Bork, in the Antitrust Paradox States: 'Only When the Issues of the Goals [Of Anti Trust Law] Has Been Settled is it Possible to Frame a Coherent Body of Substantive Rules' - Discuss with Respect to the Goals of United States and European Union Competition Law

Abstract

Antitrust starts and ends with the protection of competition. The concept of competition comes hand in hand with the free market mechanism; the process of rivalry between firms in the market place. A free market economy is an essential pre requisite: - (i) there must be a free market system where companies are free to compete; (ii) freedom to enter the market, and; (iii) to engage in economic activity. Every single company in the market has the common target: to make profit and to get the most customers. The concept and purpose of competition law is, simply, the rules that are used to protect the process of competition. Competition law is not about a public body continuously intervening, nor is it about continuous regulation. Antitrust should only be considered where it appears the process of competition is being affected. Concepts of competition policy must be distinguished from competition law. Competition policy is about enforcement. Through this application the regulatory body design their approach as to how rules should be enforced. If the different components of competition laws and policy are combined effectively then there can be said to be a system of competition law. Competition law is a fluid concept as can be seen throughout an analysis of its history and the international disparity between systems. Why do we need competition? It is perfectly possible for there to be a process of competition without there being a system of competition law. It is also possible to envisage a situation where we may never actually acquire the process of competition despite having a system of competition law. The reality of the situation reveals that the process of competition may be damaged by the operations of companies in the market. Looking at the experience of developed countries in the world we see that they have come to adopt a separate and specific area of law for the protection of the process of competition. These countries have commonly experienced a process of privatisation. It was a natural progression for antitrust systems to evolve, ensuring that former public monopolies did not harm consumers. To understand economic efficiency we need to understand two basic concepts:- (i) productive efficiency and (ii) allocative efficiency. Productive efficiency means producing a product at the lowest cost possible. Allocative efficiency is concerned with the demand, not the supply side of the market. It is the consumer’s perspective of the market and is achieved where the consumers pay the lowest price possible; consumers pay the price that they want to pay. Perfect competition does not really exist. For there to be productive efficiency there must be a great deal of incentive to drive costs down. Most companies are not efficient at all. For allocative efficiency consumers must have a great deal of information available to them in order to determine the reasonable price. As consumers we are often in the dark. Perfect competition is an economic model of the market system that exists where you have allocative efficiency and productive efficiency achieved at the optimum level. Competition authorities do not aim for perfect competition, but rather workable competition:- lower prices, better quality and more choice available to consumers. These are the general economic goals that competition policy must be expected to seek. The debate on goals looks mainly to substantive rules per se, but it far exceeds an analysis of the substantive laws as they are on paper. “Apparent similarities in basic texts suggest that E.U. and U.S. laws should produce similar results. In fact, large differences in purposes and methods of analysis persist.” The outcome of identical cases may be different according to the jurisdiction in which the case is heard, because the way in which the substantive rules are interpreted varies between jurisdictions. The perception of the facts that establish an antitrust violation will differ greatly depending upon the metaphysical and ethical considerations employed. The goals of competition law unique to the jurisdiction in question, to some extent, will define these considerations and will inform the decision making process. “Antitrust policy cannot be made rational until we are able to give a firm answer to one question: What is the point of the law – what are its goals?... Only when the issue of goals has been settled is it possible to form a coherent body of substantive rules.” Determining the goals of competition law is therefore a precondition to rationalisation. Goals can be grouped into three categories: social, political and economic.