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Showing posts with label UK. Show all posts
Showing posts with label UK. Show all posts

9.14.2008

The 2008 UK Queen Elizabeth I £5 Gold Proof Coin

A very unique gold coin has been struck by the British Royal Mint. The 2008 UK Queen Elizabeth I £5 Gold Proof Coin.

In 1558 on the 17 of November, Elizabeth, the 25-year-old daughter of Henry VIII and Anne Boleyn, was proclaimed Queen of England. She became one of the longest serving, best-loved and influential English monarchs, whose date of accession remained a national holiday for 200 years.

To celebrate the 450th anniversary of her becoming Queen, the British Royal Mint has struck a rather unique £5 crown featuring on its reverse a portrait of Elizabeth I, by the silversmith Rod Kelly. So we have the only coin in the world with two Queen Elizabeths, Elizabeth the first on the reverse and Queen Elizabeth the second on the obverse

As per the Royal Mint, “...the Queen is crowned and set within a mandorla created by four decorative arches. A Tudor rose has been placed at each connecting point while the two side arches each contain a beautiful leaf pattern reminiscent of the carvings made by the Queen’s loyal servant and friend, Robert Dudley, Earl of Leicester. The year of her accession and the year of the anniversary are both shown in Roman numerals with the inscription I HAVE REIGNED WITH YOUR LOVES.”

This unique coin is struck in 22 karat gold to proof quality. On the obverse is the portrait of the present Queen by Ian Rank-Broadley FRBS, while the reverse design by Rod Kelly bears a stunning portrait of Queen Elizabeth I crowned and set within a mandorla created by four decorative arches.

Only 1,500 gold Proof crowns will be struck to satisfy demand from collectors throughout the world and will be sold at the price of £925.00. (Approx 1825 US Dollars)

The coin is housed in a luxury walnut wood-veneer presentation case and accompanied by an individually numbered Certificate of Authenticity and the Royal Mint logo in gold on the top right-hand corner of the lid.

The product code for ordering is UKQEFGP.

This coin, if only by its uniqueness and limited strike will be sure to increase in value over the coming years.

6.23.2008

Residence and domicile

A pie chart showing the projected constituents of UK taxation receipts for the tax year 2008-2009, according to the 2008 Budget.
UK source income is generally subject to UK taxation no matter the citizenship nor the place of residence of the individual nor the place of registration of the company.
For individuals this means the UK income tax liability of one who is neither resident nor ordinarily resident in the UK is limited to any tax deducted at source on UK income, together with tax on income from a trade or profession carried on through a permanent establishment in the UK and tax on rental income from UK real estate.
Individuals who are both resident and domiciled in the UK are additionally liable to taxation on their worldwide income and gains. For individuals resident but not domiciled in the UK, foreign income and gains are taxed on the remittance basis, that is to say, only income and gains remitted to the UK are taxed (for such people the UK is sometimes called a tax haven).
Domicile here is a term with a technical meaning. Very roughly (and this is a considerable simplification) an individual is domiciled in the UK if it is his or her permanent home.
A company is resident in the UK if it is UK-incorporated or if its central management and control are in the UK (although in the former case a company could be resident in another jurisdiction in certain circumstances where a tax treaty applies).
Double taxation of non-UK income and gains is avoided by a number of bilateral tax treaties.
See IR20 - Residents and non-residents.
Income tax


UK income tax and National Insurance charges (2008–2009), prior to changes on 13 May 2008


