A firm is considered dominant if acts to an appreciable extent independently of its competitors; customers; and, ultimately, of its consumer.
Often, firms take advantage of their increase in market power, their increased market share, and decreased number of competitors after a merger or acquisition--which can adversely affect the deal that consumers get.
Public sector industries, or industries which are by their nature providing a public service, are involved in competition in many ways similar to private companies.
Any product of someone's intellect that has commercial value: copyrights, patents, trademarks, and trade secrets.
Take Coke and Pepsi, two interdependent companies. An attempt by Pepsi to attract buyers (increase sales) through an advertising campaign will decrease the sales of Coke. How Coke chooses to react to Pepsi will be based on an analysis of how the firms have acted in past situations. The industry's competitive dynamics are composed of the ongoing series of competitive actions and competitive responses that take place as Coke and Pepsi compete for customers.
Competition occurs when competing firms attempt to attract buyers by offering products with greater perceived benefit. Common benefits include price, service, reputation, and image, but may include virtually anything else associated with a product that the buyer values. A buyer's perceptions of what constitutes a benefit may vary widely based on the nature of the product. Since the actions taken by one competitor to attract buyers are likely to affect the performance of other competitors, competing firms are said to be interdependent. The current state of competition can be examined based on the following categories.
When firms hold large market shares, consumers risk paying higher prices and getting lower quality products than when compared to competitive markets. However, the existence of a very high market share does not always mean consumers are paying excessive prices since the threat of new entrants to the market can restrain a high market share firm's price increases. A firm is considered dominant if acts to an appreciable extent independently of its competitors; customers; and, ultimately, of its consumer.
This lack of competition can lead to abuses in today's business environment. Forms of abuse relating directly to pricing include price exploitation. It is difficult to prove at what point a dominant firm's prices become "exploitative" and this category of abuse is rarely found.
Mergers and Acquisitions
A merger or acquisition involves, from a competition perspective, the concentration of economic power in the hands of fewer than before. This usually means that one firm buys out the shares of another. Often, firms take advantage of their increase in market power, their increased market share, and decreased number of competitors--which can adversely affect the deal that consumers get. Since mergers and acquisitions can lead to market dominance, competition law attempts to deal with this problem before it arises.
Public sector industries, or industries which are by their nature providing a public service, are involved in competition in many ways similar to private companies. Many industries, such as railways, electricity, gas, water, and media have their own independent competitive concerns and sector regulators. These government agencies are charged with ensuring that private providers carry out certain public service duties in line with social welfare goals.
Competition has become increasingly present in intellectual property, such as copyright; trademarks; patents; industrial design rights; and, in some jurisdictions, trade secrets. On the one hand, it is believed that promotion of innovation through enforcement of intellectual property rights promotes competitiveness, while on the other the contrary may be the consequence. The question rests on whether it is legal to acquire a monopoly through accumulation of intellectual property rights. In which case, the law must either give preference to intellectual property rights or towards promoting competitiveness. Concerns also arise over anti-competitive effects and consequences due to: