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Pros and cons of predatory pricing
Competition policy in UK
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Although competition law has occupied a place in the body of English law for many centuries, modern statutory competition policy first emerged in the aftermath of the Second World War. From the point of view of present laws, the statutes then introduced lacked the ability to deal with the prevalent market situations and had a faulty enforcement mechanism. The competition regime in UK got a major push only after the passing of the Competition Act 1998 and the Enterprise Act 2000. The doctrine of restraint of trade has played a major role in harmonizing freedom of trade and freedom to contract. The first statute to be brought into force was the Monopolies and Restrictive Practices (Inquiry and Control) Act in the year 1948. The passing of Restrictive Trade Practices Act 1956 resulted in a two-fold system comprising of restrictive activities and monopolistic activities. As time passed new acts were incorporated to fulfill the challenges posed by the market. The basic objective behind the passing of Competition Act 1998 was to shape the domestic law along the lines of EC law. This was done by introducing provisions, which dealt with, prohibition of anti competitive agreements and abuse of dominant position.
Section 2 of the 1998 Act is similar to Article 81(1) of EC law. Section 3 excludes certain types of agreement – such as mergers, which come under the ambit of the Fair Trading Act 1973. Section 50 provides for the ad hoc exclusion of land agreements and vertical agreements. Section 4 provides for the granting by the Office of Fair Trading of ‘individual exemptions’ from the prohibition where conditions set out in section 9 are satisfied by the agreements in question.
Section 18 of the 1998 Act incorporates Chapter II i.e. prohi...
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...Supreme Court and the ECJ to decide matters on predatory pricing. Prima facie, the section has been divided into two parts and so both the parts/conditions need to be fulfilled, and therefore, only when the goods are priced below the cost with an intention of driving out the competitors, it can be said to be illegal and termed predatory pricing. as per the Competition Act, 2002 even dominant position in itself is not an abuse or a restrictive trade practice. This is also position under Section 2 of the Sherman Act, 1860 and under Art 82 of the EC Competition Law. In MCX Stock Exchange Ltd v. National Stock Exchange of India Ltd., DotEx International Ltd. and Omnesys Technologies Pvt. Ltd, the CCI defined predatory pricing as the conduct, “where a dominant undertaking incurs losses or foregoes profits in the short term, with the aim of foreclosing its competitors.”
In the case of Woolworths and Coles, both businesses are being investigated by the Australian Competition and Consumer Commission (ACCC) for abusing their market power by intimidating suppliers to reduce the price of products so they can buy them for cheap. Due to Woolworths and Coles
United States has several laws that ensure that competition among businesses flow rely and new competitors get free access to the market. These laws intend to ensure fair and balanced competitive business practices. However, there are times when some businesses will do anything to gain competitive edge. USA has strong antitrust laws that prohibit fixing market price, price discrimination, conspiring boycott, monopolizing, and adopting unfair business practices. The history of Antitrust laws goes back to 1890 when Congress passed Sherman Act. In 1914, Congress passed two more acts: Federal Trade Commission Act, and Clayton Act. With some revisions, these three acts are still core antitrust acts.
This essay will examine key aspects of the recent implementation of the Australian Consumer Law (ACL) 2011, which is the largest overhaul in Consumer Law in Australia in the past twenty five years. The ACL replaces 20 existing State and Territory laws into one national law , the legislation was enacted in two main parts as Schedule 2 of the renamed Trade Practices Act 1974 (Cth) (TPA) - Competition and Consumer Act 2010 (Cth) (CCA) . Aforementioned this essay it will outline the key benefits of the implementation of the act. Furthermore it will critique the Act, whilst exploring the objectives of the legislation.
The Clayton Anti-Trust Act of 1914 has 26 sections describing laws which “protects trade and commerce against unlawful restraints and monopolies” (63rd Cong.,Sess. II, 1914). The Federal Trade Commission and the U.S. Department of Justice (DOJ) Antitrust Division are bodies that enforce the federal antitrust laws which are deeply rooted in the Sherman Anti-Trust Act of 1890 and the Clayton Anti-Trust Act of 1914.
Legal Studies Essay Joey Agerholm Exclusion clauses determine the liability of something that might go wrong within a contract. They are used by sellers as an attempt to avoid or limit their liability. The seller has the advantage over the buyer who must agree to the clauses to purchase the product/service. Because of the buyers disadvantage the court takes such cases, involving exclusion clauses, very seriously, and the content of the clauses are carefully interpreted. With the current Trade Practises Act and the Fair Trading Act the standard form of business contract is adequate and effective in protecting the buyer. The Trade Practise Act is the most effective legislation for the protection of the consumer. It implies to the following situations:- - “A promise by the seller that the buyer will become the owner” If a car dealer breaks a promise or part of a contract, for example that he has the right to sell a car, and the car is stolen then although the buyer will have to give the car back he/she will get her money back. - “ A promise by the seller that goods will fit the description supplied by the seller” In this case the buyer is protected if the seller makes a promise, which is a condition of the contract, describing the product, and when the buyer receives the product, it does not match the description. - “ A promise where the seller is made aware of the purpose for which the goods are required, that the goods will be reasonably fit for that purpose” This condition is implied when the buyer makes the purpose of the goods needed known to the seller, and the buyer then relies on the seller’s judgement in providing the correct product. For example it would not be reasonable if you made the seller aware that you wished to purchase something suitable for mowing the average suburban backyard and you were sold a tractor. - “A Promise that goods are of merchantable quality” According to this act a good is considered to be merchantable if they are suitable for the prospect for which other similar goods are sold, involving the description applied to them, the price and any other relevant information. This act does however does not protect the consumer if he/she has examined the product and missed any defects that should have been seen or if the seller made him/her aware of the defect prior to the purchase of the product.
