12 Types of anti-competitive behaviour

The increase of digital market conglomerates and their increasing market power have made competition authorities rework their laws and limits. In the case of the UK, the CMA (2024) launched a digital market unit specialising in overseeing the activities of firms exceeding £25 billion turnover globally or £1 billion in the UK. On the same ground, the European Competition Commission has the Digital Markets Act (2024) focusing on defining market gatekeepers and how to deal with them. One immediate consequence of this was the change of the iPhone lightning port cable to a standardised USB-C port to limit gatekeeping. 

Competition Authorities are still developing strategies and laws that can help minimise abuse of dominance in these types of firms. However, economists and lawmakers are still debating the limits of firm innovation and how to intervene. 

Competition allows consumers to have cheap and quality products. However, this outcome is usually less beneficial for firms, as their profits could increase when they are in dominant positions with oligopoly or monopoly power. Firms strategize ways to improve their sales through advertising, or differentiate their products by creating different lines. Examples of product differentiation are vanilla Coca-Cola or Pepsi-Max, variants which distinguish the previously very similar soft drinks and cost virtually the same to produce. These types of strategies are in a certain way desirable as they do not necessarily decrease social welfare. But economists have also shown how they give rise to ‘monopolistic competition’, which can reduce consumers’ welfare via an increased number of very similar products each being produced in smaller quantities and at higher cost than before the differentiation.

Sometimes, also, firms find ways to restrict competition to achieve better outcomes. There are three broad ways in which firms lessen competition: collusion, mergers, and abuse of dominance.