Citizendia

Competition law
Basic concepts
Anti-competitive practices
Laws and doctrines

United States

Europe

  • European Community
    competition law
  • Irish Competition Law
  • Competition Act 1998 (U. Competition law history refers to attempts by governments to regulate Competitive markets for goods and services leading up to the modern competition or Antitrust The term "monopolization" refers to an offense under Section 2 of the American Sherman Antitrust Act, passed in 1890 Natural monopoly is a term used in Economics to refer to two different things In Economics and especially in the theory of Competition, barriers to entry are obstacles in the path of a firm which wants to enter a given Market In Economics, market power is the ability of a firm to alter the Market price of a good or service In Competition law, before deciding whether companies have significant Market power which would justify government intervention the test of Small but Significant and Non-transitory In Competition law the Relevant market defines the market in which one or more goods compete Merger control refers to the procedure of reviewing Mergers and acquisitions under Antitrust / competition law Anti-competitive practices are Business or Government practices that prevent and/or reduce Competition in a Market (see Restraint of trade Collusion is an agreement usually secretive which occurs between two or more persons to deceive mislead or defraud others of their legal rights or to obtain an objective forbidden A cartel is a formal (explicit agreement among firms Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve Price fixing is an agreement between business competitors to sell the same product or service at the same price Product bundling is a Marketing strategy that involves offering several products for sale as one combined product Tying is the practice of making the sale of one good (the tying good to the De facto or De jure customer conditional on the purchase of a second distinctive Refusal to deal is one of several Anti-competitive practices forbidden in countries which have Free market economies In Competition law, a group boycott is a type of Secondary boycott in which two or more competitors in a Relevant market refuse to conduct business Exclusive dealing refers to when a retailer or wholesaler is ‘tied’ to purchase from a supplier on the understanding that no other distributor will be appointed or receive supplies Bid rigging is an illegal agreement between two or more competitors Dividing territories (also Market division) is an agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories Conscious parallelism is a term used in Competition law to describe Price-fixing between competitors in an Oligopoly that occurs without an actual spoken Predatory pricing (also known as destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the Market In United States patent law, patent misuse is an Affirmative defense used in patent litigation when a Defendant has been accused to have Copyright misuse is an equitable defense against Copyright infringement in the United States based on the unreasonable conduct of United States antitrust law is the body of Laws that prohibits anti-competitive behavior (monopoly and Unfair business practices. The Sherman Antitrust Act ( Sherman Act, July 2, 1890, ch 647,) was the first United States Federal statute to limit Cartels and The Clayton Antitrust Act of 1914 ( October 15[[ 914]] ch 323, codified at,) was enacted in the United States to add further substance to the U The Robinson-Patman Act of 1936 (or Anti-Justice League Discrimination Act,) is a United States federal law that prohibits what were considered at the time of passage The Federal Trade Commission Act of 1914 (15 USC §§ 41-58 as amended) established the Federal Trade Commission (FTC a Bipartisan body of five members The Merger guidelines are a set of internal rules promulgated by the Antitrust Division of the United States Department of Justice (USDOJ in conjunction with the The essential facilities doctrine (sometimes also referred to as the essential facility doctrine) is a Legal doctrine which describes a particular type of claim of The Noerr-Pennington doctrine is a doctrine of United States Antitrust law set forth by the United States Supreme Court in a pair of cases which The rule of reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. European Community competition law is one of the areas of authority of the European Union. Irish Competition Law is the Irish body of legal rules designed to ensure fairness and freedom in the Marketplace. The Competition Act 1998 is the current major source of competition policy in the UK along with Enterprise Act 2002. K. )

