Should big fish eat the small fish? Share Shah

In the US, Sherman Act prohibits contracts, combinations, and conspiracies in restraint of trade, and monopolisation. For violators of the law there are criminal penalties which is enforced by the government. Violation can also result in substantial fines and for individual, prison terms. In addition, court may order restraining future violations. Primarily the Antitrust Division of the Justice Department enforces the law. The basic antitrust statutes are few in number: The Sherman Act of 1890, the Clayton Act, enacted in 1914 and amended in 1936 and the Federal Trade Commission Act of 1914.
   One of the key elements of the law relates to price fixing. Unfortunately in our country the public have little protection against price fixing although certain essential commodities need regulatory price fixation which does not preclude marketing techniques. Many trade bodies have been fixing prices in the guise of self-interest. Probably the banks are the main perpetrators of such fixing. Any agreements among competitors with respect to prices for products or services are illegal under this law. The prohibition is all embracing, whoever may be involved and whatever the circumstances. Not only sellers but buyers as well are within the statute's scope. Both large and small companies in all industries, whether booming or depressed, are covered. Even price agreements intended to provide their participants with the countervailing power to meet larger, more powerful competitors are not permitted. Moreover, the reasonableness of the agreed-upon prices is beside the point. Agreements setting maximum prices in inflationary times and those setting minimum prices during depressions are equally prohibited. In short, price fixing, in any shape or form, is deemed anti-competitive and thus unlawful.
   Also any agreements among competitors to divide markets by territory or by customers are considered anti-competitive. If anything, such arrangements are even more restrictive than the most formal price-fixing agreement, since they leave no room for competition of any kind. Thus, competing firms may not divide among themselves the geographical areas in which they sell, nor might they distribute customers or allocate the available market. All such understandings, whether direct or indirect, are unlawful.
   Trade associations; by their very nature are shrouded with antitrust problems. Practically by definition the requisite agreement is present, and the inquiry focuses on the nature of the members' concerted activity. In view of this constant antitrust concern, every trade association activity, even if it may appear wholly innocuous, is closely supervised in the US. In addition, membership in a trade association have to be open to all qualified firms, since arbitrary exclusion may construed to be an unlawful group boycott, especially where membership confers a significant competitive advantage over non-members. Offences such as price fixing and market division are obviously improper for an association. The trade associations to act properly must concentrate their work to statistical reporting of various types such as past costs, production, sales etc. But the identification of the individual firm's data should be buried in the association's reports, and forecasts of any kind should be avoided. Past prices can probably be reported; but, in light of the use of past price discussions to help prove price-fixing conspiracies, such statistics are dangerous under the law.
   Antitrust is also concerned with market structure, and it prohibits structural phenomena likely to substantially lessen competition or to amount to monopolisation. Whether or not the assumption is sound as a matter of law or economics, antitrust is premised on the belief that a competitive economy can best be achieved by maintaining markets with a significant number of sellers. Hence, to a considerable extent, the structural aspect of the law focuses on avoiding or remedying the concentration of market power in a few firms with large market shares. Some leading US companies have had to face charges. In 1911 Standard Oil was broken up, in 1920 US Steel was accused, in 1926 GE was charged and in 1936 IBM was indicted. In 1960 the consumer advocate lead charges against the automobile industry collusion in order to obtain consumer protection. In respect of price fixing, charges were brought against to old art auction house- Sotheby's for commission fixing. Similar charges were brought on NYSC, which eventually led to deregulation of brokerage commission rates. The latest unfinished big story is Microsoft.
   The Sherman Act makes it unlawful to monopolise, attempt to monopolise, or conspire to monopolise a line of commerce. It is significant that the statute does not speak in terms of the existence of a monopoly; rather, its focus is on the act of monopolisation, which requires something more. The offence of monopolisation, which is not purely structural, has two elements: the possession of monopoly power in the relevant market, and wilful acquisition or maintenance of that power.
   US Supreme Court has defined monopoly power as the power to control prices or excludes competition. Such a power is measured by the alleged monopolist's share of the relevant market. Absolute monopoly in the economic sense is a rare phenomenon, raising the question of how large a share a firm must possess to come within the statutory concept. Although there is no hard and fast rule, any market share of fifty per cent or higher is sufficient to be of concern.
   In order to encourage technological innovation, the patent system, established by US Congress, provides to inventors of new and useful products and processes a seventeen-year right to exclude others from making, using and selling the patented invention. The grant of this limited "monopoly" can run counter to the antitrust principle encouraging free and open markets; and the courts have, not surprisingly, struck an appropriate balance between the two. If a patent is lawfully acquired and lawfully enforced, any economic monopoly that stems from the power it confers is immune from the strictures of the antitrust laws. Thus, it is not an act of monopolisation or an attempt to monopolise to apply for and receive a patent, which confers the power to exclude all competition from a relevant market, even though monopoly power may have been wilfully acquired.
   The general public is today becoming more concerned about corporate mischief despite the fact they may not associate that easier remedies could be obtained by fighting against unholy cartel and price fixing. Our constitution, our mind set and our national ethos is against big fish eating small fish. Successive governments have also realised that too big is not beautiful because it risks the entire economy. In the US all the historic cases have been against very big companies which yield unholy alliance with political parties at a cost to the public and fair competition.
   The Monopoly and Cartel Ordinance, 1969 was not rectified by the government in1986 mainly because it was considered premature. Today our economy has reached a watershed. There are more opportunities for both big business and international interests in certain sectors usually at a cost to the consumer. If we continue to remain a 'lassie faire' economy than we shall become a battleground of for unequal competition at the expense our smaller companies and fair competition. One can now see a picture emerging in the cement sector, which may in a few years come under the total control of the international big players in the absence of anti-trust laws.
   Often the public becomes a hostage in the hands of some businesses. The suffering of the public is used to make private gains. The Anti-trust laws would strengthen government's hand in charging some individuals and delinquent business groups who break the law for their private interests. At long last we understand that our government is doing something in the form of The Competition Law which would impose some major restriction on non competitive active delinquent businesses.