UK income tax and National Insurance as a percentage of taxable pay (2008-2009), prior to changes on 13 May 2008
Income tax forms the bulk of revenues collected by the government. Each person has an income tax allowance, and income up to this amount in each tax year is free of tax for everyone. For 2008-09 the tax allowance for under 65s is £5,435.[1], however on 13th May 2008 Alistair Darling, announced plans to raise this personal allowance by £600 to £6,035. In the case of people receiving the full £120 benefit of this change, it will be accounted for beginning in September 2008 with a £60 tax reduction that month and then £10 per through March 2008. [2]
Above this amount there are a number of tax bands — each taxed at a different rate:
Rate (08-09) Dividend Income Savings Income Other Income (inc employment) Band (above any personal allowance)
Basic rate 10% 20% 20% (£0 - £36,000) £2,320 - £36,000
Higher rate 32.5% 40% 40% over £36,000
This table reflects the removal of the 10% Starting Rate as at April 2008, which also saw the 22% income tax rate drop to 20%.
The taxpayer's income is assessed for tax according to a prescribed order, with income from employment using up the personal allowance and being taxed first, followed by savings income (from interest or otherwise unearned) and then dividends, with capital gains always being taxed as the top "slice".
Figures for 2008-09.[1]
Note that these rates only apply to income within that tax band.
To work out how much someone with a dividend income of £7,665 would pay in 2008/09:
Deduct their allowance of £5,435 from their income of £7,665. This gives £2230. 10% of this is £223. So they are only liable to pay £223 in tax.
Dividends from UK companies are received with a notional 10% tax credit (£766.50 in this example), which would more than cover this liability. The excess of tax credit above the liability is, however, not refundable.
Savings income (for instance, interest received from investments, and/or capital gains) is taxed at a rate of 20% within the basic rate band, and at 40% above it (over £36,000 in 2008-09).
Income from share dividends is taxed at 10% up to the basic rate limit (£36,000) and at 32.5% above that.
Exemptions on Investment


