Download Competition promotes innovation and productivity

Competition Policy
and Consumer
Protection
Dr. Patrick Krauskopf
Swiss Competition Commission (COMCO)
National Training Workshop on Competition Policy and Law organised by CUTS International &
Coordinated by CUTS Institute for Regulation and Competition (CIRC),
Namibia, 31 July – 02 August, 2007
What is competition?
BMW
Fiat
Costumer
The importance of competition in
an economy
Competition allows a suitable assignment
of resources and a better distribution of
income
Competition promotes innovation
and productivity (1)
In a competitive market, the firms must
seek to fulfill the requirements of their
clients and to offer them:
 better prices
 better quality
 new and improved products and
services
better services before and after sales
Otherwise, they will probably lose their
market shares
Competition promotes innovation
and productivity (2)
Competition leads to:
 A better assignment of the resources
 More
innovation
and
technical
development
 More consumers satisfied
Competition promotes innovation
and productivity (3)
Competition is in the interest of the
consumers
For firms competition means lot of stress
and plenty of risks to loose money.
Therefore firms try to restraint competition
How can this be done?
Cartels or mergers influence (1)
Cartels or mergers influence the degree of
competition/ can lead to dominant firms
Firms on the market: 2 situations
Cartel or merger
Degree of competition
I
+
II
-
Cartels or mergers influence (2)
 Firms can they form cartels or merge as
long as they do not restraint competition
too much / do not become too dominant
 In single cases it is very difficult to
decide whether a cartel or merger
restraints competition too much / whether
a cartel or merger leads to too dominant
firms
Cartels or mergers influence (3)
Producers
Dealers
Consumers
The monopoly and monopoly
conducts
 Mesures against the
 The price is raised
Monopoly
 The production and
the commerce are
restricted
More incentives to
get extraordinary
income
benefit of consumers
 Economic welfare is
reduced as well as the
market and the
investment
 The costs are raised
and the
competitiveness is
reduced
Ideal market structure:
no firm is dominant
Producers
Dealers
Consumers
Typical market structure
on many markets: today
Producers
Dealers
Consumers
Importance of competition policy
 Allows market access and eliminates
distortions
 Reduces the cost of supplies or capital
goods
 Allows the access of financial
resources
 Reduces the uncertainty of investment
Application of competition
law (1)
 Promotes a better use of productive
resources to generate a variety of goods
and services with better prices and
availability
 Prevents
excessive
market
concentrations and creates opportunities
for small enterprises
 Prevents and eliminates monopolistic
practices
Application of competition
law (2)
 Strengthens industry and internal
markets
 Promotes growth of innovative and
efficient enterprises, with better potential
and endurance to adverse changes,
which allows them to improve and
compete in national and international
markets.
The three pillars of competition
law
What can today competition law do?
 Cartels – horizontal or
vertical ones
Control and eventually forbid
cartels (Art. 81 EC, Art. 5 KG)
 Mergers
Control and eventually forbid
mergers (Art. 2 Merger Reg,
Art. 9 and 10 KG)
 Abusive use of market
dominance
Control and eventually forbid
abuse use of market
dominance (Art. 82 EC, Art. 7
KG)
Thank you
For further information, please do not hesitate to contact:
Mr. Patrick Krauskopf: [email protected]
Ms.Katrin Emmenegger: [email protected]