Economic Power: Competition Law, Economic Evaluation and Policy Implications

A keen interest in the measurement of economic power, particularly from regulatory authorities, derives from its potentially adverse impact on resource allocation. The concept of economic power encapsulates the dual forces of market (monopoly) power and political power. It is generally associated with the large-scale accumulation of wealth and significant assets. When viewed from political, economic and ethical perspectives it is seen as a ‘threat to the operation of both economy and society’ (Gerber, 2001: 87). The threat derives from ills associated with the economic dependency of one firm on another, and with the potential for the poor treatment of workers. An alternative view focuses on its unfair representation that amounts to a punishment of entrepreneurial skills. In particular, Peritz (2000) perceives the animosity generated by economic power as evidence of the tension between the rhetorics of competition and property. This perception is especially unfair when economic power reflects commercial success as a result of the fruits of research and development (R&D) or economies of scale from which an economy benefits.