UK central government expenditure projection for tax year 2008-2009, according to the 2008 Budget.
Certain investments carry a tax favoured status including:
• UK Government Bonds (Gilts)
While all income is taxable, gains are exempt for income tax purposes.
• National Savings and Investments
Certain investments via the state owned National Savings scheme are not subject to tax including Index linked Certificates (up to £15,000 per issue) and Premium Bonds a scheme that issues monthly prizes in place of interest on indivdual holdings up to £30,000.
• Individual Savings Accounts.
These permit up to £7,200 (Maximum of £3,600 in cash funds, and the balance being allocated either to mutual funds (Units Trusts and OEICs) or individual self-selected shares. No tax is deducted, although the 10% tax witheld on UK dividends cannot be reclaimed.
• Pension Funds
These have the same tax treatment as ISAs in terms of growth. Full tax relief is also given at the individual's marginal rate on contributions or, in the case of an employer contributions, it is treated as an expense and is not taxed on the employee as a benefit in kind. Aside from a tax free lump sum of 25% of the fund, benefits taken from pension funds are taxable.
• Venture Capital Trusts
These are investments in smaller companies or funds of holdings in such companies over a minimum term of five years. These are not taxable and qualify for 30% tax relief against an individual's income.
• Enterprise Investment Schemes
A non taxable investment into smaller company shares over three years that qualifies for 20% tax relief. The facility also allows an indiviudal to defer capital gains liabilities (these gains can be stripped out in future years using the annual CGT allowance.)
• Insurance bonds
These include offshore and onshore investment Bonds issued by insurance companies. The main difference between the two is that corporation tax onshore means that gains are treated as if basic rate tax has been paid (this cannot be reclaimed by zero or starting rate tax payers). With both versions up to 5% for each complete year of investment can be taken without an immediate tax liability (subject to a maximum total of 100% of the original investment. On this basis, investors can plan an income stream while deferring any chargeable withdrawals until they are on a lower rate of tax, are no longer a UK resident, or their death.
Capital gains tax
Capital gains are subject to tax at the marginal rate of income tax (for individuals) or of corporation tax (for companies).
Capital gains for individuals are taxed slightly differently from those for companies:
• The basic calculation for individuals (in very broad terms) is proceeds less cost; the gain is then subjected to an indexation allowance for periods of ownership from March 1982 to April 1998 (items acquired before March 1982 are generally revalued at their market value at that point) thereafter taper relief is applied (a percentage reduction which varies depending on how long the asset was held prior to its disposal with a years ownership being credited for an asset held before the introduction of taper relief, and whether the asset was a "business" asset or a "non-business" asset in the hands of the owner). Individuals also have a capital gains tax free amount or "annual exemption" (in 2006/07 this was £8,800, and in 2007/08 it is £9,200).[3]
• For companies, the chargeable gain is calculated (again, in very broad terms) as proceeds less cost; however, instead of taper relief, companies are entitled to indexation allowance, which is calculated with reference to movements in the retail prices index (individuals are also entitled to indexation allowance prior to April 1998). Companies are not entitled to any annual exemption.
The tax year
The Tax Year in the UK, which applies to income tax and other personal taxes, runs from 6 April in one year to 5 April the next (for income tax purposes). Hence the 2005-06 tax year runs from 6 April 2005 to 5 April 2006.
The odd dates are due to events in the mid-18th century. The English quarter days are traditionally used as the dates for collecting rents (on, for example, agricultural properties). The tax system was also based on a tax year ending on Lady Day (March 25). When the Gregorian calendar was adopted in the UK in September 1752 in place of the Julian calendar, the two were out of step by 11 days. However, it was felt unacceptable for the tax authorities to lose out on 11 days' tax revenues, so the start of the tax year was moved, firstly to 5 April and then, in 1800, to 6 April.
The tax year is sometimes also called the Fiscal Year. The Financial Year, used mainly for corporation tax purposes, runs from 1 April to 31 March (hence Financial Year 2005 runs from 1 April 2005 to 31 March 2006).
History
The income tax was first implemented in Britain by William Pitt the Younger in his budget of December 1798 to pay for weapons and equipment in preparation for the Napoleonic Wars. Pitt's new graduated (progressive) income tax began at a levy of 2d in the pound (0.8333%) on incomes over £60 and increased up to a maximum of 2s (10%) on incomes of over £200. Pitt hoped that the new income tax would raise £10 million, but actual receipts for 1799 totalled just over £6 million.[4]
Income tax was levied under five schedules—income not falling within those schedules was not taxed. The schedules were:
• Schedule A (tax on income from UK land)
• Schedule B (tax on commercial occupation of land)
• Schedule C (tax on income from public securities)
• Schedule D (tax on trading income, income from professions and vocations, interest, overseas income and casual income)
• Schedule E (tax on employment income)
Later a sixth Schedule, Schedule F (tax on UK dividend income) was added.
Pitt's income tax was levied from 1799 to 1802, when it was abolished by Henry Addington during the Peace of Amiens. Addington had taken over as prime minister in 1801, after Pitt's resignation over Catholic Emancipation. The income tax was reintroduced by Addington in 1803 when hostilities recommenced, but it was again abolished in 1816, one year after the Battle of Waterloo. The UK income tax was reintroduced by Sir Robert Peel in the Income Tax Act 1842. Peel, as a Conservative, had opposed income tax in the 1841 general election, but a growing budget deficit required a new source of funds. The new income tax, based on Addington's model, was imposed on incomes above £150.
UK income tax has changed over the years. Originally it taxed a person's income regardless of who was beneficially entitled to that income, but now a person only owes tax on income to which he or she is beneficially entitled. Most companies were taken out of the income tax net in 1965 when corporation tax was introduced. Also the Schedules under which tax is levied have changed. Schedule B was abolished in 1988, Schedule C in 1996 and Schedule E in 2003. For income tax purposes, the remaining schedules were superseded by the Income Tax (Trading and Other Income) Act 2005, which also repealed Schedule F completely. The Schedular system and Schedules A and D still remain in force for corporation tax. The highest rate peaked in the Second World War at 99.25% and remained at about 95% till the late 1970s.[citation needed]
