Ahmet is a PhD Candidate in the School of Law, Politics and Sociology. His blog post focuses on competition.
They say “may the best man win”. We often hear that when people compete for something, be that winning someone’s heart, the World Cup or millions of pounds. In fact, life is all about competition as sources are always scarce in their nature. Even the blog post on doctoral researchers at the University of Sussex introducing their research in plain English as organised by the Hive Scholars involves some degree of competition among the researchers who send their blogs with a view to entering the draw and eventually winning a £15 Amazon voucher, in addition to having them published on the Research Hive blog. Obviously one of them is going to win the voucher as the Hive Scholars don’t have hundreds of them to be given to all participants. Interestingly enough, their competition isn’t for the “best” piece since the winner will be randomly picked (and announced at a BBQ party!). So let’s say in this case “may the luckiest guy win”, hopefully me.
However, in real life and especially in the market place, winners are not necessarily the luckiest ones. What matters at the end is how good and efficient a firm is in conducting its business activity. If Tesco wins the competition against a small corner shop, it is not because Tesco is lucky; it is because it sells you a bottle of water for 50p and you probably won’t want to buy the same bottle for £1 from that corner shop, unless of course you are sentimental to that poor shop owner. Competition is thus desirable, but it has some rules too. In other words, “the end doesn’t justify the means” meaning that maximising profits doesn’t give a large economic enterprise like Tesco a “carte blanche” to engage in all kinds of conduct. Instead, it should refrain from carrying out certain types of conduct due to their possible adverse effects on the competitive structure of the market. This can be better understood by remembering what Uncle Ben said to Peter Parker in the film Spider Man: “With greater power comes greater responsibility!”
Large economic enterprises, more technically dominant firms, are prohibited under competition law to carry out certain types of market conduct with a view to protecting the welfare of consumers. Generally speaking, they are not allowed to charge excessively high or below-cost prices, tie the sale of one good to another or sign exclusive dealing agreements with their distributors and so on. But is competition in fact not all about those? Winners of competition deserve to charge high prices so as to reward entrepreneurship, firms charge low or even below-cost prices when faced with competition, consumers may love products being sold together and distributors can enjoy lower costs in the form of discounts when they buy all of their supplies from a single firm. Because anti-competitive conduct and competitive conduct thus look alike, competition law has struggled to distinguish truly anti-competitive conduct from a vigorously competitive one and millions of words have been written in the literature on this issue.
But what should be the role of competition law in dealing with conduct which only raises obstacles to competition without any redeeming features e.g. efficiency gains? Within this context, a dominant firm might decide to blow up the factory of its competitors, put pressure on its distributors to restrict the commercialisation of competing products or bribe state officials to block otherwise lawful entry of new firms to the market. These hardly involve vigorous competition and generate some undesirable effects on the market. But can they be prohibited under competition law when they are already unlawful under different bodies of law? Put it differently, are they really the type of anti-competitive conduct that competition law aims to prohibit? There is a lack of clarity as well as of consensus on the role of competition law in handling that category of conduct, to which my thesis proposes a normative approach under EU competition law.