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Monopoly
is a beast that rules by abusing fair trade
SanghaiDaily.com,
June 23, 2008
COMPETITIVENESS
is the adrenaline of all economies, says Pradeep S Mehta
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Many
businesses, however, either collude through
cartels or plainly abuse their dominance through
monopolistic and exclusionary behavior. Every
other day, cartels are being hauled up by
fair-competition agencies around the world. But a
more difficult fight is against dominant players
abusing their preeminence through monopolistic
practices. For example, the fight of the European
Commission with Microsoft Corp over alleged
abusive behavior.
In its
first-ever and biggest fine on a single company,
the commission recently levied a fine of US$1.4
billion against Microsoft for noncompliance with
its order.This is a typical case of an
intellectual property rights holder that misuses
its position by ensuring that consumers have
little choice, and are thus pushed into buying
their products. In India, Monsanto is facing a
competition action (involving the Competition Act)
on grounds that it charges excessively for its
patented Bt cotton seeds.The case has not been
resolved finally, but shows how intellectual
property rights holders abuse their monopolistic
status.
Abusive behavior can also be seen in many other
cases, where there are natural monopolies, such as
airports, energy and utility companies. Energy
companies around the world create onerous
conditions for their consumers, most of whom do
not have a choice at all. Another type of abusive
behavior has been observed in segments like
microprocessors.In Europe, and in parts of Asia,
monopoly power is still seen as problematic and
worth serious competition action.
In
North America, monopoly power has been relegated
largely to a regulatory also-ran as agencies focus
on cartels and merger reviews.
The
key questions for all those interested in fair
competition policy are first, does the divergence
have any practical impact on consumers and
economies? Second, does it matter if agencies
differ on abusive monopoly power.
So how
are we facing a situation in which the European
Commission is seen to be blazing a trail against
abuse of monopoly power while the US Department of
Justice treats monopoly power as seriously as
rowdiness at a game?
The
answers lie in more than one place. One answer
could be that the US and the EU simply enforce
their competition rules differently.
This
article can also be viewed at:
http://www.shanghaidaily.com/
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