Part I Normative Foundations, 2 Normative Theory of Competition Law

Abstract

This chapter discusses why competition law is beneficial and which objectives it should pursue from a theoretical and normative perspective. It identifies long-term social welfare as the ultimate objective of competition law. In the eyes of the law, certain behaviour may be prohibited because it is likely, in the majority of cases, to reduce social welfare in the long term. Thus, from a legal perspective, firms' behaviour that reduces market rivalry so as to harm long-term social welfare should be prohibited. This prohibition should be based on three pillars which give it substance and make it operational as a set of legal rules: the protection of the competitive process or a competitive market structure, economic freedom, and fairness. However, these concepts must be interpreted in the light of the long-term social welfare objective.