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Competition Policy - Protecting the Consumer? PDF Print
Years ago there was mass production for a homogenous market, strong brand loyalty and long product cycles. Times have obviously changed and consumers want specialized products and services catering to new, “niche” markets. The consumers are now more discriminating and shop for best quality, service and value.

These global forces have led to a growing convergence and interaction between different policy fields such as competition and consumer protection policy and ultimately result in ‘across the board’ benefits for both the economy and consumers. These closer relationships between the two fields will no doubt be further explored and advanced by policy makers who have come to realize that true consumer power requires more than competitive markets and product choice but that accurate and understandable information is also needed to facilitate consumer decision making in the increasingly complex marketplace of today and tomorrow.

One would wonder how competition, when thought about in its simplest form brings to mind persons trying to defeat each other in some type of contest, would benefit consumers. Competition, however, in its business or policy sense however, goes much deeper than merely winning or loosing a contest – it speaks to the WAY in which we compete.

Competition policy refers to the body of laws which govern the extent, and ability, to which firms can economically and fairly compete. By extension it can be seen as a set of regulations which seek to promote fair competition and prevent anti-competitive conduct. The prohibition of these anti-competitive practices such as abuse of dominance, exclusive dealing, predatory pricing, tied selling, collusion and excessive pricing, is a means to ensure efficient allocation of resources which are usually scarce in a developing economy. This efficient allocation and mobilization of resources along with its ability to facilitate market access and prevent artificial barriers to entry would have many benefits to the consumer. With an increasingly integrated global economy, a good competition policy would foster static and dynamic efficiencies which would not only focus benefits to the economy, but would ultimately result in better and/or more choices to consumers as well as lower prices.

This positive effect on consumers is directly related to Consumer Protection policies which look at protecting the interests of consumers and ensuring that consumers are fully informed with regard to products and/or services they use. The main goal of the policy of Consumer Protection is to shield consumers against unfair, deceptive, or fraudulent practices by businesses. In essence, it tries to ensure a fair and equitable marketplace in terms of client versus business / buyer versus seller, as well as safe products and services for consumers. This goal of a ‘fair and equitable marketplace’ is also part of the goals of competition policies and the major link between the two policies.

There are many other distinct similarities between these laws. Both are essentially designed to enhance consumer sovereignty and effective consumer choice. That is to say that both are essentially concerned with improvement of choices the consumer has and the control the consumer has for making those choices. Both also address situations where market transactions and outcomes fail to serve the consumer interest, economic efficiency and a nation state’s productivity and competitiveness. These important and crucial synergies between the two policies would mean that greater competition and choice in the marketplace can lead to better consumer information, just as a better informed and more demanding consumer, who makes his or her preferences clearly known to suppliers, can stimulate greater competition and more product choice.

It can be seen that there is one fundamental difference between the two sets of policies. Competition laws are intended to ensure that markets provide consumers with a competitive range of product or service options. Violations of these policies stem from market failures that may be considered as external to consumers (eg. tied selling). In contrast, consumer protection laws are intended to ensure that consumers have the information they need to choose effectively from among those options. Violations under this policy are founded on market failures that derive from consumers’ own perceptions (e.g misleading advertising). This difference is really only in the application of the policy – the end result is still very much the same – benefits to the consumers.

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