Anti-Competitive Practices

Anti-competitive practices

Introduction

These are practices that are used by government, business and other religious practices which will actually have the potential to reduce the competition in the market.

Explain anti-competitive practices with examples

The following are the most common ones:

• Dumping: This is the process by which the concerned company actually sells a product in the competitive market at a loss. This means the company is actually losing money from the sale, but the organization hopes to remove all competition and would soon be free to raise the prices to the level of greater profit. For example, the retail sale. The sale cushions the price hike.
• Exclusive dealing: This is the process wherein the product based company is bound to be obliged by contract and purchase only from those who are mentioned in the contract. For example, in the context of cloth, the material can be bought from only one vendor.
• Price fixing: All the companies come together to set the price for the same product eventually dismantling the existing market.
• Refusal to deal: Two companies cannot take a third particular company as their vendor.
• Dividing territories: Some companies work out a plan and do not trade in each other territories by this process.
• Limit pricing: The pricing of the particular product is determined by the monopolist of the game which will further not encourage others from entering the forest.
• Tying: If two products are related they can be tied together and sold.
• Resale price maintenance: This is when the resellers are not allowed to set the prices of the product separately.
• Religious group doctrine: This is when the particular company is bound to pay some small part to the community so that they can trade there.
• Absorption of competing technology: Criticized exuberantly, this is when a powerful organization swallows the competitor rather than give it a chance to grow.
• Subsidies are from government that allows the company to function without being profitable and thereby giving them the advantage over the others in the market.

Effects of anti-competitive practices:

Until and unless you have huge market power or the backing of a hot shot, surviving with the anti competitiveness becomes difficult. Most of the time, it is the monopolies which are found to be guilty by following them. Many countries have anti competitiveness laws that prevent them to have a general negative effect on the market.

Conclusion

The argument that goes around is that anti competitiveness laws has a negative effect on the economy of the country. Only the efficient market economy will prevent any monopolizing force to come into power and therefore lead to lower prices for the consumers. Not following the corrupt method will ensure that the product is widely distributed.

The market is too complex for a single theory to support it. Each of the market niche is considered to be natural monopoly and therefore government implements regulatory laws that will prevent the market to become monopolizing in nature.

This article has been compiled by Evelyn, who is a writer on various academic topics.