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In: Economics

Explain, the two main purposes of Competition laws (known as antitrust laws in the United States)....

Explain, the two main purposes of Competition laws (known as antitrust laws in the United States). Overview why US anti-legislation is so concerned with the impact of the business deal on the consumer in 200 words or more. Essays less than 200 words will not be accepted.

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Expert Solution

1. Competition law is a law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. Competition law is known as "antitrust law" in the United States. The most important purpose of competition law are;

a. prohibiting agreements or practices that restrict free trading and competition between business. This includes in particular the repression of free trade caused by cartels.

b. Banning abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others.

c. Supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether.

2. The  US anti-legislation is so concerned with the impact of the business deal on the consumer because:

a. To ensure that fair competition exists in an open-market economy.

b. Consumers would be forced to pay higher prices and would have access to a limited supply of products and services.

c. to ensure the prices are not fixed, Price fixing occurs when the price of a product or service is set by a business intentionally rather than letting market forces determine it naturally.

d. To make sure consumers are not affected due to monopoly, and monopolies are not borne out of a naturally competitive environment and gained market share simply through business acumen and innovation.


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