What is competition law?
In simple words Competition law, also know as the also known as Antitrust Law, is the law that promotes fair competition and prevents anti-competitive practices in the market.
Famous scholarly opinions on competition law
Richard Whish
“Competition law is essentially about ensuring that markets work efficiently, that consumers are not exploited, and that firms are encouraged to innovate” – Richard Whish
George Stigler
“The job of the antitrust authorities is to ensure that competition remains unfettered, not to seek out and punish business practices that threaten to undermine it.” – George Stigler
Kenneth Elzinga
“Antitrust law exists to protect competition, not competitors” – Kenneth Elzinga
Objectives of competition law
- To prevent monopolies which can limit consumer choice, effective competition.
- To prevent anti- competitive agreements among companies.
- To control corporate mergers and acquisitions which can create dominant market players.
- To prevent abuse of dominance in order to prohibit predatory pricings and refusing the sale.
- To protect consumers and to promote consumer welfare by ensuring fair competition.”
Competition law in Sri Lanka and other jurisdictions
Competition Law in Sri Lanka
Sri Lanka is a developing country with a growing market economy in the private sector. To regulate a healthy market behavior and to establish a sustainable economic development, Sri Lanka recognizes competition law from key provisions in different legislations. Thus the competition law regime in Sri Lanka is not governing under a single act rather scattered provisions from different Acts including Consumer Affairs Authority Act No. 9 of 2003 and Public Utilities Commission Sri Lankan Act No. 35 of 2002 .
The other legislations are:
- Companies Act No. 7 of 2007
- Intellectual Property Act No. 36 of 2003
- Banking Act No. 30 of 1988
- Sri Lanka Telecommunication Act No. 25 of 1991
- Sri Lanka Electricity Act No. 20 of 2009
With the introduction of the Consumer Affairs Authority Act No. 9 of 2003, below legislations were repealed.
- Consumer Protection Act, No. 1 of 1979
- Fair Trading Commission Act, No. 1 of 1987
- Control of Prices Act
The main governing authority in Sri Lanka is the “Consumer Affairs Authority” The functions of CAA are,
- Fix prices to prevent exploitation.
- Handling complaints related to unfair trade practices.
- Investigate monopolies, mergers, abuse of dominant position etc.
- Acting as an advisory body for the government to regulate fair trade and consumer protection.
Competition Law in the USA
In the USA competition law is referred to as “Anti-trust law” and in China, it is known as “Anti-monopoly law”. Unlike Sri Lanka countries like the USA have strong legislations to control ‘anti-competitive trade practices’ such asSri the “Federal Trade Commission Act”, “Sherman Act”, “Clayton Act” etc.
Antitrust law in the USA, is mainly enforced by agencies including “Federal Trade Commission”, “Department of Justice” etc.
Competition law in Europe Union
The European Union strictly applies competition laws under treaties like, “Treaty on the Functioning of the European Union”
In the European Union the main Commission which investigates the market behaviour and merger controls is the “ European Commission”.
Competition law in India
There is a dedicated legislation in India to govern anti-competitive behaviors, merger controls, abuse of dominant position etc. It’s the “Competition Act, 2002”
There is a dedicated Commission in India to actively investigate anti-competitive practices, abuse of dominant position, merger controls etc. It is “The competition Commission of India”.
The challenges Sri Lanka face due to lack of a consolidated statue
- Standalone legislation
- Dedicated authority
- Expertise Knowledge
- Legal Awareness
As Sri Lanka does not have a standalone legislation to properly address this matter, traders face difficulties in competitive markets. “The Consumer Affair Authority Act No. 9 of 2003 is primarily enacted to promote consumer welfare. And also the main duty of the Consumer Affairs Authority is to protect consumers from unfair trade practices. Thus you can see that, there is no direct mechanism to address anti-competitive behaviors in the Sri Lankan regime.
As there is no proper authority to investigate merger controls in Sri Lanka, some mergers which are not well recognized, severely affecting the economy and reduce the fair competition in the market.
The next challenge the traders have is lack of expertise lawyers in the country. Thus the legal proceedings are costly and time consuming.
As competition law is a newly growing area in the legal field of Sri Lanka, most of the businessmen even consumers don’t know their rights and responsibilities, which is affecting the effective enforcement of applicable laws.
Recommendations for legal reform
- Enacting standalone legislation to govern mergers, cartels, dominant position etc.
- Establishing a separate legal entity to govern and enforce competition laws.
- Introducing competition law as a separate legal subject in law schools and universities.
- Conducting public awareness programmes to educate consumers and traders about competition rights and duties
Conclusion
As Sri Lanka has a growing economy in the private sector, enacting a consolidated legislation is a gap to be fulfilled in order to attract foreign investors and to encourage local entrepreneurs. If we can have a powerful enforcing authority to investigate fair competition, it will foster the sustainable economy as well as consumer welfare.
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