In 1974 the top-rate of income tax increased to its highest rate since the war, 83%. This applied to incomes over £20,000, and combined with a 15% surcharge on 'un-earned' income (investments and dividends) could add to a 98% marginal rate of personal income tax. In 1974, just 750,000 people were eligible to pay the top-rate of income tax. [5] Margaret Thatcher, who favoured indirect taxation reduced personal income tax rates during the 1980s. [6]
The Finance Act 2004 introduced an income tax regime known as "pre-owned asset tax" which aims to reduce the use of common methods of inheritance tax avoidance.[7]
National Insurance contributions
Main article: National Insurance
The second largest source of government revenues is National Insurance contributions (NIC), payable by employees, employers and the self-employed. Unlike income tax, Class 1 (non self-employed persons) NIC is paid between lower and upper thresholds, or between £82 and £630 per week for 2005-06.[8] A zero rate of NIC applies to earnings between the lower earnings limit of £82 per week and the earnings threshold of £94 per week (in 2005-06) to protect employees' contributory benefit entitlements. National Insurance is levied at 11% (that is, 11p in the £), but can be contracted-out for persons with a qualifying pension scheme with a reduction of 1.6%. There has also been the addition of a 1% rate on income above the upper threshold in recent years. Employers pay an additional 12.8% on earnings over the lower earnings threshold (£94 per week), but without the upper threshold, so total earnings are taxed at 12.8% per employee.
Employers are additionally liable to Class 1A NIC at 12.8% on most benefits-in-kind provided to employees which are subject to income tax in the hands of the employee, and to Class 1B NIC (also at 12.8%) on the value of the tax and on certain benefits paid via a "PAYE Settlement Agreement".
There are also separate arrangements for self-employed persons (who are normally liable to Class 2 flat rate NIC and Class 4 earnings-related NIC), married women, and voluntary sector workers.
Value added tax
The third largest source of government revenues is value added tax (VAT), charged at the standard rate of 17.5% on supplies of goods and services. It is therefore a tax on consumer expenditure. Certain goods and services are exempt from VAT, and others are subject to VAT at a lower rate of 5% (the reduced rate) or 0% ("zero-rated").[9]
Corporation tax
Main article: United Kingdom corporation tax
The fourth largest source of government revenues is corporation tax, charged on the profits and chargeable gains of companies. The main rate is 30%, which is levied on taxable income above £1.5m. In 2005-06, income below this level was taxed at 0% and 19%,[10] but with marginal reliefs in between the bands. The 0% starting rate has been abolished with effect from 1 April 2006.
There is also a Supplementary charge to Corporation Tax for companies involved in petroleum exploration (for example in the North Sea) which is levied at a rate of 20% for profits arising from 1 January 2006 (previously the rate was 10%).
Excise duties
Excise duties are charged on, amongst other things, motor fuel, alcohol, tobacco, betting and vehicles.
Stamp duty
Stamp duty is charged on the transfer of shares and certain securities at a rate of 0.5%. Modernised versions of stamp duty, stamp duty land tax and stamp duty reserve tax, are charged respectively on the transfer of real estate and shares and securities, at rates of up to 4% and 0.5% respectively.[11]
Inheritance tax
Main article: Inheritance Tax (United Kingdom)
Inheritance tax is levied on "transfers of value", meaning:
1. the estates of deceased persons;
2. gifts made within seven years of death (known as Potentially Exempt Transfers or "PETs");
3. "lifetime chargeable transfers", meaning transfers into certain types of trust. See Taxation of trusts (United Kingdom). Legislation announced in the 2006 budget but not yet enacted will extend this category to many more trusts than previously.
The first slice of cumulative transfers of value (known as the "nil rate band") is free of tax. This threshold is currently set at £300,000 (tax year 2007-08)[12] and, although it is raised annually, it has recently failed to keep up with house price inflation with the result that some 6 million households currently fall within the scope of inheritance tax. Over this threshold the rate is 40% on death. Any inheritance tax must be paid by the executors or administrators of the estate (the burden falling upon the beneficiaries) before probate is granted.
Transfers of value between UK-domiciled spouses are exempt from tax. Recent changes to the tax mean that nil-rate bands will be transferable between spouses to reduce this burden - something which previously could only be done by setting up complex trusts.
Gifts made more than seven years prior to death are not taxed; if they are made between three and seven years before death a tapered inheritance tax rate applies. There are some important exceptions to this treatment: the most important is the "reservation of benefit rule", which says that a gift is ineffective for inheritance tax purposes if the giver benefits from the asset in any way after the gift (for example, by gifting a house but continuing to live in it).
Motoring taxation
Main article: Motoring taxation in the United Kingdom
Motoring taxes include: fuel duty (which itself also attracts VAT), and vehicle excise duty. Other fees and charges include the London congestion charge, various statutory fees including that for the compulsory vehicle test and that for vehicle registration, and in some areas on-street parking (as well as associated charges for violations).
Business rates
Main article: Business rates
Business rates is the commonly used name of non-domestic rates, a United Kingdom rate or tax charged to occupiers of non-domestic property. Business rates were introduced in England and Wales in 1990, and are a modernised version of a system of rating that dates back to the Elizabethan Poor Law of 1601. As such, business rates retain many previous features from, and follow some case law of, older forms of rating.
Business rates form part of the funding for local authorities, and are collected by them, but rather than receipts being retained directly they are pooled centrally and then redistributed. In 2005/06, £19.9 billion was collected in business rates, representing 4.35% of the total UK tax income.[13]
Business rates are a property tax, where each non-domestic property is assessed with a rateable value, expressed in pounds. The rateable value broadly represents the annual rent the property could have been let for on a particular valuation date according to a set of assumptions. The actual bill payable is then calculated using a multiplier set by central government, and applying any reliefs.[14]

