Definition: A legal and regulatory framework that prevents businesses from unreasonably limiting the quality, quantity, and price of goods or services available in the marketplace and seeks to limit anticompetitive government regulation of the marketplace.
The fundamental goal of Competition Law is to foster a culture of competition that ultimately benefits consumers through better quality, service, and pricing for goods and services.
Competition Law is of significant relevance to countries that seek to thrive within liberalized markets and better integrate into the world economy. Although Competition Law by itself does not create competition, when effectively applied it can counteract the dangers of anticompetitive behavior and protect consumer welfare.
In many developing nations, Competition Law is not considered a high priority. In certain cases, Western-oriented Competition law may not yet be appropriate, especially if there is rampant corruption and weak institutions. For many transitioning and developing countries, donors should consider the need to engender, nurture, and sustain support for reform prior to embarking on a full-scale initiative. Coalition building is essential in this process; such a coalition should include politicians, executive branch officials, business and civic leaders, judges, professional associations, experts from universities, and others.
In 2003, the United Nations Conference on Trade and Development developed a Model Competition Law that set forth eight components as essential to supporting a developing country’s emergence into the world economy (see box to the right). A critical element to the success and enforcement of these principles is a network of implementing institutions. These institutions may include: a highly competent administering authority, an independent regulator of private or state-owned monopolies, a regulatory and licensing system, a sufficiently trained legal community, and a consumer protection enforcement authority. The participation of supporting institutions such as business associations, consumer groups, lawyers, economists, statisticians, and universities can also serve as an important resource and support for the implementation of a meaningful Competition Law.
The Model Competition Law developed at a United Nations Conference on Trade and Development contains the following components:
- Restrictive agreements and arrangements
- Acts or behavior constituting an abuse of a dominant position of market power
- Notification, examination, and prohibition of mergers affecting concentrated markets
- The relationship between the administering authority and regulatory bodies including sectoral regulators
- Possible aspects of consumer protection
- Sanctions and relief
- Appeals
- Actions for damages
