Market Dominance and Antitrust Policy, Second Edition

Market Dominance and Antitrust Policy, Second Edition

Michael A. Utton

This new edition addresses the recent fundamental changes in antitrust law, especially in the UK and the EU, and reviews some high profile and controversial cases such as the Boeing–McDonnell Douglas merger and the Microsoft monopoly. The author moves on to deal with several unresolved questions including the conflicts between trade and antitrust policy, the foreign take-over of domestic assets and extra-territorial claims made by certain countries.

Chapter 3: The Antitrust Response: An Outline of Antitrust Policy in Europe and the United States

Michael A. Utton

Subjects: economics and finance, competition policy, industrial economics, industrial organisation


I Introduction Broadly speaking the antitrust provisions in the USA, the EU and the UK all have the same purpose. It is recognized that freely functioning markets may ‘fail’ because of the actions of individual firms or groups of firms acting together and that, as a result, some correcting force is necessary to try to ensure that the benefits of competition are achieved. The market failure that antitrust policy seeks to correct is the situation where competition, although in principle viable, appears to be faltering as the result of the direct actions of some firms. The remedy is essentially to maintain or restore competition. Such cases may be contrasted with a relatively small group of important industries where very strong increasing returns to scale may make competition impossible and where some other remedy has to be sought, often through regulation. In the absence of competition the regulators of such industries may nevertheless seek a competitive performance by insisting that the regulated firms pursue policies (for example, on prices) which a competitive industry would attain.1 Despite their similar general objective the provisions sprang from very different backgrounds. The first substantial antitrust measure of modern times was the US Sherman Act of 1890. It was passed on a wave of discontent amongst the general public and the then very large farming community at what was seen to be the overweening power of the newly created trusts, the most prominent of which were in the railway and oil industries. The first and greatest...

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