Australia
Enforcement authorities and organizations
edit box

In economics and business ethics, a coercive monopoly is a business concern that prohibits competitors from entering the field, with the natural result being that the firm is able to make pricing and production decisions independent of competitive forces. The Trade Practices Act 1974 is an act of the Parliament of Australia. The International Competition Network is an informal virtual network that seeks to facilitate cooperation between Competition law authorities globally A competition regulator is a Government agency, typically a statutory authority, sometimes called an economic regulator, which regulates and enforces Economics is the social science that studies the production distribution, and consumption of goods and services. Business ethics is a form of Applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment [1] A coercive monopoly is not merely a sole supplier of a particular kind of good or service (a monopoly), but it is a monopoly where there is no opportunity to compete through means such as price competition, technological or product innovation, or marketing due to coercion; entry into the field is closed. As a coercive monopoly is securely shielded from possibility of competition, it is able to make pricing and production decisions with the assurance that no competition will arise. It is a case of a non-contestable market. In Economics, a contestable market is a Market served by only one firm but with mandated "competitive" pricing so as to escond the Monopoly A coercive monopoly has very few incentives to keep prices low and may deliberately price gouge consumers by curtailing production. Price gouging is a Pejorative term for a seller pricing much higher than is considered reasonable or fair [2] Also, according to economist Murray Rothbard, "a coercive monopolist will tend to perform his service badly and inefficiently. Murray Newton Rothbard (March 2 1926 – January 7 1995 was an American economist of the Austrian School who helped define modern Libertarianism "[3]

Advocates of free markets say that the only feasible way that a business could close entry to a field and therefore be able to raise prices free of competitive forces, i. e. be a coercive monopoly, is with the aid of government in restricting competition. It is argued that without government preventing competition, the firm must keep prices low because if they sustain unreasonably high prices, they will attract others to enter the field to compete. In other words, if the monopoly is not protected from competition by government intervention, it still faces potential competition, so that there is an incentive to keep prices low and a disincentive to price gouge (i. In Economics, a monopoly (from Greek monos, alone or single + polein, to sell exists when a specific individual or enterprise has sufficient e. , competitive pressures still exist in a non-coercive monopoly situation).

Contents

Contrasted with other monopolies

Exclusive control of electricity supply due to government imposed "utility" status is a coercive monopoly, because users have no choice but to pay the price that the monopolist demands. Consumers would not have an alternative to purchase electricity from a cheaper competitor, because the wires running into their homes belong to the monopolist. Exclusive control of Coca-Cola would not be a coercive monopoly because consumers have a choice to drink another brand of soda, and the Coca-Cola company is subject to competitive forces. Coca-Cola is a carbonated Soft drink sold in stores restaurants and Vending machines in more than 200 countries There is an upper limit to which the company can raise its prices before profits begin to erode because of the presence of viable substitute goods.

Contrastingly, for a non-coercive monopoly to be maintained, the monopolist must make pricing and production decisions knowing that if prices are too high or quality is too low competition may arise from another firm that can better serve the market. If it is successful, it is called an efficiency monopoly, because it has been able to keep production and supply costs lower than any other possible competitor so that it can charge a lower price than others and still be profitable. Since potential competitors are not able to be so efficient at producing, they are not able to charge a lower, or comparable, price and still be profitable. Hence, competing is possible but doing so is not profitable; whereas, for a coercive monopoly, competition is neither profitable nor possible.

Establishing a coercive monopoly

According to business ethicist, John Hasnas, "most [contemporary business ethicists] take for granted that a free market produces coercive monopolies. "[4] However, some people, including Alan Greenspan and Nathaniel Branden, argue that such independence from competitive forces "can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises. "[5][6] Some point out that a monopolist themselves may "employ violence" to create or maintain a coercive monopoly. [3]