"The International Anti-Bribery and Fair Competition Act of 1998." 1998. Document. 6 February 2014. < http://www.justice.gov/criminal/fraud/fcpa/docs/antibribe.pdf>.
9. Sherman Anti-Trust Act – 1890 – forbade combinations in restraint of trade, without any distinction between “good” and “bad” trusts.
Anti-trust laws are laws which prohibit anti-competitive behavior and unfair business practices. Their purpose is to make sure that businesses and consumers cannot be abused by powerful firms that hold or wish to hold a monopoly in the market. They also take into account certain ethical standards, and therefore can be considered quite subjective. Many specific strategies are outlawed by anti-trust laws, including price fixing (agreement on prices of uniform goods or services), predatory pricing (setting a low price in order to knock off competitors), and vendor lock-in (virtually forcing a consumer to buy from a certain supplier).
Is it permissible to allow certain corporations with more power, more political influence, and more money to have absolute control over the given market? In the journal article, “Trade Restraints: Federal Trade Commission: False Representation as Unfair Method of Competition,” it states how under the Federal Trade Commission Act unfair methods of competition in commerce are declared unlawful (1937). Furthermore, it addresses whether it is permissible to have a product being sold under two names while representing it is sold for less than the usual price, (“Trade Restraints: Federal Trade Commission: False Representation as Unfair Method of Competition,” 1937). This is important to note because forms of unfair competition still exist within corporations, even with the Federal Trade Commission being a part of
The Lex mercatoria was an international law of commerce governing the trades and disputes based on the customs and practices of merchants. By the nineteen century, the law of merchant was fully incorporated in the Common law, but the development of commercial law led to a conflicting mass of case law . Following the commercial community recommendations, European countries started to rationalized the commercial law by building codes . English law didn’t follow this path, but instead adopted a series of Act of Parliament focusing on specific area, such as Bills of Exchange Act 1882 and the Sale of Good Act 1893 . Finally, the rise of the consumerism forced the Parliament to recognize the separateness of certain commercial transaction and to adopted an interventionist approach that aimed to create a body of laws protecting consumers, such as the Unfair Contract Terms ACT 1977 and Consumer Protection Act 1987
Competition law in the European Union has developed from being an uncertain preoccupation of a few economists, lawyers and officials to one of the leading competition law system in the globe. Nonetheless, in agreement with most commentators, there are inherent flaws within the EU Commission’s procedures. This paper aims to provide an account of concerns in the current system, drawing comments from scholars and EU officials in order to demonstrate both benefits and shortcomings of the system. An overview of the legal and policy debate of the current EU Competition enforcement will be presented as the introduction. Policy concerns such as prosecutorial bias and self-incrimination in enforcement powers will be the main subjects for the purpose of this paper, followed by analysis of the EU commission structure, in particular checks and balances and the hearing process, both of which have been claimed being incompatible with the ECHR. A comparison with the US Antitrust system will also be paralleled through out this essay in order to demonstrate a clearer examination. This essay will conclude with the Commission’s flaws that have effected on the upcoming UK competition law reforms.
Predatory pricing “is alleged to occur when a firm sets a price for its product that is below some measure of cost and forfeits revenues in the short run to put competitors out of business” (Sheffet p.163-164). The reason firms take the short term loss is because they hope to drive out competitors and raise prices to monopolistic levels. By doing this, they covered their short term loss to make even greater profits in the long term than they would have by not using predatory tactics (Sheffert). Predatory pricing became illegal under Section 2 of the Sherman Act. It has remained one of the more difficult allegations for prosecutors to prove, due to the complexity of determining the company’s actual intent and whether or not it the strategy is competitive pricing. According to Areeda and Turner, there are three ways to determine if a firm is implementing predatory pricing. First, a price above marginal cost is presumed lawful; second, a price below marginal cost is considered unlawful, except when there is strong demand; and third, average variable cost is considered a good proxy for marginal cost. This is a reason predatory pricing is still important today. The courts must decide whether or not companies are engaging in competitive prices for the good of the consumers or are using predatory tactics for the good of their own company. The purpose of this paper is to focus on the current legislation regarding predatory pricing, determining when there is predation in an industry and the cause and effect relationship it has on an industry.
The competition and consumer act aims to discourage price discrimination in the business environment if the discrimination could substantially reduce competition. An example of price discrimination would be Apple with the distribution of IPhone 5c around the world, the prices vary from $500-$1,500(local currency). The IPhone 5c is less-profitable for Apple but still the price range has a big gap e.g., in Singapore the iPhone costs $948, but in the UK it costs $529 . There are three types of price discrimination (first degree, second degree and third degree) and they all discriminate differently. The price discrimination in business will increase revenue, they will attract more consumers and will enable companies to stay in business. The consequences for price discrimination is that the manufacture/business will get sued by consumers for price discrimination especially when paying higher prices, decline in consumer surplus, there may be administrative costs of separating the markets etc. However, Price discrimination has a lot of impacts on consumers and business owner 's around the world but most importantly it affects people that have been discriminated over the price for the same
...ur; in such cases, competition authorities must act to fight unlawful practices that are detrimental for the economic welfare.
An oligopolistic market has a small number of sellers dominating market share and therefore barriers to entry are high. These sellers are highly competitive and do not act independently of each other. Access to information is limited so sellers can only speculate of their competitor’s actions. Sellers will take advantage of competitor’s price changes in order to increase market share.