Abstract

The purpose of enforcing the Fair Trade Law （FTL） is to maintain the market order and ensure fair competition. But the FTL is only treated as the criterion under the current conditions, instead of being used to correct market failure. In the Article 4 of the FTL the definition of the competition is generalized and broadened. However, there exit still some controversies of the dimensions of time, spatial and the beneficial price. This report intends to discuss the concept of competition in both economic theory and what the FTL can further fulfill.

In economics literature, there is still strongly controversy on the concept of market competition. Classical economists, including others like Karl Marx and Joseph Schumpeter etc., believe that competition is of dynamic characteristic, and firms could easily enter and exit market in the long run. This ensures the existence of market competition. On the contrary, neoclassical economists put more emphasis on market structure and set a workable competition criterion instead, which are based on the mathematical reasons. On the other hand, classical economists propose a concept of contestable market to correct the only point-of-view of market structure.

Due to diversified meanings, there are totally four different categories of market competition, i.e. intrabrand vs. interbrand competition, market competition vs. industry competition, potential competition vs. foreign competition, and horizontal competition vs. vertical competition etc.

The inside spirit of pursuing competition is similarly different due to various regulation on abusing monopoly power. Regulating collusion behaviors is simply trying to achieve market competition. The maintenance of resale price is the core pf intrabrand competition. Vertical competition is the key in boycott. Discrimination, tie-in sale, and exclusive dealing are all related to market competition. Geographical restriction, customer restriction, and user restriction belong to intrabrand competition and market competition.

In sum, most regulation in the FTL therefore try to achieve market competition first and then focus upon other target such as industry competition, potential competition, intrabrand competition and vertical competition. If the Fair Trade Commission can first figure out the target to achieve and then decide the means of enforcement, then unnecessary mistakes can be avoided.