Anti Competitive Practices
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Anti-competitive practices are business, government or religious practices that prevent or reduce competition in a market. It is usually difficult to practice anti-competitive practices unless the parties involved have significant market power or government backing. Anti-competitive practices are unfair business practices that are likely to reduce competition and lead to higher prices, reduced quality or levels of service, or less innovation. These can include: Dumping,: where a company sells a product in a competitive market at a loss. Though the company loses money for each sale, the company hopes to force other competitors out of the market, after which the company would be free to raise prices for a greater profit. let's say China is producing all goods and services at very low rates. Now, suppose that it makes computer chips at extremely low rates and then supplies a lot of those cheap computer chips in the American markets. Now the American producers of computer chips may not be able to supply chips at the low rates that China is supplying them at. The end result is, China would have a heavy monopoly over the supply of computer chips in the American market. Now it can do whatever it likes because people would have no other choice but to buy Chinese computer chips. Many producers try this tact of "dumping" because once they have wiped out their competition; they might increase prices in the future. Exclusive dealing: Exclusive dealing broadly involves one trader imposing restrictions on another trader’s freedom to choose with whom, or in what, or where they deal. Exclusive dealing is prohibited by section 47 of the Trade Practices Act. Such agreements can raise issues under the antitrust laws because, by denying competitors access to the goods or services(inputs)
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Anti-Competitive Practices
Transcript of Anti Competitive Practices
Anti-competitive practices are business, government or religious practices that prevent or reduce competition in a market.
It is usually difficult to practice anti-competitive practices unless the parties involved have significant market power or government backing.
Anti-competitive practices are unfair business practices that are likely to reduce competition and lead to higher prices, reduced quality or levels of service, or less innovation.
These can include:
Dumping,: where a company sells a product in a competitive market at a loss. Though the company loses money for each sale, the company hopes to force other competitors out of the market, after which the company would be free to raise prices for a greater profit.
let's say China is producing all goods and services at very low rates. Now, suppose that it makes computer chips at extremely low rates and then supplies a lot of those cheap computer chips in the American markets. Now the American producers of computer chips may not be able to supply chips at the low rates that China is supplying them at.
The end result is, China would have a heavy monopoly over the supply of computer chips in the American market. Now it can do whatever it likes because people would have no other choice but to buy Chinese computer chips.
Many producers try this tact of "dumping" because once they have wiped out their competition; they might increase prices in the future.
Exclusive dealing: Exclusive dealing broadly involves one trader imposing restrictions on another trader’s freedom to choose with whom, or in what, or where they deal. Exclusive dealing is prohibited by section 47 of the Trade Practices Act.
Such agreements can raise issues under the antitrust laws because, by denying competitors access to the goods or services(inputs) offered by the promisor, they can exclude those competitors from the marketplace or materially handicap their ability to compete.
For example, in one well-known case, Standard Fashion Company v/S. Magrane-Houston Company
(1922), a leading manufacturer of dress patterns (Standard) contracted with a prominent Boston retailer (Magrane-Houston) to sell its patterns on the condition that Magrane-Houston not sell the patterns of any other manufacturer.
Refusal to deal: typically includes joint agreements between competitors to not do business with certain competitors, trade partners, or customers
"I refuse to deal with you if you deal with my competitor.
"A dominant banana wholesaler, United Brands Continentaal (UBC), which decided to discontinue the supply to a long-standing retailer, Olesen, in Denmark. One of the reasons was that Olesen was also an exclusive distributor of UBC’s competitor.
Dividing territories: An agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories.
"I won't sell in your market if you don't sell in mine."
an agreement when two chemical companies agreed that one would not sell in North America if the other would not sell in Japan.
Disparagement: Making false claims or statements about a competitor.
Resale price maintenance: is the practice whereby a manufacturer and its distributors agree that the distributors will sell the manufacturer's product at certain prices (resale price maintenance), at or above a price floor (minimum resale price maintenance) or at or below a price ceiling (maximum resale price maintenance). If a reseller refuses to maintain prices, either openly or covertly (see grey market), the manufacturer may stop doing business with it.[1]
