Competition Policy

Abstract

Competition policy is an important, if contested, area of government-business interaction. At its broadest, it is the use of government laws or regulations to force or encourage competition to occur in the private marketplace. Competition policy can be defined as ‘those policies and actions of the state intended to prevent certain restraints of trade by private firms’ (Doern, 1995, p. xi). Without competition policy, its advocates argue, firms would collude; behave in a predatory manner or merge with competitors, all with the aim of reducing competition and keeping prices and profits high. Competition policy operates at the very border between government and business, with government action being intimately concerned with the operations of the market. Its role can become controversial, with businesses not always particularly happy with the way competition authorities go about their work. Not surprisingly, businesses and business groups often object to the results of particular cases and to restrictions on their freedom of action.