Antitrust Legislation

Learn about Antitrust Laws with iMinds Money's insightful fast knowledge series. 

Competition is an essential part of the free market. The competition between participants in the market promotes efficiency. This occurs as the supply of a product is improved to provide more attractive prices than a competitor can offer. Competition also drives innovation, as producers develop superior products and services to gain the favour of buyers. As all competitors engage in such behaviour, productivity and efficiency increase, contributing to economic growth.

All suppliers of a similar product should theoretically offer similar prices in relation to the supply of and the demand for their product. If a company raises the price of its product, consumers will instead buy from a competitor who offers a similar product as a lower cost. As a result, markets should not require regulation by government and should operate to the benefit of consumer welfare. 

Therefore, competition works to provide economic benefit to the consumer and promote economic growth. However, business practices and behaviours can distort competition to the benefit of the producers. In order to prevent such manipulations of the market, antitrust legislation is put in place to protect the economic welfare of consumers.

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