Some recommend that government create coercive monopolies. For example, claims of natural monopoly are often used as justification for government intervening to establish a statutory monopoly (government monopoly or government-granted monopoly) where competition is outlawed, under the claim that multiple firms providing a good or service entails more collective costs to an economy than that which would be the case if a single firm provided a good or service. Natural monopoly is a term used in Economics to refer to two different things A legal monopoly, statutory monopoly, or de jure monopoly is a Monopoly that is protected by law from competition In Economics, government monopoly (or public monopoly) is a form of Coercive monopoly in which a Government agency is the sole provider of a In Economics, a government-granted monopoly (also called a "de jure monopoly" is a form of Coercive monopoly by which a government grants exclusive privilege This has often been done with electricity, water, telecommunications, and mail delivery. Some economists believe that such coercive monoplies are beneficial because of greater economies of scale and because they are more likely to act in the national interest, while Judge Richard Posner famously argued in Natural Monopoly and Its Regulation that the deadweight losses associated with regulating such monopolies were greater than any possible benefit. Socialist economics is a broad and sometimes controversial term This article is about the generic foreign affairs term See The National Interest for the political journal Richard Allen Posner (born January 11 1939 in New York City) is currently a judge on the United States Court of Appeals for the Seventh Circuit in Chicago In Economics, a deadweight loss (also known as excess burden or allocative inefficiency) is a loss of economic efficiency that can occur when equilibrium [7]

Private Coercion

A corporation which successfully engages in coercion to the extent that it eliminates the possibility of competition, operates a coercive monopoly. A corporation is a separate legal entity usually used to conduct business Coercion (co-er-shion is the practice of compelling a person or manipulating them to behave in an involuntary way (whether through action or inaction by use of threats A firm may use illegal or non-economic methods, such as extortion, to achieve and retain a coercive monopoly position. Extortion, outwresting, or exaction is a criminal offense, which occurs when a person Unlawfully obtains either money property or services A company which has become the sole supplier of a commodity through non-coercive means (such as by simply outcompeting all other firms), may theoretically then go on to become a coercive monopoly if it maintains its position by engaging in coercive "barriers to entry. In Economics and especially in the theory of Competition, barriers to entry are obstacles in the path of a firm which wants to enter a given Market " The most famous historical examples of this type of coercive monopoly began in 1920, when the Eighteenth Amendment to the United States Constitution went into effect. Year 1920 ( MCMXX) was a Leap year starting on Thursday (link will display 1920 of the Gregorian calendar Amendment XVIII (the Eighteenth Amendment) of the United States Constitution, along with the Volstead Act (which defined "intoxicating liquors" This period, called Prohibition, presented lucrative opportunities for organized crime to take over the importation ("bootlegging"), manufacture, and distribution of alcoholic beverages. Prohibition of alcohol, often referred to simply as prohibition, also known as Noble Experiment, refers to a Sumptuary law which prohibits Alcohol "Crime syndicate" redirects here For the DC Comics group of villains see Crime Syndicate. Rum-running is the business of Smuggling or transporting of Alcoholic beverages illegally usually to circumvent Taxation or Prohibition. Al Capone, one of the most famous bootleggers of them all, built his criminal empire largely on profits from illegal alcohol, and effectively used coercion (including murder) to impose barriers to entry to his competitors. Alphonse Gabriel "Al" Capone (January 17 1899 &ndash January 25 1947 commonly nicknamed Scarface, was an Italian American Gangster who Production Uses Usually large scale distillation is practiced for the purpose of making ethanol for drinking, yet it may also practiced for creating Biofuel Murder is the unlawful killing of another human person with Malice aforethought, as defined in Common Law countries However, it may be relevant to take into account the fact that government was intervening in the alcohol industry by making manufacture and sales illegal and arresting those in the business, thereby enabling unnaturally high profits, and was not providing the usual service of enforcing trade contracts; likewise, some corrupt public officials derived rent-like profit from bribes that ensured that Capone would receive preferential treatment against potential competitors. Political corruption is the use of governmental powers by government officials for illegitimate private gain

