Question

At a trade fair in Leipzig, Germany in October 2010 Mascot’s representative was approached by a major German manufacturer of workwear, who wanted the German manufacturer and Mascot to cooperate on pricing and workwear models, so that they would not, as the representative said, "compete each other out of business". Please analyze what legal problems can be linked to the listed events? You must provide a legal justification for the solution

Answer 1

This co operation between two the two companies on pricing and workwear models falls against the antitrust and competition law In the European Union. This law promotes or maintains market competition by regulating anti-competitive conduct by companies. The following are the major legal problems that arise due to this co operation.

1. This activity restrict free trading and competition between business.
2. Also this behaviour makes them dominant in the market (monopoly) and cause predatory pricing, tying, price gouging, etc
3. This type corporation is against the law which prohibits all transactions that are considered to threaten the competitive process.
4. This is gainst the interest of the consumers
5. This will not ensure opportunity for entrepreneurs to compete in the market economy.

Due to mergers, companies can reduce transaction costs compared to operating on an open market But, concentrations can increase economies of scale and scope. Also, firms take advantage of their increased market share, market power and decreased number of competitors, which can adversely affect the deal that consumers get. Another point is that it is important to consider the product in question and the rate of technical innovation in the market. Thereby, the new market becomes more conducive to collusion. Then firms can coordinate their behavior more easily, can deploy deterrents and are safe from a reaction by their competitors and consumers.

Another important legal matter is about intellectual property, such as copyright, trademarks, patents, industrial design rights and trade secrets. It is believed that promotion of innovation through enforcement of intellectual property rights may promote as well as limit competitiveness. The question is whether it is legal to acquire monopoly through accumulation of intellectual property rights and the judgment needs to decide between giving preference to competitiveness or intellectual property rights. Should antitrust laws accord special treatment to intellectual property. When antitrust laws are violated, can the intellectual rights be revoked or not granted.

Concerns also arise in further cases. Antitrust laws are intentionally violated using Intellectual properties that are collaboratively designed. The further effects on competition needs to be studied legally (may violates) when such properties are accepted into industry standards.Cross-licensing of intellectual property is also another legal issue. To extend the market exclusiveness of intellectual property rights beyond their statutory duration, bundling of intellectual property rights to long term business transactions are done.

As a recent example the European Commission has prohibited the creation of a joint venture by Tata Steel and ThyssenKrupp under the EU Merger Regulation. According to the commision, the merger would have reduced competition and increased prices for different types of steel causing monopoly in the market.