A Brief History of Competition Law – Part 1
It is readily accepted in modern times that vigorous competition is healthy for a country’s economy. As competitors focus their efforts on persuading consumers to buy their particular product or service, suppliers are obliged to live up to certain standards and to honor their warranties and promises, because failure to do so will send the consumer to their competitors. Competition also ensures that customers are getting the best value for their money, and antitrust laws enforced by regulating authorities prevents competitors from colluding to set prices.
Earliest records of antitrust laws and practices date back to around 50 BC where authorities appointed by the Roman Republic protected consumers interests with regard to the supply of corn, a staple of the commoners diet at the time. It was a regular practice of suppliers to interrupt the supply chain, usually at the docks, thereby driving up demand and the price consumers were willing to pay out of desperation. Roman authorities imposed heavy fines on those found to be doing this, and by 301 AD an edict on maximum prices was established under the leadership of Diocletian whereby traders found to be manipulating the supply and demand market faced the death penalty. Under Zeno, and later Justinian I, the penalties for violating the rules laid out for free and fair competition risked having their property confiscated and being banned from trading.
In the Middle Ages, a system of merchant courts was set up along the primary trade routes where a form of international law of commerce known as the “Lex Mercatoria” was practiced. These merchant courts were run by a body of appointed merchants and not the governments of the day. Traders suspected of contravening the regulations would be dealt with speedily, ensuring the free flow of trade along the routes. In the 13th century, Henry III of England passed an Act fixing bread and ale prices and a 14th century statute declared market manipulators to be oppressors, not only of the poor, but the community at large, making them enemies of the entire country. Merchants found guilty of overcharging on items where the price had been set by authorities were obliged to pay double the sum they had received back to the injured party as punitive damages.
Laws against monopolies continued to be refined and enforced through the Middle Ages, with Emperor Charles V of the Holy Roman Empire and King Henry VIII of England detailing laws specifically for the protection of their subjects against, as stated in King Henry VIII’s legislation, “the greedy covetousness and appetites of the owners of such victuals…to the great damage and impoverishing of the King’s subjects.”
To be continued…