Anti-Trust

There are examples in history where a firm that is not a government-granted monopoly is claimed to have a coercive monopoly, and anti-trust action has been initiated to resolve the perceived problem. In Economics, a government-granted monopoly (also called a "de jure monopoly" is a form of Coercive monopoly by which a government grants exclusive privilege For example, in United States v. Microsoft [1] The Plaintiff's Finding of Fact alleged that Microsoft "coerced" Apple Computer to enter into contracts resulting in the prohibition of competition. United States v Microsoft There were many civil actions taking place in May 18 1998 Apple Inc, ( formerly Apple Computer Inc, is an American Multinational corporation with a focus on designing and manufacturing Consumer electronics [2] Eric Raymond, an author and one of the founders of the Open Source Initiative, says "The thing a lot of people somehow missed is that the courts affirmed the findings of fact – that Microsoft is indeed a coercive monopoly. The Open Source Initiative is an organization dedicated to promoting Open-source software. "[8] Although the court ruled against the company, many continue to argue that Microsoft was not a coercive monopoly. [9] [10] Another disputed example, is the case of U. S. v. Aluminum Co. of America (Alcoa) in 1945. The court concluded that Alcoa "excluded competitors. "[5] The ruling is heavily criticized for punishing efficiency and is quoted below.

It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.

[11]

Advocates of a laissez-faire economic policy are quick to assert (barring private criminal conduct) that a coercive monopoly can only come about through government intervention, and defend these situations as non-coercive monopolies in which government should not intervene. Laissez-faire ( pronunciation: French,; English,) is a French phrase literally meaning Let do (“allow to do” They argue that competition with these monopolies is open to any firm that can offer lower prices or better products —that competition is not excluded. They claim that these monopolies keep their prices low precisely because they are not exempt from competitive forces. In other words, the possibility of competition arising indeed affects their pricing and production decisions. [5] A coercive monopoly would be able to price-gouge consumers secure with the knowledge that no competition will develop. Some see the fact that prices are low as lending evidence to the assertion that a monopoly is a non-coercive monopoly.

Government Monopolies

Undisputed examples of coercive monopolies are those that are enforced by law. In a government monopoly, an agency under the direct authority of the government itself holds the monopoly, and the coercive monopoly status is sustained by the enforcement of laws or regulations that ban competition, or reserve exclusive control over factors of production for the government. In Economics, government monopoly (or public monopoly) is a form of Coercive monopoly in which a Government agency is the sole provider of a In economic theory factors of production (or productive inputs) are the resources employed to produce goods and services The state-owned petroleum companies that are common in oil-rich developing countries (such as Aramco in Saudi Arabia or PDVSA in Venezuela) are examples of government monopolies created through nationalization of resources and existing firms; the United States Postal Service is an example of a coercive monopoly created through laws that ban potential competitors such as UPS or FedEx from offering competing services (in this case, first-class and standard (formerly called "third-class") mail delivery). Petroleum ( L petroleum, from Greek πετρέλαιον, lit Saudi Aramco, the state-owned national oil company of Saudi Arabia, is the largest oil corporation in the world and the world's largest in terms of proven crude The Kingdom of Saudi Arabia, KSA ( المملكة العربية السعودية, al-Mamlaka al-ʻArabiyya as-Suʻūdiyya) or Suudi Petróleos de Venezuela SA ( PDVSA) is the Venezuelan state-owned Petroleum company Venezuela (ˌvɛnəˈzweɪlə) officially the Bolivarian Republic of Venezuela (Spanish República Bolivariana de Venezuela) is a country on the Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the Public ownership of a national government United Parcel Service Inc ( commonly referred to as UPS, is one of the world's largest Package delivery companies FedEx Corporation ( is a Logistics services company based in the United States. 1

