Anticompetitive practices


Author Definition



Competition encourages businesses to offer high quality goods and services at the lowest possible price. If a company does so, it will attract customers and expand market share. Competition also drives diversity and innovation. To compete for business, firms will try to make products that are different from those of their rivals, and more appealing to consumers. Competition thus forces businesses to be creative and innovative, for example in the design of their products or the use of technology. Anticompetitive practices are business practices that prevent or reduce competition in a market. Anticompetitive practices typically lead to market distortions resulting in higher prices, lower quality products, poorer service and a stifling of innovation.



It has been known for centuries that anticompetitive practices have harmful economic effects. Adam Smith famously declared that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”. Cartels are indeed one of the most harmful anticompetitive practices and cause significant damage to consumers and to the economy as a whole. A cartel is basically a group of firms that colludes to behave like a monopolist by restricting output and raising price.

More than a century after Smith, Alfred Marshall popularized the concepts of consumer surplus, producer surplus and deadweight loss. Consumer surplus measures the difference between the price a consumer pays for an item and the price he would be willing to pay rather than do without it. Producer surplus is the difference between the market price and the lowest price a firm is willing to accept to produce a good. A deadweight loss is a cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium. In economic terms, the exercise of monopoly power causes an inefficient allocation of resources by restricting output below what would be achieved by a competitive market. As a result, there is a deadweight loss in welfare. In addition, monopoly redistributes gains from consumers to producers by transferring consumer surplus to profit.

Still, laws prohibiting anticompetitive practices were slow to catch on. In 1970, only twelve jurisdictions around the world had a competition law regime. During the 1970s and 1980s, numerous economic studies were undertaken to demonstrate the harmful effects of anticompetitive practices on consumers and producers alike. These studies led to a growing awareness among both developed and developing countries that regulation is necessary to protect economies and that competition law is not intended to punish companies but that these rules are healthy for businesses too, because it keeps them on their toes. Some 130 jurisdictions have now enacted competition laws and the vast majority have a competition enforcement authority actively pursuing anticompetitive practices. Particularly the European Union and the United States have well-developed competition laws and policies that aim to prevent and penalise anticompetitive practices.

Anticompetitive practices may take the form of either collusion between competing businesses, for example to set prices or limit production, or of unilateral conduct by companies with significant market power that exploits consumers or excludes competition. In the EU, collusion is caught by Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and abusive unilateral behaviour by Article 102 TFEU. In the US, Section 1 of the Sherman Act prohibits agreements between two or more independent entities that unreasonably restrain trade, while Section 2 makes it illegal to acquire or maintain monopoly power through improper means.

Examples of anticompetitive practices are horizontal price fixing (firms fixing prices between them, or controlling prices, discounts, rebates or credits); market division (firms dividing up customers or territories to limit the need to compete for customers); output restriction (restricting the volume of goods produced or services offered). Examples of exclusionary practices would be a dominant firm charging prices below cost; entering into a long-term exclusivity agreement with customers with no objective justification; or refusing to supply a vital input to a customer competes with it in a downstream market.

Some jurisdictions make a distinction between anticompetitive practices which are, in US parlance, “per se” illegal and those which are examined under a “rule of reason”. Under the per se rule, certain conduct is presumed to violate antitrust law, which means that no further inquiry into the practice’s actual effect on the market or the intentions of those who engaged in the practice is necessary. Under the rule of reason, the actual effect of the anticompetitive behaviour on competition is examined, and it requires a court to balance an agreement’s pro-and anticompetitive effects.

Similarly, in EU law agreements can be restrictive of competition by “object” or “effect”. Price-fixing or market-sharing agreements between competitors are examples of anticompetitive practices that are so obviously harmful that no further analysis of their economic effects is required for them to be unlawful, i.e., unless they satisfy the criteria in Article 101(3). In Budapest Bank, however, the CJEU held that the by-object restriction concept must be interpreted restrictively and applied to practices only if they reveal a sufficient degree of harm to competition to consider that it is unnecessary to investigate its effects. The Intel case demonstrates that the European Courts are prepared to annul Commission decisions if they do not undertake a thorough effects-based analysis or if their economic analysis has flaws.


Case references

Case T-236/22 Intel Corporation v Commission (2022/C 237/94)

C-228/18 Gazdasági Versenyhivatal v Budapest Bank Nyrt. and Others, EU:C:2020:265

Case 56/64 Consten SaRL and Grundig GmbH v Commission (1966), ECLI:EU:C:1966:41

Case 56/65 Société Technique Minière v Maschinenbau Ulm GmbH, ECLI:EU:C:1966:38

Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1910)



Alfred Marshall, Principles of Economics (1st edition, Prometheus Books, 1890)

Richard Whish and David Bailey, Competition Law (10th edition, Oxford University Press, 2021)

Richard Posner, Antitrust Law (2nd edition, The University of Chicago Press, 2001)

Simon Bishop and Mike Walker, The Economics of EC Competition Law (3rd edition, Sweet & Maxwell, 2007)

OECD, Relationship Between Public and Private Antitrust Enforcement, Working Party No. 3 on Co-operation and Enforcement, 15 June 2015



Kees Kuilwijk, Anticompetitive Practices, Global Dictionary of Competition Law, Concurrences, Art. N° 85395

Visites 13514

Publisher Concurrences

Date 1 January 1900

Number of pages 500


Institution Definition

Refers to a wide range of business practices in which a firm or group of firms may engage in order to restrict inter-firm competition to maintain or increase their relative market position and profits without necessarily providing goods and services at a lower cost or of higher quality. The essence of competition entails attempts by firm(s) to gain advantage over rivals. However, the boundary of acceptable business practices may be crossed if firms contrive to artificially limit competition by not building so much on their advantages but on exploiting their market position to the disadvantage or detriment of competitors, customers and suppliers such that higher prices, reduced output, less consumer choice, loss of economic efficiency and misallocation of resources (or combinations thereof) are likely to result.

Which types of business practices are likely to be construed as being anticompetitive and, if that, as violating competition law, will vary by jurisdiction and on a case by case basis. Certain practices may be viewed as per se illegal while others may be subject to rule of reason. Resale price maintenance, for example, is viewed in most jurisdictions as being per se illegal whereas exclusive dealing may be subject to rule of reason. The standards for determining whether or not a business practice is illegal may also differ. In the United States, price fixing agreements are per se illegal whereas in Canada the agreement must cover a substantial part of the market. With these caveats in mind, competition laws in a large number of countries examine and generally seek to prevent a wide range of business practices which restrict competition.

These practices are broadly classified into two groups: horizontal and vertical restraints on competition. The first group includes specific practices such as cartels, collusion, conspiracy, mergers, predatory pricing, price discrimination and price fixing agreements. The second group includes practices such as exclusive dealing, geographic market restrictions, refusal to deal/sell, resale price maintenance and tied selling. Generally speaking, horizontal restraints on competition primarily entail other competitors in the market whereas vertical restraints entail supplier-distributor relationships.

However, it should be noted that the distinction between horizontal and vertical restraints on competition is not always clear cut and practices of one type may impact on the other. For example, firms may adopt strategic behaviour to foreclose competition. They may attempt to do so by pre-empting facilities through acquisition of important sources of raw material supply or distribution channels, enter into long term contracts to purchase available inputs or capacity and engage in exclusive dealing and other practices. These practices may raise barriers to entry and entrench the market position of existing firms and/or facilitate anticompetitive arrangements. © OECD

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