Authored By: Subhranil Bhowmik, Postgraduate Diploma in Law (PGDL), University of Law, Bloomsbury Campus, London; B.Sc./LL.B. (Hons.) in Criminal Law, KIIT Law School, Bhubaneswar;,

Edited By: Mr. Varun Kumar, Advocate, Himachal, Punjab & Haryana and Founder at Law Audience.

Abstract

 To implement socialist initiatives, governments require capital, which is largely collected from citizens and businesses in the form of taxes. In countries such as the United States and the United Kingdom, businesses play a key role in ensuring financial stability[1]. Therefore, both governments frame policies that support the growth of businesses. However, this growth must remain healthy. The term “healthy” is used because competition laws in both jurisdictions prohibit monopolisation and unfair concentration of economic power.

Although the objective of competition law in the United Kingdom and the United States is the same, there is a significant difference in how these laws operate and are enforced. This paper examines the role of competition law in preventing monopolisation in the UK and the US and compares the structural and enforcement differences between the two legal systems.

Keywords

 Competition law, Sherman Act, Clayton Act, Competition and Markets Authority (CMA), enforcement mechanisms, criminal sanctions, leniency programmes

Introduction

Since time immemorial, with the growth of various businesses, we have seen the majority of founders, CFOs, and CEOs of the company structure the working model in a way to yield maximum output as compared to the quantum of input given. As time passes by, slowly and slowly, there has been a rise in commercial malpractices done by various entrepreneurs, company officials, and businessmen, which would result in their commercial initiative becoming no.1 in the world financially.

To stop such practices from occurring, competition law was introduced with an objective of overseeing the behaviors of companies and trying to ensure no unfair practices, and penalizes those companies which are found to be doing illegal activities recognized by the act.In the 19th century, the prices in industry sectors like steel, oil, and railways used to be regulated by big giants of the sector like US Steel and Standard Oil, leaving no choice for small-scale businesses but to comply, which ultimately resulted in monopolisation of the sector and ultimately strengthened the crony capitalists of that time.

To undo such injustice which was happening with small-scale businesses, Sherman Act (1890), Clayton Act (1914), and Federal Trade Commission Act (1914) were introduced.The similar could be seen happening in the commercial history of the UK, where introduction of competition law dates back to the 14th century.As mentioned in the abstract, although the introduction of law by two countries was done with the objective to prevent monopolisation, prevention of unfair practices, and transfer of capital to few selected powerful capitalists of that time, the focus of law and subjects to be protected was entirely different in the two jurisdictions.The UK focuses more on industries, and the US focuses on consumers[2].

Hypothesis

The United States has better and more effective provisions, as it punishes offenders not only by imposing fines but also by sentencing them to imprisonment in certain cases where the offence is serious. In contrast, the United Kingdom mostly imposes monetary penalties, which do not create sufficient fear among potential offenders regarding the loss of their freedom of movement.[3]

Research Objectives

1. Comparative study of the historical evolution of competition law in the U.S.A. and the U.K.
2. Understanding the difference in the framework of competition law of the two countries through extensive reading of provisions and case laws.
3. Understanding the role of international organisations handling issues related to competition law.

Scope and Limitations

• Scope:

1. Examines only the US and UK competition law.
2. Considers the history, rules, cases, and international role.
3. Demonstrates impact of global trade on competition.

• Limitations:

1. Does not analyse other countries.
2. Mainly concentrates on important cases, not all cases.
3. Focuses on rules and cases rather

Research Questions

1. How, when, and what led to the enactment of competition law in these two jurisdictions?
2. How is the nature of punishment provisions different in the laws of the two countries?

Methodology

This research paper utilizes a qualitative research method with a focus on comparative legal analysis to a great extent. The study explores the development over time, legal provisions, and the application of competition law in the US and the UK. Important rulings are discussed to show practical enforcement strategies and results. Besides, the author refers to secondary sources like scholarly articles, law texts, and reports from international organizations (OECD, UNCTAD, WTO, ICN) to grasp the global setting and the integration initiative. Such a research method provides a thorough insight into the differences in the structure, procedures, and policies that exist between the two legal systems.

