History of competition law
This grew out of the codifications of United States antitrust statutes, which in turn had considerable influence on the development of European Community competition laws after the Second World War.
The earliest surviving example of modern competition law's ancestors appears in the Lex Julia de Annona, enacted during the Roman Republic around 50 BC.
[2] Under Diocletian, in 301 AD an Edict on maximum prices established a death penalty for anyone violating a tariff system, for example by buying up, concealing or contriving the scarcity of everyday goods.
[4] The Domesday Book recorded that "foresteel" (i.e. forestalling, the practice of buying up goods before they reached market and then inflating the prices) was one of three forfeitures that King Edward the Confessor could carry out through England.
"[8] Under King Edward III, the Statute of Labourers of 1349[9] fixed wages of artificers and workmen and decreed that foodstuffs should be sold at reasonable prices.
On top of existing penalties, the statute stated that overcharging merchants must pay the injured party double the sum they received, an idea that has been replicated in punitive treble damages under US antitrust law.
[10] "...we have ordained and established, that no merchant or other shall make Confederacy, Conspiracy, Coin, Imagination, or Murmur, or Evil Device in any point that may turn to the Impeachment, Disturbance, Defeating or Decay of the said Staples, or of anything that to them pertaineth, or may pertain.
"Examples of legislation in Europe include the constitutiones juris metallici by Wenceslas II of Bohemia between 1283 and 1305, condemning combinations of ore traders increasing prices; the Municipal Statutes of Florence in 1322 and 1325 followed Zeno's legislation against state monopolies; and under Emperor Charles V in the Holy Roman Empire a law was passed "to prevent losses resulting from monopolies and improper contracts which many merchants and artisans made in the Netherlands."
The court found the grant void and that three characteristics of monopoly were (1) price increases (2) quality decrease (3) the tendency to reduce artificers to idleness and beggary.
So in the 1613 case of Rogers v Parry[21] a court held that a joiner who promised not to trade from his house for 21 years could have this bond enforced against him since the time and place was certain.
Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine....Section 2.
After World War II, the Allies, led by the United States, introduced tight regulation of cartels and monopolies in occupied Germany and Japan.
In Germany, despite the existence of laws against unfair business practices and unfair competition passed in 1909 (Gesetz gegen den unlauteren Wettbewerb or UWG) it was widely believed that the predominance of large cartels of German industry had made it easier for the Nazis to assume total economic control simply by bribing or blackmailing the heads of a small number of industrial magnates.
Following World War II and the unconditional surrender of Japan and Germany, tighter controls, replicating the existing American policies and regulations were introduced.
Coal industry, railroads, steel, electricity, water, health care and many other sectors were targeted for their special qualities of being natural monopolies.
Prohibited are... "(1) ...all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market..."Article 81(1) EC then gives examples of "hard core" restrictive practices such as price fixing or market sharing and 81(2) EC confirms that any agreements are automatically void.
However, just like the Statute of Monopolies 1623, Article 81(3) EC creates exemptions, if the collusion is for distributional or technological innovation, gives consumers a "fair share" of the benefit and does not include unreasonable restraints (or disproportionate, in ECJ terminology) that risk eliminating competition anywhere.
Antitrust, EC law has never been used to punish the existence of dominant firms, but merely imposes a special responsibility to conduct oneself appropriately.
Specific categories of abuse listed in Article 82 EC include price discrimination and exclusive dealing, much the same as sections 2 and 3 of the U.S. Clayton Act.
Also under Article 82 EC, the Council of the European Union was empowered to enact a regulation to control mergers between firms, currently the latest known by the abbreviation of ECMR "Reg.
The general test is whether a concentration (i.e. merger or acquisition) with a community dimension (i.e. affects a number of EU member states) might significantly impede effective competition.
[28] Chapter 5 of the post war Havana Charter contained an Antitrust code[29] but this was never incorporated into the WTO's forerunner, the General Agreement on Tariffs and Trade 1947.
Office of Fair Trading Director and Professor Richard Whish wrote sceptically that it "seems unlikely at the current stage of its development that the WTO will metamorphose into a global competition authority.