UK competition law

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"Making markets work well for consumers" is the purpose of UK competition law
United Kingdom competition law is affected by both British and European elements. The Competition Act 1998 and the Enterprise Act 2002 are the most important statutes for cases with a purely national dimension. However if the effect of a business' conduct would reach across borders, the European Union has competence to deal with the problems, and exclusively EU law would apply. Even so, the section 59 of the Competition Act 1998 provides that UK rules are to be applied in line with European jurisprudence. Like all competition law, that in the UK has three main tasks.
• prohibiting agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels.
• banning abusive behaviour by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal and many others.
• supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to "remedies" such as an obligation to divest part of the merged business or to offer licences or access to facilities to enable other businesses to continue competing.
The Office of Fair Trading (OFT) and the Competition Commission are the two primary regulatory bodies for competition law enforcement. The OFT's slogan is that it "makes markets work well for consumers". Consumer welfare is usually thought of as the dominant objective of competition law, though it may connect with a number of difficult questions relating to industrial policy, regional development, protection of the environment and the running of public services. Competition law is closely connected with law on deregulation of access to markets, state aids and subsidies, the privatisation of state owned assets and the establishment of independent sector regulators. Specific "watchdog" agencies such as Ofgem, Ofcom and Ofwat are charged with seeing how the operation of those specific markets work. The OFT and the Competition Commission's work is generally confined to the rest.
Contents
[hide]
• 1 Competition law history
o 1.1 Classical trade theory
o 1.2 Restraint of trade
o 1.3 Twentieth century change
• 2 European Union law
• 3 Competition Act 1998
• 4 Enterprise Act 2002
• 5 Office of Fair Trading
• 6 Competition Commission
• 7 See also
• 8 Notes
• 9 References
• 10 Further reading
• 11 External links

