Competition law

The first antitrust law in modern history was passed in Canada in 1889 ^[2] . A year later, the Sherman Act was passed in the United States.

At the level of individual regions, antitrust laws appeared even earlier - in individual US states ^[3] . Initiators of their approval were organizations such as the Missouri Farmers Alliance. They brought together producers who were worried about increased competition from larger and more efficient farms. The increase in the market share occupied by large farms was portrayed as a dangerous concentration leading to monopolization of the market. At the same time, market concentration was accompanied not by a reduction in production and a rise in prices, which the "monopolists" were accused of, but by directly opposite phenomena . So, wheat in 1889 was 35% cheaper than ten years earlier, pork for 1883 - 1889 . fell in price by 19%, beef tenderloin - by 39%, livestock in live weight for five years fell by 28.8%. Livestock in the United States increased by about 50% during the 1880s.

The situation at the federal level was similar. Senator John Sherman , who sought antitrust laws in the United States, accused trusts of restricting output to raise prices. As his correspondence ^[4] with representatives of small oil companies shows, in reality, Sherman defended precisely the interests of those entrepreneurs who suffered from falling prices, in particular, from the cheapening of oil products caused by the use of tanks during oil transportation. In particular, he lobbied for a law prohibiting railways from offering discounts on oil transportation in tanks, but not in barrels.

Among the industries that were considered monopolized in Congress were the production of oil, sugar, rails, lead, zinc, jute, coal, and cottonseed oil. But in all of the industries listed, for which relevant data are available, production is between 1880 and 1890 . grew faster than American production in general. US GDP for this period grew in real terms by 24%, and in nominal terms by 16%. As for output in industries where trusts were formed, in nominal terms it grew by 62% during this time, and in real - by 175%. Thus, the trusts ensured the growth of production and lower prices.

Table. Output Growth in Selected US Industries from 1880 - 1890

Table. Price increases in certain US industries in 1880 - 1890

(Source: Thomas DiLorenzo The Origins of Antitrust Rhetoric vs. Reality "Regulation, Volume 13, Number 3, Fall 1990) ^[5]

Since the adoption of the Sherman Act, antitrust laws have spread to most countries of the world. This process was not instantaneous: for example, in Italy the corresponding law was adopted 100 years after the Sherman Act in 1990 ^[6] .

Table. Countries where there is no antitrust law

(Based on data from the International Bar Association . Erroneous information about the absence of antitrust legislation in Turkmenistan and its presence in Georgia has been corrected).

There are examples of the abolition of antitrust laws. Thus, the law “On Freedom of Trade and Competition” adopted by M. Saakashvili in Georgia, in contrast to the previously existing law “On Monopolistic Activity and Competition”, contains exclusively prohibitions on the actions of authorities, but not private companies. Thus, there is currently no antitrust law in Georgia ^[7] .

The basis of the Russian antitrust law is the Federal Law of July 26, 2006 N 135-ФЗ (as amended on June 4, 2014) "On Protection of Competition" (July 26, 2006) .

The law contains restrictions on the freedom of entrepreneurial activity and freedom of contract for business entities that occupy a dominant position. The presence of the latter is established on the basis of determining the company's share in total sales in the market or determining the total share held by several of the largest (in terms of sales) companies in the market.

Under certain exceptions, such entities are prohibited from:

1) the establishment, maintenance of a monopolistically high or monopolistically low price of goods;

2) withdrawal of goods from circulation, if the result of such withdrawal was an increase in the price of the goods;

3) to impose on the counterparty the terms of the contract that are unfavorable to him or not related to the subject of the contract;

4) economically or technologically unjustified reduction or termination of the production of goods, if there is a demand for this product or orders for its delivery are placed if there is the possibility of its cost-effective production;

5) economically or technologically unreasonable refusal or avoidance of concluding an agreement with individual buyers (customers) in the event of the possibility of production or supply of the corresponding goods;

6) economically, technologically and otherwise unjustified establishment of different prices (tariffs) for the same product, unless otherwise provided by federal law;

7) the establishment of a financial institution unreasonably high or unreasonably low prices for financial services;

8) the creation of discriminatory conditions;

9) creating obstacles to access to the product market or exit from the product market to other business entities;

10) violation of the pricing procedure established by regulatory legal acts.

Along with this, the federal law “On Protection of Competition” introduces control over the mergers of companies, the sale and purchase of large blocks of shares in companies, as well as a ban on the coordination of prices between business entities, market division and some other practices.

Control over economic concentration consists in the control of the antimonopoly authorities over the acquisition of assets by economically significant companies. Such control in one form or another exists in most countries with antitrust laws. In particular, of the 80 countries with antitrust laws examined by the US Department of Justice, about 60 control mergers. However, the details of the control regime may vary depending on the country and type of transactions.

Control may be preliminary (companies submit information about transactions to the antimonopoly authorities before the completion of these transactions) or subsequent (after transactions). In addition, filing a notice may be mandatory or voluntary. So, in Australia, in which there is no mandatory notification procedure, a company, however, may prefer to receive immunity from possible prosecution and pre-file an application for formal approval.

