The following business practices are prohibited: 1. Agreements to fix prices (including export and import prices); 2. Collusive tendering; 3. Market or customer allocation (division) arrangements; 4. Allocation of sales or production by quota; 5. Collective action to enforce arrangements, e.g., by concerted refusals to deal; 6. Concerted refusal to sell to potential importers; and 7. Collective denial of access to an arrangement, or association, where such access is crucial to competition and such denial might hamper it. In addition, businesses are forbidden to engage in the abuse of a dominant position in the market by limiting access to it or by otherwise restraining competition by: a. Predatory behaviour towards competitors; b. Discriminatory pricing or terms or conditions in the supply or purchase of goods or services; c. Mergers, takeovers, joint ventures, or other acquisitions of control; d. Fixing prices for exported goods or resold imported goods; e. Import restrictions on legitimately- marked trademarked goods; f. Unjustifiably - whether partially or completely - refusing to deal on an enterprise's customary commercial terms, making the supply of goods or services dependent on restrictions on the distribution or manufacturer of other goods, imposing restrictions on the resale or exportation of the same or other goods, and purchase "tie-ins".
C. ANTI - COMPETITIVE STRATEGIES Any Competition Law in Macedonia should, in my view, excplicitly include strict prohibitions of the following practices (further details can be found in Porter's book - "Competitive Strategy").
These practices characterize the Macedonian market.
They influence the Macedonian economy by discouraging foreign investors, encouraging inefficiencies and mismanagement, sustaining artificially high prices, misallocating very scarce resources, increasing unemployment, fostering corrupt and criminal practices and, in general, preventing the growth that Macedonia could have attained.
Strategies for Monopolization Exclude competitors from distribution channels. - This is common practice in many countries. Open threats are made by the manufacturers of popular products: "If you distribute my competitor's products - you cannot distribute mine. So, choose." Naturally, retail outlets, dealers and distributors will always prefer the popular product to the new. This practice not only blocks competition - but also innovation, trade and choice or variety.
Buy up competitors and potential competitors. - There is nothing wrong with that. Under certain circumstances, this is even desirable. Think about the Banking System: it is always better to have fewer banks with bigger capital than many small banks with capital inadequacy (remember the TAT affair). So, consolidation is sometimes welcome, especially where scale represents viability and a higher degree of consumer protection. The line is thin and is composed of both quantitative and qualitative criteria.
One way to measure the desirability of such mergers and acquisitions (M&A) is the level of market concentration following the M&A. Is a new monopoly created? Will the new entity be able to set prices unperturbed? stamp out its other competitors? If so, it is not desirable and should be prevented.
Every merger in the USA must be approved by the antitrust authorities. When multinationals merge, they must get the approval of all the competition authorities in all the territories in which they operate. The purchase of "Intuit" by "Microsoft" was prevented by the antitrust department (the "Trust-busters"). A host of airlines was conducting a drawn out battle with competition authorities in the EU, UK and the USA lately.
Use predatory [below-cost] pricing (also known as dumping) to eliminate competitors. - This tactic is mostly used by manufacturers in developing or emerging economies and in Japan. It consists of "pricing the competition out of the markets". The predator sells his products at a price which is lower even than the costs of production. The result is that he swamps the market, driving out all other competitors. Once he is left alone - he raises his prices back to normal and, often, above normal.
The dumper loses money in the dumping operation and compensates for these losses by charging inflated prices after having the competition eliminated.