Competition policy

Competition policy is an area of economic policy. It describes state rules and procedures, with the aim to prevent all kinds of restrictions on competition in markets that affect the welfare of society.

Demarcation

In contrast to regulatory policy, competition policy is directed to markets, allow the terms of competition though, but on which impairs competitive conduct.

Models

The following four models dominate the competition theory:

• Model of perfect competition; a state of perfect competition is regarded as the ideal state
• Model of workable competition: After Schumpeter's dynamic theory of competition occur as a result of innovations in the short and medium term monopolies. However, this must be prevented in the long term.
• Model of free competition: After Hoppmann the competition does not serve the purpose, but it is your own goal.
• Model of deniability: After Hayek high profits of large companies are signs of efficiency. The Chicago School makes use of the theory of contestable markets as a theoretical basis.

Objectives

The main objective of competition policy is to prevent economically or socially damaging effects of unfair or anti-competitive behavior. The latter include in particular cartels, certain mergers and the abuse of market power. Another objective of competition policy is to allow an equitable distribution of income by providing a framework which will come in the income differences by performance differences materialize. Thus, it seeks to promote competition in the interests of a free market economy.

Instruments

• Prohibition of cartels
• Merger
• Ban wettbewerbsbeschädigender behaviors ( abusive )
• State aid
• Liberalization
• Public Procurement ( in Germany )
• Prohibition of discrimination or interference with other companies by dominant undertakings (§ 20 GWB )
• Prohibition of price-fixing of the "second hand "

History of competition policy in Germany

In Germany there was a long time before the opinion that cartels are a good tool to instability in prices, which can be caused by price wars, for example, to control. Only in 1923 a government antitrust enforcement has been established. The GWB applicable today (Act against Restraints of Competition ) has existed since 1958. With it, the Federal Cartel Office and the prohibition of cartels was introduced. ( Exceptions cartelization are defined by law, see GWB )