Competition means struggle or contention for superiority and in commercial world it means striving for customers and business of people in market place. Often described as 'process of rivalry between firms…seeking to win customers business over time.' The purport of competition law is to preserve and promote competition, the essential object of competition is to ensure optimal allocation of available resources, produce more while using less resources and thus achieve efficient market outcomes. The competition policy introduces a 'level playing field' for all market players. The same will provide the market with a set of 'rules of game' that protects competition process itself, rather than competitors in market

Competition law system is concerned with practices that are harmful to the competitive process such as: anti- competitive agreements; abusive behavior; mergers; public restrictions of competition. Where horizontal agreements are those agreements to fix prices, to share markets, to restrict output. vertical agreement: between firms at diff levels of market where the supplier of goods instructs its retailers nt to resell them at less than certain price [resale price maintenance ] and example for vertical agreements includes those agreement where a dominant firm reduces its price to less than cost so as to drive competitor out of the market or to deter competitor from entering the market [predatory pricing]. In abusive behavior or mergers, one competitor acquiring the main competitor results in deprivation of choice available to consumers.

Competition law is considered a night-watchman of market economy. Competition law does not contain a blueprint for economic development or the establishment of a sustainable free market economy. It consists of rules that are intended to protect the process of competition so as to maximize the consumer welfare. Competition is a mechanism to accomplish efficient market performance and increased economic welfare.

In a sustainable free market economy, the market's drive for efficiency and profit is balanced with the need to protect and preserve resources and ensure social well-being, ensuring that economic activities do not compromise the ability of future generations to meet their needs.The fundamental economic rationale of competition law and policy is that competition is a mechanism to accomplish efficient market performance and increased economic welfare. In the words of Robert Bork 'the whole task of antitrust law can be summed up as the effort to improve allocative efficiency without impairing productive efficiency so greatly to produce either no gain or a net loss in consumer welfare.'

Economic Efficiency
Larry H Summer states that 'it needs to be remembered that the goal is efficiency not competition'. The goal of competition law is to ensure that the market functions optimally because according to economists, an optimal operation of market leads to greater welfare. In a world with scarce resources, a vital question is how to put the available resources to the best use for society as a whole, without wasting them.

Economic efficiency is when all goods and factors of production in an economy are distributed or allocated to their most valuable uses and waste is eliminated or minimized. The market mechanism is the process through which resources are allocated in an economy based on supply and demand.In a market economy, the market mechanism has the task of allocating given resources to the best use. In a market context, the benchmark for good use is consumer preferences. The price system allocates resources for the production of goods/products that consumers demand.

Role of antitrust law in relation to consumer welfare is explained by Frank Knight as:
From a social point of view, this process may be viewed under two aspects:

1. The assignment or allocation of the available productive forces and materials among the various lines of industry, and
2. The effective coordination of the various means of production in each industry into such groupings as will produce the greatest result.

These two factors are called allocative efficiency' and 'productive efficiency'. Allocative efficiency therefore refers to the placement of resources in the economy Productive efficiency refers to the effective use of resources by particular firms. And both types of efficiency together make up the overall efficiency that determines the level of society's economic wealth-termed consumer welfare'

Typology Of Efficiencies

Static and dynamic efficiency are two dimensions of the efficiency goal. Competition as the driving force of the market mechanism furthers both static and dynamic efficiency. But competition does not necessarily maximize both static and dynamic efficiency.

• Static Efficiency:
  • It is about maximizing efficiency at a given point of time.
  • Optimal use of existing resources (knowledge and technology).
  • Not concerned with how these resources have reached the market, or what they consist of.
  • Focuses on maximizing output and minimizing costs using the current resources and technology.
  • Static efficiency is limited to seeking how to allocate those resources to maximize social welfare, focusing on a single magnitude: the exchange price.
  • The problem of static efficiency is solved by setting a price that distributes the given resources between sellers and buyers in an optimal way.
  • Markets are in comfortable equilibrium. Firms just make their capital cost and cover long run marginal costs, and consumers are never overcharged.
  • Ecology of firms is unchanging, with no firm becoming dominant over the other.
  • Output is mostly static or stable and predictable in nature.
  • Neoclassical Economics focuses on static equilibrium with a minimum number of known exogenous variables.
     
• Productive Efficiency:
  • Refers to producing goods and services with optimal combinations of inputs with minimum cost.
  • Implies producing at the Production Possibility Frontier (PPF). All points on the PPF represent different combinations of the total output produced at a given point of time (i.e., it is impossible to produce more of one good without producing less of another).
  • Includes:
    • Economies of Scale: Benefits yielded from larger units of production with existing capital assets.
    • Economies of Scope: When related activities are carried together (production of two different but related products and production and distribution by the same person). Sources of these efficiencies include common raw materials, complementary technical knowledge, and the reduction or elimination of distribution channels and sales forces.
       
• Allocative Efficiency:
  • Also called social efficiency, it implies the utilization of scarce resources for the availability of output to the whole economy and not just to the majority of the population.
  • A market is said to achieve "allocative efficiency" when market processes lead society's resources to be allocated to their highest valued use among all competing uses.
  • Suppliers produce goods and services that consumers want, measured by their willingness to pay.
  • Benefits consumers by moving the allocation of scarce resources towards Pareto optimum, a situation where no further improvements to society's well-being can be made through a reallocation of resources that makes at least one person better off without making someone else worse off (no further mutual gain possible).

References:

• Monti G, EC Competition Law (Cambridge University Press 2007)
• Slot PJ and Farley M, An Introduction to Competition Law (Bloomsbury Publishing 2017)
• Buttigieg E, Competition Law: Safeguarding the Consumer Interest: A Comparative Analysis of US Antitrust Law and EC Competition Law (Kluwer Law International 2009)
• Bork, Robert H. The Antitrust Paradox: A Policy at War with Itself, 2nd ed., New York: Free Press, 1993