Table. Merger Control Procedures Worldwide

* - depending on the specifics of transactions (Source: US Department of Justice, 2000) ^[8] .

According to the leaders of the Federal Antimonopoly Service of the Russian Federation I. Artemyev and A. Sushkevich, ^[9] "the antitrust policy of the state, like no other form of public interference by the authorities in private affairs, is under constant fire of criticism of representatives of economic science." Critics of antitrust law are such well-known economists, lawyers and philosophers as M. Friedman, F. Hayek, A. Greenspan, A. Rand, R. Coase, R. Bork, R. Pozner , M. Rothbard. The main objects of criticism are:

• economic consequences of antitrust regulation (it is argued that it always or often leads to a decrease in social welfare); and
• the ethical and legal philosophy underlying antitrust regulation (it is alleged that it violates property rights and freedom of contract and leads to inequality of citizens' rights).

Some of the critics of antitrust law are in favor of repealing it, while others are in favor of significant adjustments.

Famous antitrust critics

• "I am increasingly skeptical about the beneficence ... of government actions against specific monopolies, and I am seriously alarmed by the arbitrary policy to limit the size of individual businesses." ( Friedrich Hayek ) ^[10]
• “The whole system of antitrust law in the United States is a promiscuous mixture of economic irrationality and ignorance. This is a product of a) a completely incorrect interpretation of history and b) rather naive and, no doubt, unrealistic economic theories ”( Alan Greenspan ) ^[11]
• “I was bored with antitrust when, after raising prices, the judges stated that it was a monopoly, after the fall they called it predatory pricing, and constant prices called it an implicit conspiracy” ( Ronald Coase ) ^[12]
• “At the very beginning of my research, as a supporter of free competition, I fully supported antitrust laws ... over time, I came to the conclusion that antitrust laws do much more harm than good, which would be better if it weren’t, if we they got rid of him ”( Milton Friedman ) ^[13]
• “About a person who is idle ... we can say that he“ restricts trade ”, although he simply does not participate in it ... If the fighters against the monopolies want to eliminate idleness, then the law on compulsory labor and inadmissibility of leisure should be adopted” ( Murray Rothbard ) ^[14]
• “If I was asked to choose a date that marks a fatal turn on the road leading to the final destruction of American industry, as well as the most shameful legislative act, I would choose the 1890th year and the Sherman Act” ( Ayn Rand ) ^[15] .
• “Do not forget that the tightening of antitrust regulation can also lead to restriction of competition, like any other type of state regulation” ( E. Nabiullina ) ^[16]
• “... antitrust regulation is impossible to achieve the development of competition. To win the wallets of customers, you need those who want to make their goods better and cheaper. This is competition. ”(A. Pirozhenko, Director of the Competition Development Department of the Ministry of Economic Development of Russia) ^[17]
• “Artificially restraining the concentration of production or product markets means punishing the most efficient producers ... Sherman’s Law ... was an openly protectionist law designed to protect small and less efficient businesses from larger competitors ... The main obstacles to competition and business development lie in the administrative field. They are associated with the creation of unequal conditions of competition for various business entities, the presence or absence of state restrictions on entry into it, the activities of quasi-state entities (state institutions, state enterprises, state-controlled commercial enterprises) and local governments ... Developed programs for the restructuring and demonopolization of individual system-forming industries led to the opposite effect, that is, increased monopolization and made these markets e more concentrated ... "( M. Esenbaev ) ^[18]

Ethical and Legal Criticism of Antitrust Laws

According to libertarian critics of antitrust law, it violates human rights, in particular property rights and freedom of contract. Companies that are subject to the antitrust laws are deprived of the opportunity to freely use and dispose of their property. The antimonopoly authorities put this property at the service of the "society as a whole" and thereby effectively appropriate it. So, according to ^{[19] the} founder of the Institute for Competitive Entrepreneurship Fred Smith, the roots of antitrust policy lie in the statist view that business “in principle does not have the right to distribute its property in a way that it considers appropriate, but has only relative freedom, provided that it helps maximize the function of a particular public utility. This means that no enterprise has a right of ownership if this property can be moved to another sphere in order to expand production. ”

Professor Frank Easterbrook argues that the traditional rule of balanced approach is subject to the limits of antitrust enforcement. “It assumes that judges can draw from the source of economic knowledge that does not yet exist, and ignores the costs of making court decisions (including the costs arising from erroneous or intentional condemnation of effective behavior)” ^[20] .

Moreover, antitrust laws violate the principle of legal equality of citizens ^[3] . It does not recognize the rights of influential business entities (freedom of pricing, freedom to sell a company, freedom of production, freedom to sell goods “on load”, etc.) that are recognized by other owners. Thus, antitrust laws are discriminatory.

• Antimonopoly legislation / N.I. Klein, A.I. Levin // Big Russian Encyclopedia : [in 35 vols.] / Ch. ed. Yu.S. Osipov . - M .: Great Russian Encyclopedia, 2004—2017.
• Antitrust Policy