Government-granted monopolies often closely resemble government monopolies in many respects, but the two are distinguished by the decision-making structure of the monopolist. In Economics, a government-granted monopoly (also called a "de jure monopoly" is a form of Coercive monopoly by which a government grants exclusive privilege In government monopoly, the holder of the monopoly is formally the government itself and the group of people who make business decisions is an agency under the government's direct authority. In government-granted monopoly, on the other hand, the coercive monopoly is enforced through law, but the holder of the monopoly is formally a private firm, or a subsidiary division of a private firm, which makes its own business decisions. A corporation is a separate legal entity usually used to conduct business Examples of government-granted monopolies include cable television and water providers in many municipalities in the United States, exclusive petroleum exploration grants to companies such as Standard Oil in many countries, and historically, lucrative colonial "joint stock" companies such as the Dutch East India Company, which were granted exclusive trading privileges with colonial possessions under mercantilist economic policy. In Economics, a government-granted monopoly (also called a "de jure monopoly" is a form of Coercive monopoly by which a government grants exclusive privilege Water is a common Chemical substance that is essential for the survival of all known forms of Life. The United States of America —commonly referred to as the Standard Oil was a predominant American integrated oil producing transporting refining and marketing company The Dutch East India Company ( Vereenigde Oost-Indische Compagnie or VOC in old-spelling Dutch, literally "United East Indian Mercantilism is the idea that a colony should export more goods than it imports and that a colony should sell at higher prices and buy at lower prices Intellectual property such as copyrights and patents are government-granted monopolies. Intellectual property ( IP) is a legal field that refers to creations of the mind such as musical literary and artistic works inventions and symbols names Another example is the thirty-year government-granted monopoly that was granted to Robert Fulton in steamboat traffic, but was later ruled by the U. Robert Fulton ( November 14, 1765 &ndash February 24, 1815) was a U S. Supreme Court to be unconstitutional. 2

Economist Lawrence W. Reed says that a government can cause a coercive monopoly without explicitly banning competition but by "simply [bestowing] privileges, immunities, or subsidies on one firm while imposing costly requirements on all others. Lawrence W (Larry Reed is president of the Mackinac Center for Public Policy, a Midland Michigan -based research and educational institute "[12]For example, Alan Greenspan, in his essay Antitrust argues that land subsidies to railroad companies in the western portion of the U. Alan Greenspan (born March 6 1926 in New York City) is an American Economist and was from 1987 to 2006 the Chairman of the Federal Reserve of S. in 19th century created a coercive monopoly position. He says that "with the aid of the federal government, a segment of the railroad industry was able to "break free' from the competitive bounds which had prevailed in the East. " In addition, some claim that regulations can be established that place burdens on smaller firms that attempt to compete with an industry leader.

The State Coercive Monopoly

Economist Murray Rothbard, noted for his espousal of anarcho-capitalism, argues that the State itself is a coercive monopoly as it uses "violence" to establish "a compulsory monopoly over police and military services, the provision of law, judicial decision-making, the mint and the power to create money, unused land (“the public domain”), streets and highways, rivers and coastal waters, and the means of delivering mail. Murray Newton Rothbard (March 2 1926 – January 7 1995 was an American economist of the Austrian School who helped define modern Libertarianism Anarcho-capitalism (also known as Free-market anarchism) is an individualist anarchist Political philosophy that advocates the elimination " He says that "a coercive monopolist tends to perform his service badly and inefficiently" [4] In addition to moral arguments over the use of force, free market anarchists often argue that if these services were open to competition that the market could supply them at a lower price and higher quality.

Unions

Labor unions have been called coercive monopolies which keep wages rates higher than they would otherwise by if individuals competed with each other for wages. Economists who believe this to be the case refer to this as a monopoly wage. Monopoly wage is a term used by economists to refer to the higher wages earned by unionized workers compared to non-unionized workers (Heery, Edmund; Noon, Mike (2002). A Dictionary of Human Resources Management. Oxford University Press. p. 225)

Footnotes

1. Lysander Spooner started the commercially successful American Letter Mail Company in order to compete with the United States Post Office by providing lower rates. The American Letter Mail Company was started by Lysander Spooner in 1844 competing with the Legal monopoly of the United States Post Office (USPO (now He was successfully challenged by the U. S. government and exhausted his resources trying to defend what he believed to be his right to compete.

