Competition Law and State-Owned Enterprises - Research Paper Example

The Clayton Act is an amendment to the Sherman Act used for placing restrictions on business mergers. The bill also puts restrictions on the acquisition of other companies that could in turn lead to monopolies or unfair commercial practices. The agency in charge of seeking out free and fair competition is the federal trade commission (Alexander, 2009). The department of justice carries out all investigations on matters concerning the competition also, and the law gives it the authority to call and gather a grand jury to indict a suspect.

There are civil and criminal charges in place for any part found guilty of acting against the antitrust laws in the state. Civil consequences of the statutes include among others injunctions, divestiture or even cancellation of contracts. The laws have the responsibility of ensuring that there exists a level playing ground for all parties involved. It also serves the function of protecting smaller firms from large enterprises that intend to run them out of business. Lastly, the laws protect the final consumer by considering market conditions so that they do not suffer high prices for commodities in the market (Mazzolini, 1980).

State-owned businesses or government-owned corporations are legal organizations that carry out commercial activities on behalf of the government. State-owned enterprises are common to natural monopolies and infrastructure. They have the task of providing services and products that are otherwise said to be expensive, and the private sector cannot offer them to the public. They provide goods and services such as railways and telecommunications, mail services and weapons for defence, energy and electricity, politically sensitive businesses, broadcasting, education and healthcare (Drew, 2006).

State-owned enterprises have the responsibility of promoting the interests of the public, unlike other organizations whose objects are profit maximization (Thomas, 2005). They have strong incentives to engage in activities without facing any competition with the purpose of serving to expand the scale and scope of their business operations.