ABSTRACT
INTRODUCTION Since 1945 legislation has been concerned with single-firm monopolies, mergers and restrictive practices in product markets. The 1948 Monopolies and Restrictive Practices Act established the Monopolies Commission which had to decide whether particular monopolies operated against the ‘public interest’. There was no general ruling that all monopolies were ‘undesirable’ and the approach was pragmatic with the emphasis on inquiry rather than control. Initially, the Monopolies Commission also dealt with restrictive practices. This changed with the 1956 Restrictive Practices Act which established the Restrictive Practices Court. The Act established a general presumption that restrictive agreements between firms were against the public interest unless the parties could prove otherwise by using one of the standard exemptions or ‘gateways’. These included agreements which could be shown to confer benefits on consumers or avoid local unemployment or promote exports. Where the parties to a restrictive agreement successfully used one of the gateways, the Court still had to be satisfied that the benefits to the public outweighed the detriments. In 1964 a similar procedure involving the Restrictive Practices Court, gateways and a balancing of benefits and detriments was applied to resale price maintenance. The 1964 Resale Prices Act established a general presumption that resale price maintenance was against the public interest. There followed the 1965 Monopolies and Mergers Act. This was concerned with the control of mergers and whether proposed mergers are likely to create a monopoly. Merger inquiries were undertaken by the Monopolies Commission and where there was an unfavourable report, the Act allowed the government to prohibit proposed mergers, to impose conditions on a merger and to dissolve completed mergers. Finally, the 1973 Fair Trading Act established a Director-General of Fair Trading responsible for the regulation of monopolies, mergers and restrictive practices, and a new emphasis was placed on consumer protection. The public interest was re-defined to include as one of its elements the desirability of maintaining and promoting competition. However, the re-named Monopolies and Mergers Commission retained considerable discretion in interpreting the public interest since it was required to consider ‘all matters which appear to…be relevant’.