[edit] Competition law history
See also: Lex Mercatoria, Guilds, and Renaissance


Edward III during the Black Death enacted the Statute of Labourers to cap wages, and provide double damages against infringers
Legislation in England to control monopolies and restrictive practices were in force well before the Norman Conquest.[1] The Domesday Book recorded that "foresteel" (i.e. forestalling, the practice of buying up goods before they reach market and then inflating the prices) was one of three forfeitures that King Edward the Confessor could carry out through England.[2] But concern for fair prices also led to attempts to directly regulate the market. Under Henry III an act was passed in 1266[3] to fix bread and ale prices in correspondence with corn prices laid down by the assizes. Penalties for breach included amercements, pillory and tumbrel.[4] A fourteenth century statute labelled forestallers as "oppressors of the poor and the community at large and enemies of the whole country."[5] Under King Edward III the Statute of Labourers of 1349[6] fixed wages of artificers and workmen and decreed that foodstuffs should be sold at reasonable prices. On top of existing penalties, the statute stated that overcharging merchants must pay the injured party double the sum he received, an idea that has been replicated in punitive treble damages under US antitrust law. Also under Edward III, the following statutory provision in the poetic language of the time outlawed trade combinations.[7]
"...we have ordained and established, that no merchant or other shall make Confederacy, Conspiracy, Coin, Imagination, or Murmur, or Evil Device in any point that may turn to the Impeachment, Disturbance, Defeating or Decay of the said Staples, or of anything that to them pertaineth, or may pertain."
In 1553 King Henry VIII reintroduced tariffs for foodstuffs, designed to stabilise prices, in the face of fluctuations in supply from overseas. So the legislation read here that whereas,
"it is very hard and difficult to put certain prices to any such things... [it is necessary because] prices of such victuals be many times enhanced and raised by the Greedy Covetousness and Appetites of the Owners of such Victuals, by occasion of ingrossing and regrating the same, more than upon any reasonable or just ground or cause, to the great damage and impoverishing of the King's subjects."[8]


Elizabeth I assured monopolies would not be abused in the early era of globalisation
Around this time organisations representing various tradesmen and handicraftspeople, known as guilds had been developing, and enjoyed many concessions and exemptions from the laws against monopolies. The privileges conferred were not abolished until the Municipal Corporations Act 1835. In 1561 a system of Industrial Monopoly Licences, similar to modern patents had been introduced into England. But by the reign of Queen Elizabeth I, the system was reputedly much abused and used merely to preserve privileges, encouraging nothing new in the way of innovation or manufacture.[9] When a protest was made in the House of Commons and a Bill was introduced, the Queen convinced the protesters to challenge the case in the courts. This was the catalyst for the Case of Monopolies or Darcy v. Allin.[10] The plaintiff, an officer of the Queen's household, had been granted the sole right of making playing cards and claimed damages for the defendant's infringement of this right. The court found the grant void and that three characteristics of monopoly were (1) price increases (2) quality decrease (3) the tendency to reduce artificers to idleness and beggary.
This put a temporary end to complaints about monopoly, until King James I began to grant them again. In 1623 Parliament passed the Statute of Monopolies, which for the most part excluded patent rights from its prohibitions, as well as guilds. From King Charles I, through the civil war and to King Charles II, monopolies continued, especially useful for raising revenue.[11] Then in 1684, in East India Company v. Sandys[12] it was decided that exclusive rights to trade only outside the realm were legitimate, on the grounds that only large and powerful concerns could trade in the conditions prevailing overseas. In 1710 to deal with high coal prices caused by a Newcastle Coal Monopoly the New Law was passed.[13] Its provisions stated that "all and every contract or contracts, Covenants and Agreements, whether the same be in writing or not in writing... are hereby declared to be illegal." When Adam Smith wrote the Wealth of Nations in 1776[14] he was somewhat cynical of the possibility for change.
"To expect indeed that freedom of trade should ever be entirely restored in Great Britain is as absurd as to expect that Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but what is more unconquerable, the private interests of many individuals irresistibly oppose it. The Member of Parliament who supports any proposal for strengthening this Monopoly is seen to acquire not only the reputation for understanding trade, but great popularity and influence with an order of men whose members and wealth render them of great importance."
[edit] Classical trade theory
See also: Competition law theory and Classical economics


