The public often have an ambivalent view of competition: as consumers we’re grateful for it, as employees we fear it, as citizens we debate it. For some, it is a healthy form of emulation, which allows the most deserving to assert their talents. Indeed, economist Frédéric Bastiat keenly noted in his day that destroying competition is like “killing intelligence”. Competition is the antithesis of arbitrariness, privilege and unjustified rents: it embodies “the democratic law in essence”. For others, competition is like a selection process, at the end of which a company finds itself alone on the market and will entrench its position by resorting to unfair means, to the detriment of the most fragile. To recall the words of J.F. Proudhon, “competition kills competition”.
In fact, there is an element of truth to both of these opposing views. On the one hand, every day we can see the beneficial effects of new players entering the market: on prices, quality and diversity of products, as well as the incentive to innovate. For example, in the case of France, the strengthening of competition in air transport, ride-hailing services, mobile telephony and notarial offices are all recent, concrete examples of the benefits of this invisible but powerful force.
On the other hand, we also witness that dominant companies abuse their positions to block the entry of new, equally efficient competitors, or to discriminate against their customers. In oligopolistic markets, companies sometimes engage in collective cartel practices that artificially raise prices, without any benefits for customers. The first victims of these practices are often other companies, whose competitiveness is negatively affected.
These two visions, as opposed as they may be, are not irreconcilable, as long as we adopt a dynamic vision. Experience shows us that a company that has initially beaten the competition on its merits may subsequently be tempted to maintain its market power by resorting to artificial practices. The competition process will then grind to a permanent halt: competition will have “killed competition”.