United Kingdom competition law

Add links
Source: Wikipedia, the free encyclopedia.

United Kingdom competition law is affected by both British and European elements. The

EU law
would apply. Even so, the pre-Brexit section 60 of the Competition Act 1998 provides that UK rules are to be applied in line with European jurisprudence. Like all competition law, that in the UK has three main tasks.

  • prohibiting agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels.
  • banning abusive behaviour by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal and many others.
  • supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to "remedies" such as an obligation to divest part of the merged business or to offer licences or access to facilities to enable other businesses to continue competing.

The

Ofgem, Ofcom and Ofwat
are charged with seeing how the operation of those specific markets work. The OFT and the Competition Commission's work is generally confined to the rest.

History

See also:
Guilds, and Renaissance

Legislation in England to control monopolies and restrictive practices were in force well before the

US antitrust law. Also under Edward III, the following statutory provision in the poetic language of the time outlawed trade combinations.[7]

"...we have ordained and established, that no merchant or other shall make Confederacy, Conspiracy, Coin, Imagination, or Murmur, or Evil Device in any point that may turn to the Impeachment, Disturbance, Defeating or Decay of the said Staples, or of anything that to them pertaineth, or may pertain."

In 1553,

King Henry VIII
reintroduced tariffs for foodstuffs, designed to stabilise prices, in the face of fluctuations in supply from overseas. So the legislation read here that whereas,

"it is very hard and difficult to put certain prices to any such things... [it is necessary because] prices of such victuals be many times enhanced and raised by the Greedy Covetousness and Appetites of the Owners of such Victuals, by occasion of ingrossing and regrating the same, more than upon any reasonable or just ground or cause, to the great damage and impoverishing of the King's subjects."[8]

globalisation
.

Around this time organisations representing various tradesmen and handicraftspeople, known as

Case of Monopolies or Darcy v Allein.[10]
The plaintiff, an officer of the Queen's household, had been granted the sole right of making playing cards and claimed damages for the defendant's infringement of this right. The court found the grant void and that three characteristics of monopoly were (1) price increases; (2) quality decrease; and (3) the tendency to reduce artificers to idleness and beggary.

This put a temporary end to complaints about monopoly, until

Wealth of Nations in 1776[14]
he was somewhat cynical of the possibility for change.

"To expect indeed that freedom of trade should ever be entirely restored in Great Britain is as absurd as to expect that Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but what is more unconquerable, the private interests of many individuals irresistibly oppose it. The Member of Parliament who supports any proposal for strengthening this Monopoly is seen to acquire not only the reputation for understanding trade, but great popularity and influence with an order of men whose members and wealth render them of great importance."

Classical trade theory

John Stuart Mill believed the restraint of trade doctrine was justified to preserve liberty and competition.
See also: Competition law theory and Classical economics

The classical British perspective on competition was that certain agreements and business practice could be an unreasonable restraint on the

individual liberty of tradespeople to carry on their livelihoods. Restraints were judged as permissible or not by courts as new cases appeared and in the light of changing business circumstances. Hence the courts found specific categories of agreement, specific clauses, to fall foul of their doctrine on economic fairness, and they did not contrive an overarching conception of market power. Adam Smith
rejected any monopoly power on this basis.

"A monopoly granted either to an individual or to a trading company has the same effect as a secret in trade or manufactures. The monopolists, by keeping the market constantly under-stocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate."[15]

In The Wealth of Nations (1776), Adam Smith also pointed out the cartel problem, but did not advocate legal measures to combat them.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."[16]

Smith also rejected the very existence of, not just dominant and abusive corporations, but corporations at all.[17]

By the latter half of the nineteenth century, it had become clear that large firms had become a fact of the market economy. John Stuart Mill's approach was laid down in his treatise On Liberty (1859).

"Again, trade is a social act. Whoever undertakes to sell any description of goods to the public, does what affects the interest of other persons, and of society in general; and thus his conduct, in principle, comes within the jurisdiction of society... both the cheapness and the good quality of commodities are most effectually provided for by leaving the producers and sellers perfectly free, under the sole check of equal freedom to the buyers for supplying themselves elsewhere. This is the so-called doctrine of Free Trade, which rests on grounds different from, though equally solid with, the principle of individual liberty asserted in this Essay. Restrictions on trade, or on production for purposes of trade, are indeed restraints; and all restraint, qua restraint, is an evil..."[18]

Restraint of trade

The 17th-century judge Edward Coke thought that general restraints on trade were unreasonable.
Main article: Restraint of trade

The English law of restraint of trade is the direct predecessor to modern competition law.

Nordenfelt v Maxim, Nordenfelt Gun Co[20]
a Swedish arm inventor promised on sale of his business to an American gun maker that he "would not make guns or ammunition anywhere in the world, and would not compete with Maxim in any way."

To be considered whether or not there is a restraint of trade in the first place, both parties must have provided valuable

Dyer's case[21]
a dyer had given a bond not to exercise his trade in the same town as the plaintiff for six months but the plaintiff had promised nothing in return. On hearing the plaintiff's attempt to enforce this restraint, Hull J exclaimed,

"per Dieu, if the plaintiff were here, he should go to prison until he had paid a fine to the King."

