Chapter 26: The Basic Goal of Competition Law: To Protect the Opposite Side of the Market
Daniel Zimmer* 35 1 INTRODUCTION The goals of competition law appear to present an unresolved problem. A core issue in this debate concerns the intricate relationship of competition as a process and its desired outcomes. A prevailing consensus seems to be that efficiency is among the desired outcomes of competition. However, the law has to make a decision as to whether in the first instance it protects competition as a process. Some economists argue that the term ‘competition’ is tantamount to efficiency. In their view, if a legal rule refers to competition, it means efficiency. This perception may be explained by the fact that industrial economists are able to depict efficiency in mathematical models, whereas the term ‘competition’ leaves them clueless. Therefore ‘industrial organization’ can come into play if we refer to efficiency. But is this sufficient reason to refer in the first instance to efficiency when applying competition law? Apparently, there are good reasons primarily to refer to competition and not to efficiency or consumer welfare. US antitrust law relies on the term competition, not efficiency. Admittedly, we find no reference to the notion of ‘competition’ in the Sherman Act of 1890. In Section 1, the Act prohibits unreasonable ‘restraints of trade’ and similarly excludes ‘monopolization’ and an ‘attempt to monopolize’ in Section 2. The Clayton Act of 1914 refers directly to competition: where the effect of price discrimination ‘may be substantially to lessen competition or to tend to create a monopoly’, such behaviour shall be unlawful (Section 13)...
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