Overview
Competition policy helps to promote and protect the competitive process and provides a level playing field for all enterprises. Fair and effective competition contributes to improvements in economic efficiency, economic growth and development, as well as consumer welfare.
Broadly speaking, competition policy can be defined as a government policy that helps maintain the level of competition in markets. This includes governmental measures that directly affect the behavior of enterprises, as well as the structure of industries and markets.
Competition policy basically covers:
- A set of policies that promote competition in local and national markets, for example policies to eliminate restrictive trade practices, favor market entry and exit, reduce unnecessary governmental interventions and put greater reliance on market forces; and
- A competition law that comprises specific legislation and regulations aimed at preventing anti-competitive agreements, abuse of dominance and anti-competitive mergers.
Competition policy complements other government policies such as trade policy, industrial policy and regulatory reform, and accommodates other economic and social objectives to enhance technological advancement, industrial diversification and job creation.
Fair competition is a key element of a functioning market economy. It provides impulses to innovation and promotes an optimal allocation of resources. By setting limits to market power, competition policy ensures the fair participation of companies and safeguards the interests of consumers. The increased competitiveness of economies, resulting from a competitive economic framework, is a crucial prerequisite for growth.
Competition policy also leads to greater consumer sovereignty and welfare. In a fair and competitive business environment, companies are under constant pressure to respond to consumer preferences in order to attract more customers and thus increase their market share. This means that they are forced to offer the best possible quality at reasonable or reduced prices. In other words, consumers have a wider range of goods and services to choose from.