2. For about six months, Thomas Gibbons and Cornelius Vanderbilt, operated a steamboat with lower fares in defiance of the law. Thomas J Gibbons (1904 – 1988 was the Philadelphia Police Department Commissioner appointed by Mayor Joseph S Cornelius Vanderbilt ( May 27 1794 &ndash January 4 1877) also known by the Sobriquets The Commodore or Gibbons took his case to the U. S. Supreme Court. His case was successful. The Court ruled that the government-granted monopoly was an unconstitutional violation of interstate commerce. Fares immediately dropped from 7 to 3 dollars. [13]

See also

Notes and References

  1. ^ Greenspan, Alan, Antitrust, in Capitalism:The Unknown Ideal by Ayn Rand. In Economics, a contestable market is a Market served by only one firm but with mandated "competitive" pricing so as to escond the Monopoly A free market is a Market in which property rights are voluntarily exchanged at a price arranged completely by the mutual consent of sellers and buyers In Economics, a government-granted monopoly (also called a "de jure monopoly" is a form of Coercive monopoly by which a government grants exclusive privilege In Economics, government monopoly (or public monopoly) is a form of Coercive monopoly in which a Government agency is the sole provider of a Natural monopoly is a term used in Economics to refer to two different things Regulatory capture is a term used to refer to situations in which a Government regulatory agency created to act in the public interest instead acts in favor of the commercial In Economics, rent seeking occurs when an individual organization or firm seeks to make money by manipulating the economic and/or legal environment rather than by trade and Alan Greenspan (born March 6 1926 in New York City) is an American Economist and was from 1987 to 2006 the Chairman of the Federal Reserve of Also The Question of Monopolies by Nathaniel Branden defines and discusses coercive monopoly. Nathaniel Branden, né Nathan Blumenthal (born 9 April 1930 in Brampton, Ontario, Canada) is a psychotherapist
  2. ^ Kudlow, Lawrence, The Judicial Hacker, in Jewish World Review (June 14, 2000)
  3. ^ a b Rothbard, Murray, The State Versus Liberty in The Ethics of Liberty by Rothbard (1982)
  4. ^ Hasnas, John. Lawrence (Larry Kudlow (born August 20, 1947) is an American conservative, Supply-side Economics advocate and television Murray Newton Rothbard (March 2 1926 – January 7 1995 was an American economist of the Austrian School who helped define modern Libertarianism The normative theories of business ethics: a guide for the perplexed. in Business Ethics Quarterly v. 8 (Jan. 1998) p. 19-42 ISSN 1052-150X Number: BSSI98006753
  5. ^ a b c Antitrust, by Alan Greenspan
  6. ^ Branden, Nathaniel, ''The Question of Monopolies, from The Objectivist Newsletter (June 1962)
  7. ^ Posner, Richard A. Natural Monopoly and Its Regulation (ISBN 1-882577-81-7). Richard Allen Posner (born January 11 1939 in New York City) is currently a judge on the United States Court of Appeals for the Seventh Circuit in Chicago
  8. ^ Silicon Valley, AOL TW React With Caution in The Industry Standard, (June 28, 2001)
  9. ^ Kudlow, Lawrence, The Judicial Hacker, in Jewish World Review (June 14, 2000)
  10. ^ Sperry, Paul. The politics of personal (wealth) destruction in WorldNetDaily (2000)
  11. ^ [http://patterico.com/2005/05/05/funny-supreme-court-quotes/ Patterico's Pontifications
  12. ^ Reed, Lawrence. Lawrence W (Larry Reed is president of the Mackinac Center for Public Policy, a Midland Michigan -based research and educational institute Witch-Hunting for Robber Barons: The Standard Oil Story The Freeman, a publication of The Foundation for Economic Education, Inc. , March 1980, Vol. 30, No. 3.
  13. ^ Folsom, Burton W. The Myth of the Robber Barons. Burton W Folsom Jr (born 1947 is an American Historian and author Young America, 2003.

External links

Lawrence (Larry Kudlow (born August 20, 1947) is an American conservative, Supply-side Economics advocate and television Lawrence W (Larry Reed is president of the Mackinac Center for Public Policy, a Midland Michigan -based research and educational institute
© 2009 citizendia.org; parts available under the terms of GNU Free Documentation License, from http://en.wikipedia.org