The common law has evolved to reflect changing business conditions. So in the 1613 case of Rogers v Parry[22] a court held that a joiner who promised not to trade from his house for 21 years could have this bond enforced against him since the time and place was certain. It was also held that a man cannot bind himself to not use his trade generally by Chief Justice Coke. This was followed in Broad v Jolyffe[23] and Mitchell v Reynolds[24] where Lord Macclesfield asked, "What does it signify to a tradesman in London what another does in Newcastle?" In times of such slow communications, commerce around the country it seemed axiomatic that a general restraint served no legitimate purpose for one's business and ought to be void. But already in 1880 in Roussillon v Roussillon[25] Lord Justice Fry stated that a restraint unlimited in space need not be void, since the real question was whether it went further than necessary for the promisee's protection. So in the Nordenfelt[20] case Lord McNaughton ruled that while one could validly promise to "not make guns or ammunition anywhere in the world" it was an unreasonable restraint to "not compete with Maxim in any way." This approach in England was confirmed by the House of Lords in Mason v The Provident Supply and Clothing Co[26]

Twentieth-century change

In 1948, Chancellor of the Exchequer Sir Stafford Cripps was responsible for Britain's first Act resembling modern competition law.

Modern competition law is heavily influenced by the American experience. The so-called

Second World War the American version of competition policy was imposed on Germany and Japan. It was thought that one of the ways Hitler and the Emperor had been able to assume such absolute power was simply by bribing or coercing the relatively small numbers of big cartel and zaibatsu chiefs into submission. Economic control meant political supremacy, and competition policy was necessary to destroy it. Under the Treaty of Rome, which founded the European Economic Community, competition laws were inserted. The American jurisprudence was naturally influential, as the European Court of Justice
interpreted the relevant provisions (now Article 81 and Article 82) through its own developing body of case law.

In the meantime, Britain's own approach moved slowly, and saw no urgency for a similar competition law regime. The common law continued to serve its purpose, and debate about economic policy had become radically different after the

nationalised, and the new Labour Party was committed to a socialist economic agenda: progressive democratic ownership of the means of production. In other words, the debate about economic policy was being had on a totally different level. Controlling private industry from arms length regulatory mechanisms was neither here nor there. After the second world war, this case was strengthened, yet Clement Attlee's Labour government did introduce the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948. Far more limited than the Americanesque versions, this was updated in 1953. The Restrictive Trade Practices Act 1956 made it illegal for manufacturers to act in collusion to jointly maintain resale prices for their products to consumers. Later came the Monopolies and Mergers Act 1965 and the Monopolies And Restrictive Trade Practices Act 1969
.

European Union law

Main article:
European Community competition law

The

Commission of the European Union
will have enforcement powers and exclusively EU law will apply. The first provision is Article 101 TFEU, which deals with cartels and restrictive vertical agreements. Prohibited are...

"(1) ...all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market..."

Article 101(1) TFEU then gives examples of "hard core" restrictive practices such as price fixing or market sharing and 101(2) TFEU confirms that any agreements are automatically void. However, just like the

Clayton Act
's substantial lessening of competition. Finally, Articles 106 and 107 TFEU regulate the state's role in the market. Article 106(2) EC states clearly that nothing in the rules cannot be used to obstruct a member state's right to deliver public services, but that otherwise public enterprises must play by the same rules on collusion and abuse of dominance as everyone else. Article 107 TFEU, similar to Article 101 TFEU, lays down a general rule that the state may not aid or subsidise private parties in distortion of free competition, but then grants exceptions for things like charities, natural disasters or regional development.

Competition Act 1998

Main article: Competition Act 1998

Enterprise Act 2002

Main article: Enterprise Act 2002

Office of Fair Trading

Main article: Office of Fair Trading

Competition Commission

Main article: Competition Commission

Competition and Markets Authority

Main article: Competition and Markets Authority

Network regulation

Main article:
Public service law in the United Kingdom

See also

Notes

  1. ^ Wilberforce (1966) p.21
  2. ^ Pollock and Maitland, History of English Law Vol. II, 453
  3. ^ 51 & 52 Hen. 3, Stat. 1
  4. ^ 51 & 52 Hen. 3, Stat. 6
  5. ^ Wilberforce (1966) p.23
  6. ^ 23 Edw. 3.
  7. ^ 27 Edw. 3, Stat. 2, c. 25
  8. ^ 25 Hen. 8, c. 2.
  9. ^ according to William Searle Holdsworth, 4 Holdsworth, 3rd ed., Chap. 4 p. 346
  10. ^ (1602) 11 Co. Rep. 84b
  11. ^ e.g. one John Manley paid £10,000 p.a. from 1654 to the Crown for a tender on the "postage of letters both inland and foreign" Wilberforce (1966) p. 18
  12. ^ (1685) 10 St. Tr. 371
  13. ^ 9 Anne, c. 30
  14. ^ Adam Smith, An Enquiry into the Wealth of Nations (1776)
  15. ^ Smith (1776) Book I, Chapter 7, para 26
  16. ^ Smith (1776) Book I, Chapter 10, para 82
  17. ^ Smith (1776) Book V, Chapter 1, para 107
  18. ^ Mill (1859) Chapter V, para 4
  19. ^ "the modern common law of England [has] passed directly into the legislation and thereafter into the judge-made law of the United States." Wilberforce (1966) p.7
  20. ^
    Nordenfelt v Maxim, Nordenfelt Gun Co
    [1894] AC 535
  21. ^ (1414) 2 Hen. 5, 5 Pl. 26
  22. ^ Rogers v Parry (1613) 2 Bulstr. 136
  23. ^ Broad v Jolyffe (1620) Cro. Jac. 596
  24. ^ Mitchell v Reynolds (1711) 1 P.Wms. 181
  25. ^ Roussillon v Roussillon (1880) 14 Ch. D. 351
  26. ^ Mason v The Provident Supply and Clothing Co [1913] AC 724

References

Further reading

External links
Retrieved from "https://en.wikipedia.org/w/index.php?title=United_Kingdom_competition_law&oldid=1191870747"