Mouse v. Giants: Musings on Competition and Regulation

Of course there is a problem: a problem of trust. Especially when trusts – or those giant cartels formed specifically to reduce competition and control prices – imaginatively engage in anti-competitive behavior for the purpose of added profits. Such behavior creates deficits in international trade and offsets the benefits of trade liberalization. Manifestations of these deficits usually the rising costs of goods, defective or poor-quality products flooding the market, and/or the stagnation of technological research and development.

In this kind of set-up, there are no real winners. While there are still those who continue to make the case against antitrust policies, the general consensus is that there are no winners in the long run. Hence, antitrust policies are put in place precisely to combat monopolistic business practices, the end goal being optimal systemic efficiency. As Rosabeth Moss Kanter, in her book When Giants Learn to Dance, wrote: “Competition is a performance stimulant.”

The implementation of economically sound policies that help prevent or disperse illegal trusts is never easy. More so if a weak government and powerful cartels are involved – I imagine it to be like a mouse going against giants. (Well, unless that mouse is armed to the teeth with nuclear warheads… but I digress.) Since there are no explicit GATT or WTO agreements on the issue of competition and regulation, trade agreements and treaties continue to proliferate regionally and cross-regionally – quietly filling in the gaps of those issues that cannot, as yet, be fully addressed by the present GATT-WTO regime. However, these agreements, depending on the nature and demands of its general and specific obligations, often run the risk of being charged as undue state interference in established business practice. For example, where the rules are stringent, industries may complain that such stringency is harsh, unwarranted and unnecessary since there might not enough regulatory transparency to understand, and better navigate, what may be derisively seen as a confusing maze of bureaucratic red tape. For more arguments on how antitrust laws, and competition polices in general, are anti-free markets, click here.

I personally have no strong opinion as to how such tensions should be resolved. However, I do believe that antitrust policies should be based on the reasonable premise that the role of governments is not to force business entities to compete in a simulated market environment, but rather to ensure that no one is allowed to kill the competition

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