History

• U.S.A

1. Competition law came into enforcement in the United States in the late 19th century. Prior to the commencement of competition law, prices in the oil, steel, and railway sectors were regulated by large companies, leaving small-scale businesses unable to compete, thereby affecting consumers financially[4].
2. To prohibit such economic injustice, antitrust laws were enacted. The Sherman Act, 1890 was enacted in the States with the aim of stopping monopolisation of various sectors and curbing unfair practices. Approximately 24 years after the enactment of the Act, another law, namely the Clayton Act, was implemented with the objective of preventing harmful and illegal business mergers and acquisitions. Simultaneously, the Federal Trade Commission Act was enacted, which resulted in the establishment of the FTC, thereby strengthening the enforcement of competition rules. These laws were further strengthened through various judicial pronouncements.[5]

• UK

1. Rules against unfair trade practices in the U.K. date back to 1500–1600 AD, during the reign of Henry II, the monarch of the English Empire.
2. Although the UK had a relatively long history in competition law, the law, when formally introduced, was strong enough to prohibit unfair practices.
3. Modern UK competition law developed much later, in the early 21st century. It is evident that with the introduction of the Competition Act 1998, there has been a considerable decline in anti-competitive agreements. Subsequently, the Enterprise Act 2002 was also implemented to regulate the merger and acquisition process and to grant authorities greater powers to act against cartels. The UK primarily relies on fines and business restrictions instead of imprisonment[6].

Rules and enforcements:

• United States

The Sherman Act, 1890; the Clayton Act, 1914; and the Federal Trade Commission Act, 1914 constitute the three core statutes forming the competition law framework in the United States. Among these, the Sherman Act played a foundational role in the development of U.S. antitrust jurisprudence.

 Section 1 of the Sherman Act provides that: “Every contract, combination in the form of trust or other- wise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, at the discretion of the court”[7] This provision prohibits agreements, contracts, or conspiracies that unreasonably restrain trade, including price-fixing arrangements, market-sharing agreements, and unreasonable non-compete clauses.

Section 2 of the Act which says says “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof; shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court”[8] addresses monopolisation and attempted monopolisation.

 This provision targets not merely the existence of monopoly power but, more importantly, the abuse of such power through exclusionary or predatory conduct that suppresses competition. Judicial interpretation, particularly in cases such as Standard Oil Co. v. United States and United States v. Microsoft Corp., has clarified that monopoly power per se is not illegal unless accompanied by anti-competitive conduct.

The Clayton Act, enacted 24 years after the Sherman Act, strengthened the antitrust framework by addressing specific anti-competitive practices at an incipient stage. The Act introduced provisions regulating mergers and acquisitions where the effect of such transactions may be substantially to lessen competition. It further addressed practices such as exclusive dealing arrangements, tying agreements, and interlocking directorates, which were inadequately covered under the Sherman Act and had the potential to distort market competition.

The Federal Trade Commission, established under the Federal Trade Commission Act, is a key enforcement authority in U.S. competition law. Section 5 of the Act which says “ Whenever it shall appear to the court before which any proceeding under section four of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof ”[9]; empowers the Commission to prohibit “unfair methods of competition” and “unfair or deceptive acts or practices.” This provision grants the FTC discretionary authority to address anti-competitive conduct even where such conduct falls outside the strict textual scope of the Sherman or Clayton Acts, thereby enabling a more flexible and preventive enforcement approach.

Enforcement of antitrust law in the United States is carried out jointly by the Federal Trade Commission and the Department of Justice (DOJ). The DOJ possesses the authority to initiate criminal proceedings, particularly in cases involving hard-core cartel conduct. Such violations may result in substantial fines and imprisonment of individuals. In addition, both agencies, as well as private parties who suffer losses due to anti-competitive conduct, may initiate civil enforcement actions. This dual system of public and private enforcement has a strong deterrent effect on anti-competitive behaviour.

• United Kingdom

Competition law in the United Kingdom is primarily governed by the Competition Act 1998 and the Enterprise Act 2002, both of which have been significantly influenced by European Union competition principles.

The Competition Act 1998 was enacted to prohibit anti-competitive agreements and the abuse of a dominant position. Chapter I of the Act, titled “Agreements,” prohibits agreements between undertakings that have as their object or effect the prevention, restriction, or distortion of competition within the UK. Such agreements include price-fixing arrangements, output limitations, and market-sharing agreements.

