The law is premised on the belief that free trade benefits the economy, businesses and the consumers by forbidding various restrains of trade and monopolization. It falls under four areas namely agreement between competitors, contractual arrangements between sellers and buyers the pursuit or maintenance of monopoly power and mergers (Wilberforce, 98).
The law of competition can be dated two centuries ago, the medieval monarchs and the Roman Empire used tariff systems to control prices and support local production. The formal study of competition can be dated in the 18th century with works of Adam Smith when he wrote about the wealth of Nation. Different terms were used to describe the law which include restrictive practices, the law of monopolies, combination acts, and the restraint of trade. The law can be seen to have three main elements which include prohibiting agreements or practices that restricts free trade and competition between business premises, it element focuses mainly on repression of cartels. Second is the banning of abusive behaviors by firms dominating a market or anti competitive practices that may tend to lead to dominance (Bork, 126).
Among the practices controlled by this are predatory pricing, tying, and refusal to deal, among others. Lastly there is the supervision of mergers and acquisition of large corporations including joint values. Transactions thought to threaten competitive process can be prohibited all together. Approved subjects to remedies for example an obligation to divest part of the merged business the merged business, that is, to offer license or access to facilities that enable other businesses to continue competing. The contents and practice of competition law varies s from one jurisdiction to another. In many countries the main objective of the law is to protect the interests of thee consumer or safeguarding the consumer welfare, and ensuring that entrepreneurs have an equal opportunity to compete in the market economy. The law is also closely related to the law of deregulation of access to the market, state aids and subsidies, privatization of state assets, and the establishment of independent sector regulators. In the past decades the law has been viewed as way to provision of better public services (Whish, 198).
According to Robert Bork competition has been found to have created adverse effects when they reduce competition through protecting the inefficient competitor and when the cost of legal intervention is higher then the consumer benefits more. The business practices of market traders' guilds and governments have always been scrutinized and sometimes severe sanctions have been placed. Dating back from the 19th century competition law has been now embraced globally. The largest and the most influential law systems being the United States antitrust law and the European community competition law. National and regional competitions authorities across the world have formed to incorporate international support and enforcement networks (Bork, 127).
In microeconomics and strategic management horizontal merger refers to a type of ownership and control. It is used by businesses as a strategy that seeks to sell a type of products in many markets or numerous markets. It is much more common compared to vertical