There has been a proliferation of many businesses especially in the latter half of the twenty first century. As with any sector which experiences such tremendous growth rates, conflicts between various business players are bound to surface. This may range from conflicts between players in different businesses to conflict within players in the same business. Subsequently, many countries have enacted laws and regulations which seek to ensure that such disputes are resolved as amicably as possible. Pursuant to such laws, many countries have established such entities as competition authorities whose main purpose is to ensure that organizations adhere to fair practices even as they compete in the market. However, in a number of instances, the law may not be enough in addressing the competitive actions of certain organizations. Such was the case in the incident involving Child World and Toys R Us.
The principal reason why the law may be inadequate in addressing the competitive actions of business entities is due to the nature of the law making process itself. In most countries, the law making process is a reactive process. In other words, more often than not, the laws are made in response to a given incident which hitherto was not adequately provided for by any law. Secondly, the business field is very dynamic. To that extent, new innovations and business practices are developed every day. While this is desirable as it arguably makes the business more efficient, it carries a risk as far as the laws that seek to regulate competition are concerned. This is because the laws in most cases are not able to keep up with the innovations in business. The end result is that one may find instances where the law is greatly inadequate in addressing competitive actions of many companies. Thirdly, the laws cannot anticipate the competitive actions that a given organization will take in future. Indeed, even if it were to do so, organizations may still be able to take competitive actions that are well within the law but which are nevertheless unfair. They do these by stretching the interpretation of the law and maximizing the use of any loopholes which may exist in the concerned legislation.
This submission contends that the law should not be the only guide on whether such competitive actions as those of Toys R Us should occur. The principal reason for this is that the law cannot provide for all circumstances. On the other hand, if the laws were to provide for all circumstances, then there is a risk of overregulation in the market. It is important to note that overregulation of any market negatively affects the organizations which carry out business in such a market. The law should only provide the basic framework which will guide practices by various organizations and companies with regard to competition. However, it will be important for the organizations themselves to come up with intra-sectoral regulations that will govern what can and cannot happen within a particular business field. The organizations will also need to come up with guidelines on what constitutes good corporate ethics as far as competition is concerned. There should be clear and severe penalties for any organizations which deviate from the ethical standards set for the particular business which it undertakes. Lastly, organizations must adopt and adhere to good corporate governance practices. Among the key requirements of good corporate governance practices is the need to promote fair competition.
References
Halson, R. (2012). Contract Law. New Jersey: Pearson Education Limited.
Paperndorf, K., Machura, S., & Andenaes, K. (2011). Understanding Law in Society: Developments in Socio-legal Studies. London: LIT Verlag Münster.
Sokol, D., & Lianos, I. (2012). The Global Limits of Competition Law . Stanford: Stanford University Press.
