Anticompetitive Agreements Alice Pham 31 October

Transcript:Anticompetitive Agreements Alice Pham 31 October:
Anticompetitive Agreements Alice Pham 31 October 2014 Main prohibitions of competition laws Competition law generally prohibits three main practices: (i) anti-competitive agreements; (ii) abuse of a dominant position or a monopoly; (iii) anti-competitive mergers. It can also have provisions related to unfair commercial practices. (Handbook on Competition Policy and Law in ASEAN for Business, P.8) Firms compete and cooperate… Compete To gain a larger clientele, larger share of the market, to gain greater profits by: Offering lowest prices possible with the best quality possible Offering good services and customer care Innovating and bringing new/improved goods and services to the market Etc Cooperate To achieve economies of scale and scope To improve planning of production and distribution To gain advantages in marketing and distribution To undertake R&D To reduce risks By entering into Agreements Agreements May be alright (e.g. an agreement to collaborate on vital research which will produce new products) May be in violation of the law (e.g. an agreement to fix price) Businesses need to know what the types of agreement would be in breach of the competition law , why so, and what would be the impending sanctions for violation ‘Any agreement between undertakings might be said to restrict the freedom of action of the parties. That does not, however, necessary mean that the agreement is anti-competitive... ASEAN Member States may decide that an agreement infringes the law only if it has as its object or effect the appreciable prevention, distortion or restriction of competition’. (ASEAN Regional Guidelines, §3.2.2) ‘Agreement means any concordance of wills, arrangement, understanding, or promise between independent Undertakings, whether express or implied, written or oral, through any means of communications, including exchanges of commercially sensitive information, and whether or not enforceable or intended to be enforceable by legal proceedings.’ (Draft Competition Law of Myanmar, §2(k)) Vertical and horizontal agreements Vertical – at different levels of production (producer – wholesaler – retailer – customer); cooperation amongst those firms essential and efficient in most cases Horizontal – at the same level of production (producer – producer – producer); what is the justification for this? Not necessarily bad, but needs more consideration by competition authorities than vertical agreement Raw material producer Manufacturer Manufacturer Manufacturer Wholesale distributor Retailer Retailer Retailer Horizontal agreements General three types of agreements – [current or potential] competitors agree to: Fix prices, restrict output, market sharing/customer allocation (A can only purchase from X), bid