Competition law is the branch of law that protects competition in markets by restricting anticompetitive agreements, unlawful exercises of market power, and mergers that threaten competitive conditions. Commonly called antitrust law in the United States, it concerns both business conduct and market structure. Its rules distinguish competition through better products, lower prices, or innovation from practices that unlawfully suppress rivalry. The applicable tests, institutions, and remedies differ between jurisdictions. (ftc.gov)
Origins and legal frameworks
The United States adopted the Sherman Antitrust Act in 1890. Section 1 addresses agreements that unreasonably restrain trade, while Section 2 addresses monopolization, attempted monopolization, and conspiracies to monopolize. In 1914, Congress enacted the Clayton Act, which addresses specified practices and anticompetitive acquisitions, and the Federal Trade Commission Act, which created the Federal Trade Commission and prohibits unfair methods of competition. These statutes remain central to federal antitrust enforcement. (ftc.gov)
In the European Union, Articles 101 and 102 of the Treaty on the Functioning of the European Union provide the principal rules governing restrictive agreements and abuse of dominance. Article 101 concerns agreements between independent economic operators that restrict competition; Article 102 concerns abusive conduct by dominant undertakings. Merger review operates under a separate framework. The European Commission applies these rules alongside national competition authorities and courts within their respective competences. (competition-policy.ec.europa.eu)
Restrictive agreements
A cartel involves coordination between competitors rather than independent decision-making. Typical practices include price fixing, allocating customers or territories, restricting output, and bid rigging. These arrangements can replace rivalry with collectively determined prices or trading conditions. In the United States, price fixing, bid rigging, and market allocation are central subjects of criminal antitrust enforcement. EU law likewise treats competitor cartels as particularly serious infringements. (justice.gov)
Not every agreement between businesses is unlawful. Cooperation and distribution arrangements may combine restrictions with competitive benefits. Under US law, some categories are prohibited per se, whereas others receive a rule-of-reason assessment of their competitive effects. EU law also provides a framework for distinguishing prohibited restrictions from arrangements that satisfy the conditions for exemption. Consequently, the legal treatment of a commercial agreement depends on its content, context, and applicable legal standard. (ftc.gov)
Monopolization and abuse of dominance
A monopoly or dominant position is not automatically unlawful. US law distinguishes monopoly power acquired through superior products, innovation, or business skill from power acquired or maintained through exclusionary conduct. EU law similarly prohibits abuse of dominance rather than dominance itself. This distinction prevents the mere size or success of a business from establishing an infringement. (ftc.gov)
Potentially unlawful conduct includes predatory or exclusionary practices that obstruct effective competition. Depending on the jurisdiction and circumstances, scrutiny may extend to exclusive dealing, tying, refusal to supply, or unfair trading conditions. Assessment requires more than identifying an injured rival: harm to an individual competitor and harm to the competitive process are not equivalent. Conduct, market conditions, and any relevant justification must be examined under the governing legal test. (ftc.gov)
Merger control
Merger control examines acquisitions and combinations of businesses before harmful structural changes become established. A merger between competitors eliminates their independent rivalry and may increase the likelihood of coordination among remaining firms. Authorities also examine whether a transaction entrenches dominance or restricts rivals’ access to resources needed to compete. US merger law asks whether an acquisition may substantially lessen competition or tend to create a monopoly. (justice.gov)
Notification requirements apply to transactions meeting specified jurisdictional criteria, rather than to every acquisition. In the EU, transactions with an EU dimension generally undergo Commission review, while other transactions may fall within national systems. A reviewed merger may be cleared, prohibited, or approved subject to commitments designed to preserve competition. Merger guidelines explain enforcement approaches but are not substitutes for binding legislation and judicial decisions; the US 2023 Merger Guidelines expressly describe themselves as non-binding. (competition-policy.ec.europa.eu)
Economic analysis
Competition analysis commonly begins with a relevant market, comprising product or service and geographic dimensions. Authorities investigate which alternatives customers consider sufficiently interchangeable. This inquiry draws on substitution and demand responsiveness, rather than simply adopting an industry’s commercial label. Market definition helps identify participants and assess shares, although direct evidence of rivalry can also be important. (justice.gov)
Market concentration measures, including the Herfindahl–Hirschman Index, provide structural evidence rather than a complete assessment. Authorities also consider barriers to entry, expansion possibilities, switching costs, and network effects. Economies of scale can themselves affect entry conditions. Competitive harm is not confined to higher consumer prices: merger analysis may examine product quality, innovation, wages, benefits, and competition for workers in labor markets. (justice.gov)
Enforcement and digital markets
Enforcement combines investigation, adjudication, and remedies. The European Commission can request information, inspect premises, and impose fines for infringements. US enforcement includes civil proceedings and criminal prosecution of specified offenses. Cartel leniency programs encourage disclosure and cooperation by offering qualifying participants protection from prosecution under defined conditions. Private litigation constitutes an additional enforcement channel, with plaintiffs subject to requirements concerning violation and injury. (competition-policy.ec.europa.eu)
Digital markets also involve rules that complement conventional antitrust enforcement. The EU Digital Markets Act establishes obligations for designated gatekeepers using statutory criteria. It does not replace Articles 101 and 102: EU competition rules continue to apply alongside this additional regulatory framework. (digital-markets-act.ec.europa.eu)