Anti-competitive business agreements
September 29, 2016
What is meant by an anti-competitive business agreement?
Article 177 of the Revised Treaty of Chaguaramas prohibits, among other anti-competitive business conduct, agreements between enterprises and concerted practices by enterprises, which have as their object or effect the prevention, restriction or distortion of competition within the Community.
Restrictions of competition by object are those that by their very nature have the potential to restrict competition within the Community. On the other hand, business agreements that have restrictive effects on competition are those that inadvertently reduce competition by having an adverse effect on prices, output, or product quality in the Community.
Why are anti-competitive business agreements prohibited?
Anti-competitive business agreements are prohibited because they take advantage of consumers and other businesses and also restrict healthy economic growth by:
- Increasing prices for consumers and businesses through artificially inflating inputs and/or final products.
- Reducing innovation and consumer choices by protecting the parties to the business agreement.
- Deterring new industry entrants that might invest in opportunities, economic growth and jobs.
- Locking up resources because they interfere with normal supply and demand forces and can effectively lock out other operators from access to resources and distribution channels.
- Controlling markets and restricting goods and services to the point where other businesses cannot survive and must exit the market.
- Rigging bids in public infrastructure projects which inflates costs and ultimately reduces the public sector capacity to invest in beneficial projects.
- Applying different conditions to equivalent transactions with other parties engaged in the same trade (competitors) hence, putting them at a competitive disadvantage.
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