Chapter II of the Act, titled “Abuse of Dominant Position,” prohibits dominant undertakings from engaging in abusive conduct. Examples include predatory pricing, refusal to supply, discriminatory practices, and excessive pricing. The UK approach, similar to EU competition law, focuses on protecting the competitive process rather than competitors as such, as reflected in decisions such as British Airways plc v Commission.

The Enterprise Act 2002 primarily governs merger control and market investigations. Under the Act, competition authorities may review mergers and acquisitions to assess whether such transactions result in a substantial lessening of competition. The Act also introduced criminal sanctions for cartel offences, although enforcement has largely resulted in financial penalties rather than custodial sentences.

The Competition and Markets Authority (CMA), which succeeded the Office of Fair Trading, is the principal enforcement body responsible for the investigation and enforcement of competition law in the UK. The CMA has wide investigative powers and may impose significant fines on companies, typically calculated as a percentage of their worldwide turnover, thereby ensuring effective deterrence.

Case laws

• United states

1. Eastman Kodak case [10]

The Supreme Court decided that Kodak was not allowed to use its control over replacement parts to keep independent service providers out of the market for servicing Kodak equipment. This case showed that a company can have market power in a secondary market, even if there is competition in the main market. It also reinforced rules against exclusionary business practices.

2. Standard Oil Co. of New Jersey v. United States (1911)[11]

The Supreme Court found Standard Oil guilty of monopolizing and violating the Sherman Act. The Court, by the rule of reason, subjected Standard Oil to a breakup into 34 separate companies thereby opening the door for structural remedies in antitrust law as a main precedent.

3. United States v. Microsoft Corp. (2001)[12]

Microsoft was ordered to stop tying Internet Explorer with Windows after the Court had judged that the company abused its dominance in the operating systems market for PC by such an action and also by preventing competitors. At first, the company was even condemned to splitting, but later on, the order was changed. The case, however, had a Major impact on the standards concerning monopolization, tying, and abuse of dominance in the technology markets.

• United Kingdom

1. Marine Hose Cartel (2009)[13]

The UK competition authorities have fined six international suppliers for being involved in a world, wide cartel that was guilty of price, fixing, bid, rigging, and market, sharing. This case was a clear example of the UK’s tough attitude towards cartels and how it works with other international enforcement agencies.

2. Galvanized Steel Tanks Case

Companies were fined for collusive tendering and bid, rigging in the supply of galvanized steel tanks. The case served to reinforce the prohibition of anti, competitive agreements under the Competition Act 1998.

International Organizations

International organizations have a significant role in helping and aligning competition laws worldwide, particularly when markets were global.

1. OECD (Organisation for Economic Co, operation and Development):

The Organisation for Economic Co, operation and Development (OECD) is an association of developed countries that promotes the principles of market economies and democracy among its member countries. One of the policies it promotes is competition law and enforcement. The OECD Competition Committee holds regular sessions where members discuss various aspects of competition law, enforcement issues, business cartel identification, enforcement challenges, and merger control in their respective jurisdictions.

2. UNCTAD (United Nations Conference on Trade and Development)

UNCTAD (United Nations Conference on Trade and Development)  is mostly preoccupied with developing and least developed countries. It assists them in preparing competition laws and making them better, setting up strong competition authorities, and training their officials. Besides that, UNCTAD also offers model laws and technical help so that developing countries may be able to defend their markets against the unfair practices of dominant multinational companies.

3. WTO (World Trade Organization):

The World Trade Organization (WTO) does not have a separate global competition law. However, it promotes fair competition through its trade agreements. Provisions on subsidies, dumping, and state support indirectly regulate anti, competitive practices in international trade. Additionally, the WTO advocates transparency and non, discrimination which not only assist competitive markets but also help in preventing the granting of unfair trade advantages.

4. ICN (International Competition Network):

The ICN is basically a loose network of competition authorities from different countries. Its primary function is to enable these members to coordinate in their joint investigations of anti, competitive conduct crossing borders, e. g. cartels and abuse of dominance. The ICN prepares practical guidance, shares case studies, and fosters the convergence of competition laws and enforcement practices without setting binding rules.  In general, these bodies are instrumental in fostering coordination, consistency, and cooperation in competition law enforcement, which is a prerequisite in today’s globalized economy.

Conclusion

This research intended to explore and compare the use of competition law as an anti, monopoly tool in the US and UK markets, focusing especially on the legal mechanisms of their enforcement.

