dominant positions. The Treaty of Rome established competition law as a main aim of the European Economic Community through ensuring undistorted competition in the common market. Article 85 prohibited anti-competitive agreements subject to exemptions. Article 86 prohibited abuse of dominant position. Regulation 139/2004 governs mergers between firms with community dimensions affecting multiple member states. Modernization Regulation 1/2003 allowed national authorities to enforce EU competition law alongside the European Commission.

• 6. Global Enforcement Networks

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  By 2008, 111 countries had enacted competition laws representing more than half of nations with populations exceeding 80,000 people. Eighty-one of these countries adopted their laws within the previous twenty years following the collapse of the Soviet Union. Hong Kong's Competition Ordinance came into force in 2015. China's Anti Monopoly Law took effect in 2008 and generated 11 billion RMB of penalties between 2008 and 2018. India enacted its Competition Act in 2003 after finding earlier legislation obsolete during economic reforms. The Competition Bureau administers Canada's Competition Act which includes criminal provisions against conspiracies and bid-rigging. ASEAN member states pledged to enact competition laws by the end of 2015 as part of creating the ASEAN Economic Community. All ten member states now have general competition legislation in place despite differences over merger control notification rules. International bodies like the World Trade Organization discuss moving enforcement up to a global level while the International Competition Network coordinates national authority activities.