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Competition law and liberty: Who governs?

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The Obama administration allowed Facebook and Google to seize and concentrate their private power (the most expensive acquisitions paid by Facebook and Google all happened under Obama’s presidency), and you know that the concentration of private power effectively destroys competition and tends to infringe on liberty (daily complaints on data privacy). AFP

Competition law and liberty: Who governs?

I’m not following. Competition for liberty? It is universally acknowledged that infringements from the ruling class are unwanted anywhere.

But what most contemporary people are beginning to realise is that the private sector can also do as much – if not greater – harm to individual liberty. When your city can have but one restaurant, although the menu is nowhere near your taste, where would you go to eat? You’ll keep grinding your teeth there week after week as if you had no liberty. If corporations and tech firms abuse your personal data, what can you do? What kind of dilemma do various key economic players create to mess with the free life of your neighbors and of your own?

As the scent of a hot latte reaches our sensation, we somehow feel relaxed believing that economic freedom allows us to engage in activities we deem most pleasing to us. So let’s face it: Domestically and internationally, has it not always been the pursuit of wealth and fame that has largely written human histories everywhere? Some are glorified by happy endings; some not often so.

But if we wish to joyfully eat the fruit of economic freedom without sacrificing liberty (protecting ourselves against repeated wrongdoings by corporations), it should be obvious that ensuring the existence of law-abiding private sector that truly embraces competitive markets is a virtue we must forever defend. Such is the spirit of competition laws anywhere in the world.

Wait, what’s the fuss about the so-called market? Why bother to regulate it? In practice, most lawsuits about anticompetitive acts in the US begin with defining the relevant market in which the products are thought to compete with each other.

As a matter of legal definitions, Kentucky Fried Chicken and Texas Chicken are immediately locked in horizontal relationship (operating at the same level of production or distribution) with one another whether they want to or not. The farms that supply chicken to these fast-food restaurants are in vertical relationship with them.

Besides these two relationships – horizontal and vertical – Cambodia’s Competition Law furthermore mentions two types of situations that can raise eyebrows: dominant market power and mergers.

Market is a relevant concept in our legal parlance because our law even took pain to give definitions: “market of products or services that are in the competition” while competition refers to “actions by persons doing business in the market, aimed at getting many customers to use their product/service, gaining a big market share, and a dominant market position.”

Conceptually speaking, a relationship that is not horizontal is vertical. But the ever-changing characteristics of products/services can make such differentiation quite elusive. Twenty years ago, nobody spoke of Microsoft and Google as competitors. Since the last few years, however, their rivalry has outpaced our imagination. The intricate elements in the tech market can be daunting for economists. And the fact that corporations appear to be collaborators in some segments and are sworn enemies in others does not make the lawyer’s job in proving a relevant market any easier.

And this is nobody’s fault. In order to attain to a perfectly competitive environment within a presumed competitive market, it is said that all sellers would have to offer homogenous products so that it would not matter whom to buy from; they must have equal access to raw materials; each seller shall be equally small enough so that their increase or decrease in output would make no real difference; and all participants in that market must possess good knowledge of price and other information.

We know that such prerequisites conducive to a perfect competition do not exist in the real market. We certainly appreciate that these imperfections have led to good innovations but they have also meant that individual liberty can be infringed upon by profit-driven corporations.

The American experience is a testimony to that. The Obama administration allowed Facebook and Google to seize and concentrate their private power (the most expensive acquisitions paid by Facebook and Google all happened under Obama’s presidency), and you know that the concentration of private power effectively destroys competition and tends to infringe on liberty (daily complaints on data privacy).

If corporations cannot make themselves lovers of individual liberty, who shall govern?

Virak Prum, LLB, LLM, PhD (2006 Nagoya University) teaches law at CamEd Business School. The views expressed are solely his own.

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