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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.

Antitrust law, or Competition law as it is known outside of the United States, is a body of laws and policy aimed at preventing anti-competitive practices. The foundation of current antitrust law is the American Sherman Act which was adopted in 1890. Named after the senator who created the bill, it was aimed at “trusts” that had developed in the American economy during that time. These were combinations of businesses created through common law trust. A board of trustees would acquire the stocks of other companies to gain control over their management. They could then control market prices to their own advantage. Competition was constrained and prices were fixed in both the railway and oil industries during this time …