The examination was conducted in the light of the given hypothesis which states that the U. S. system is more efficient due to the higher severity of the penalties that can be imposed in the cases involving custodial sentences.

The parallel study shows that both legal systems have a similar goal: to keep the markets competitive, avert the concentration of power in the hands of one economic entity and thus protect the economic environment as a whole. But the ways employed to accomplish these ends are quite different.

 The United States adopts an approach which is not only more enforcement, intensive but also more deterrence, oriented. It offers the possibility of criminal sanctions such as imprisonment for cartel members constituting a hard, core cartel, which is a clear indication of the policy emphasis being placed on serious antitrust violations as if they were offences against the public interest. The DOJ’s presence together with the FTC, along with the option for private enforcement, make up a multi, layered enforcement system that considerably increases the level of deterrence.

On the other hand, the UK relies mainly on administrative enforcement through the Competition and Markets Authority (CMA), with penalties generally limited to monetary fines and business restrictions. The Enterprise Act 2002 did introduce criminal liability for cartel offences, but in reality, prison sentences have been rarely imposed. These fines, which can be calculated as a percentage of global turnover, may still be viewed by large multinational companies as just another business expense rather than a real deterrent. This thus explains the absence of custodial sanctions in the UK, which in turn leads to a less strong fear of personal liability among the decision, makers.

Nevertheless, it should be recognized that the UK model puts more emphasis on preserving market structure and protecting the competitive process, essentially taking a significant part of the principles of EU competition law. The US system, on the other hand, is more consumer, centric and confrontational, giving a lot of weight to economic effects and individual accountability. Each system is a mirror of the respective nation’s legal culture and economic philosophy.

Recommendations

On the basis of the comparative analysis of competition law in the United States and the United Kingdom and, also, considering the confirmation of the hypothesis, the following proposals are put forward to:

1. The UK should considerably strengthen its criminal cartel offence under the Enterprise Act 2002.The provision remains unused on a grand scale, which means that its potential to deter is very limited.A strong message to the corporate community that individuals, rather than just corporations, will be held culpable and are likely to be imprisoned on account of serious cartel practices would, no doubt, induce a much higher level of compliance at the senior executive and decision, maker
2. Increasingly, the focus of competition law in both the UK and the US has been on individual accountability.The kindness of a crown that impose only on a company a heavy fine may not be able to change the attitude of an individual who continues to flout the At the individual level, disqualification of a director or even jail time in extreme cases, would be a powerful incentive for compliance.
3. In light of the worldwide nature of markets, competition authorities in the US and UK ought to further harmonise their enforcement practices with international standards advocated by organisations such as the OECD and ICN. A higher degree of harmonisation would facilitate the identification of cross, border cartels and limit the exploitation of jurisdictional loopholes by multinational corporations.
4. Both systems ought to continually enhance leniency programmes and whistleblower protections.Insiders reporting cartel activities by being granted penalty reductions or immunity play a very important role in the discovery of secret anti, competitive agreements, especially in the case of complicated international
5. Moreover, the emphasis should be on encouraging leniency and whistleblower initiatives to help uncover cartels, which, if detected early, could be broken down effectively and efficiently.

[1] Dunne, N. (2015). Introduction. In Competition Law and Economic Regulation: Making and Managing Markets (pp. 1–68). chapter, Cambridge: Cambridge University Press.

[2] Whish, R., & Bailey, D. (2021). Competition Law. Oxford University Press.

[3] The Constitutionality of Income-Based Fines | The University of Chicago Law Review. (n.d.). https://lawreview.uchicago.edu/print-archive/constitutionality-income-based-fines

[4] Sherman Anti-Trust Act (1890). (2022, March 15). National Archives. https://www.archives.gov/milestone-documents/sherman-anti-trust-act

[5] Ibid.,4.

[6] ibid.,2.

[7] Sherman Antitrust Act, § 1 (1890)

[8] Sherman Antitrust Act, § 2 (1890)

[9]Federal Trade Commission Act , § 5 (1914)

[10] Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992)

[11] Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)

[12] U.S. v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001)

[13] Ryan, D., & Pick, T. S. (2009, March 16). Settlement by marine hose cartel member could create a template for private settlements in the future. Lexology. https://www.lexology.com/library/detail.aspx?g=b3fe12e1-8383-4a2e-82ef-587b6ac852ff