Background

Competition policy is a combination of two irreconcilable forces. On the one hand, there is an argument for the (spatial) concentration of business, which rationalises production and enables economies of scale. On the other hand, there is a case for an antitrust policy, which prevents monopolisation, protects individual freedom and rights and, through increased competition, increases welfare. The challenge for governments is to achieve and maintain a dynamic balance between these two tendencies. They need to keep the best parts of each of the two opposing tendencies, profit from the harmonious equilibrium between the two, avoid excessive regulation especially if it is based on lobbying by firms that interferes with the freedom to contract and may impair competitiveness, and employ competition policy as a tool to increase the general standard of living. Competition policy does not protect individual competitors, but rather the process of competition.