Advantages of competition
Advantages of competition
Economists consider competition in markets to be a phenomenon that brings clear and tangible advantages. The most common are the following: the role it has played in allocating resources in the direction preferred by the consumer, generally known as “distribution efficiency”; this has the benefit of reducing the risk that the goods or services offered would not be desired, or are not desired at the price at which they are offered; the constant process of dynamic improvement, according to the continuous changes of consumer preferences, is an incentive for manufacturers to invest in research, development and innovation, resulting in the survival and growth of those companies which make the necessary changes in a timely manner, while those who do not act in this way are undoubtedly left behind; the constant pressure on all manufacturers and retailers in the market to keep costs down and consequently prices, for fear of losing customers compared to other retailers, finding ways to attract business either through overall price reductions or through special discounts for preferred buyers; the possibility that a country whose economy is loyal to the competitive process enjoys more significant advantages in production efficiency and in the use of its own resources of raw materials and human capital.
Although the benefits of competition are great, it should not be forgotten that its effect on losers in this process can be financially devastating. Even for consumers, these effects are unfavorable, for example, when local shops are taken out of business by the very successful supermarkets of the neighboring city. This is the competition process: not sparing competitors, which means increasing the number of competitors; this is the primary goal of the competition and antitrust policy.
Recommendations on the case of Albania
Competition in Albania is still in the first steps of development. Some of the suggestions for the match are:
• Promoting fair competition in Albania and curbing all anti-corruption practices according to European standards by strengthening the competencies and independent role of the Competition Authority in implementing policies and legal standards.
• Creating a culture of competition will increase the awareness of policy-makers, the business community, and the public.
• Awareness of the public and the media about the role of competition as a public good.
• Increase transparency by organizing occasional surveys with the business community and the public on the understanding and implementation of competition and the law on the protection of competition.
E prohibited agreements card.
– The concept of the agreement
To understand prohibited agreements, we must define what agreements are in essence. “Agreements” are agreements of any kind, concluded between enterprises, with or without binding force, decisions or recommendations of groupings of enterprises, as well as collaborative practices between enterprises, which operate at the same level, i.e., horizontal or tiered agreements—different, i.e., vertical, market agreements.
– Types of agreements
The law provides for two types of agreements: horizontal and vertical agreements. The term horizontal agreement shall mean all those agreements concluded between competing enterprises operating at the same economic level. Vertical agreements will mean those agreements that are concluded between companies operating at different market levels.
The concept of prohibited agreements
Agreements that have as their object or consequence the obstruction, restriction, and distortion of competition in the market mainly deals that:
– restrict or control production, markets, technical development, or investment
– set, directly or indirectly, purchase or sale prices, or any other trading conditions
– share markets or sources of supply;
– apply different conditions for the duplicate transactions with other trading parties, placing them at a competitive disadvantage;
– a condition the conclusion of contracts with the acceptance by other contracting parties of additional obligations that, by their nature or by their commercial use, are not related to the object of these contracts
Agreements that are excluded
The types of agreements that benefit from the exemption are presented in Article 5 point 1 of the Competition Law “Horizontal agreements, especially agreements, which have as object or consequence the rationalization or specialization of economic activity, research, and development of products or processes, purchase or sale of products from and from a single source, may be exempted from the prohibition provided for in Article 4, due to economic efficiency”. These types of agreements enable the achievement of economic efficiency.Advantages of competition