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Martin Khor

The planet is in dire environmental straits and humanity is at risk if the problems are not solved, says a new report on the current state of the global environment.
   The United Nations Environment Programme (UNEP) has recently published the fourth version of its flagship Global Environment Outlook, known as GEO-4 in short.
   GEO-4 is the most comprehensive UN report on the environment, prepared by about 390 experts and reviewed by more than 1,000 others across the world.
   The massive report gives details on past trends and future prospects on the atmosphere, pollution, food, biodiversity, water and inequality in the world. And the picture is grim.
   Since 1987 there have been some achievements, but they are far outweighed by the deteriorating situation. The good news is that the environment is now much closer to mainstream politics everywhere and some straightforward problems are being tackled.
   The bad news is that there are 'harder-to-manage' issues, the 'persistent' problems. And on these, GEO-4 says: "There are no major issues for which the foreseeable trends are favourable."
   Failure to address these persistent problems may undo all the achievements so far on the simpler issues, and may threaten humanity's survival, says UNEP.
   Achim Steiner, UNEP executive director, said that in the past 20 years the world has cut by 95 per cent the production of ozone-layer damaging chemicals; created a greenhouse gas emission reduction treaty; supported a rise in terrestrial protected areas to cover 12 per cent of the Earth and devised many important treaties and agreements such as on biodiversity, desertification, hazardous wastes and bio-safety.
   "But, as GEO-4 points out, there continue to be 'persistent' and intractable problems unresolved and unaddressed. Past issues remain and new ones are emerging - from the rapid rise of oxygen 'dead zones' in the oceans to the resurgence of new and old diseases linked in part with environmental degradation," said Steiner.
   Meanwhile, institutions like UNEP, established to counter the root causes, remain under-resourced and weak.
   On climate change the report says the threat is now so urgent that large cuts in greenhouse gases by mid-century are needed.
   Another problem is unsustainable consumption - people are living beyond their means. The resources needed to sustain the world's population exceed what is available.
   "Humanity's footprint (its environmental demand) is 21.9ha per person while the Earth's biological capacity is, on average, only 15.7ha per person," says GEO-4.
   There is a triple crisis - the environmental crisis, the development crisis and the energy crisis - all rolled up as one, adds the report. The causes are population growth, the rising consumption of the rich and desperation of the poor.
   This crisis includes climate change, extinction of species, hunger, decline of fish stocks, loss of fertile land through degradation, unsustainable pressure on resources; dwindling amount of fresh water and the risk that environmental damage could pass 'unknown points of no return'.
   Among the major problems the report highlights are:
   • CLIMATE change - This problem is a 'global priority', but the report finds a remarkable lack of 'urgency', and a 'woefully inadequate' global response. Several highly polluting countries have refused to ratify the Kyoto Protocol. "Some industrial sectors that were unfavourable to the Protocol managed successfully to undermine the political will to ratify it," says GEO-4;
   • WATER will become scarcer. Irrigation already takes 70 per cent of available water, yet meeting reducing global goals on hunger will mean doubling food production by 2050. Fresh water is declining - by 2025 water use will rise by 50 per cent in developing countries and 18 per cent in the developed world. The escalating burden of water demand will become intolerable in water-scarce countries;
   • WATER quality is declining too, polluted by microbial pathogens and excessive nutrients. Globally, contaminated water remains the greatest single cause of human disease and death;
   • FISH - Consumption more than tripled from 1961 to 2001. Catches have stagnated or slowly declined since the 1980s. There is excess fishing capacity, 250 per cent more than is needed to catch the oceans' sustainable production;
   • BIODIVERSITY - Current biodiversity changes are the fastest in human history. Species are becoming extinct 100 times faster than the rate shown in the fossil record. Over 30 per cent of amphibians, 23 per cent of mammals and 12 per cent of birds are threatened; and
   • THE intrusion of invasive alien species is a growing problem. The comb jellyfish, accidentally introduced in 1982 by US ships, has taken over the entire marine ecosystem of the Black Sea, and had destroyed 26 commercial fisheries by 1992.
   In a section on Asia, the report identifies priority issues as urban air quality, fresh water stress, degraded ecosystems, agricultural land use and increased waste, including the illegal traffic in electronic and hazardous waste.
   - Third World Network Features

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