Unfair Trade Practices

Micro Level

There is a wide range of activities that may be classified as unfair trade practices at the micro level. They include espionage and theft of intellectual property, deliberately breaking business contracts or signing them without intending to adhere to them, or in some other ways undermining the competitive positions of other organizations. The point at which trade practices change from being intensely competitive to being unfair is, of course, difficult to define as it is likely to vary in most cases, and to appear differently to each participant.

For example, the growth in power of large retailers, like supermarket chains, has enabled them to apply considerable pressure on their suppliers to provide fruit and vegetables of regulation size and shape and at ever lower prices. These practices are regarded by the farmers as unfair but by the retailers as a legitimate use of market power to obtain a competitive advantage. Additional activities in which firms might indulge include the attempted creation of monopolistic conditions, discriminatory pricing, and dumping. Monopolistic competition or the attempts to create it may be countered by the use of antitrust legislation in whatever manifestation[Page 824] it appears in a particular country. Discriminatory pricing refers to charging different prices to sets of consumers based on criteria that do not conform to free trade principles. Dumping is a type of discriminatory pricing, in that prices in some export markets are set very low, possibly under the costs of production, so as to undermine the position of domestic competition. Accusations of this practice may be referred to the World Trade Organization (WTO). The tactic may also be employed within a domestic market when one or more products in a product line may be offered at a very low cost in the effort to obtain market share.

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