John Stuart Mill believed the restraint of trade doctrine was justified to preserve liberty and competition
The classical British perspective on competition was that certain agreements and business practice could be an unreasonable restraint on the individual liberty of tradespeople to carry on their livelihoods. Restraints were judged as permissible or not by courts as new cases appeared and in the light of changing business circumstances. Hence the courts found specific categories of agreement, specific clauses, to fall foul of their doctrine on economic fairness, and they did not contrive an overarching conception of market power. Adam Smith rejected any monopoly power on this basis.
"A monopoly granted either to an individual or to a trading company has the same effect as a secret in trade or manufactures. The monopolists, by keeping the market constantly under-stocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate."[15]
In The Wealth of Nations (1776) Adam Smith also pointed out the cartel problem, but did not advocate legal measures to combat them.
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."[16]
Smith also rejected the very existence of, not just dominant and abusive corporations, but corporations at all.[17]
By the latter half of the nineteenth century it had become clear that large firms had become a fact of the market economy. John Stuart Mill's approach was laid down in his treatise On Liberty (1859).
"Again, trade is a social act. Whoever undertakes to sell any description of goods to the public, does what affects the interest of other persons, and of society in general; and thus his conduct, in principle, comes within the jurisdiction of society... both the cheapness and the good quality of commodities are most effectually provided for by leaving the producers and sellers perfectly free, under the sole check of equal freedom to the buyers for supplying themselves elsewhere. This is the so-called doctrine of Free Trade, which rests on grounds different from, though equally solid with, the principle of individual liberty asserted in this Essay. Restrictions on trade, or on production for purposes of trade, are indeed restraints; and all restraint, qua restraint, is an evil..."[18]
[edit] Restraint of trade
Main article: Restraint of trade


Judge Coke in the 17th century thought that general restraints on trade were unreasonable
The English law of restraint of trade is the direct predecessor to modern competition law.[19] Its current use is small, given modern and economically oriented statutes in most common law countries. Its approach was based on the two concepts of prohibiting agreements that ran counter to public policy, unless the reasonableness of an agreement could be shown. A restraint of trade is simply some kind of agreed provision that is designed to restrain another's trade. For example, in Nordenfelt v. Maxim, Nordenfelt Gun Co.[20] a Swedish arm inventor promised on sale of his business to an American gun maker that he "would not make guns or ammunition anywhere in the world, and would not compete with Maxim in any way."
To be consider whether or not there is a restraint of trade in the first place, both parties must have provided valuable consideration for their agreement. In Dyer's case[21] a dyer had given a bond not to exercise his trade in the same town as the plaintiff for six months but the plaintiff had promised nothing in return. On hearing the plaintiff's attempt to enforce this restraint, Hull J exclaimed,
"per Dieu, if the plaintiff were here, he should go to prison until he had paid a fine to the King."
The common law has evolved to reflect changing business conditions. So in the 1613 case of Rogers v. Parry[22] a court held that a joiner who promised not to trade from his house for 21 years could have this bond enforced against him since the time and place was certain. It was also held that a man cannot bind himself to not use his trade generally by Chief Justice Coke. This was followed in Broad v. Jolyffe[23] and Mitchell v. Reynolds[24] where Lord Macclesfield asked, "What does it signify to a tradesman in London what another does in Newcastle?" In times of such slow communications, commerce around the country it seemed axiomatic that a general restraint served no legitimate purpose for one's business and ought to be void. But already in 1880 in Roussillon v. Roussillon[25] Lord Justice Fry stated that a restraint unlimited in space need not be void, since the real question was whether it went further than necessary for the promisee's protection. So in the Nordenfelt[26] case Lord McNaughton ruled that while one could validly promise to "not make guns or ammunition anywhere in the world" it was an unreasonable restraint to "not compete with Maxim in any way." This approach in England was confirmed by the House of Lords in Mason v. The Provident Supply and Clothing Co.[27]
[edit] Twentieth century change


Labour Minister Sir Stafford Cripps was Chancellor of the Exchequer responsible for Britain's first Act resembling modern competition law in 1948
Modern competition law is heavily influenced by the American experience. The so called Sherman Act of 1890 and the Clayton Act of 1914 (in the US they often name legislation after the people who propose it) were passed by Presidents concerned about the threat of big business to the power of the government. It was originally used to break up the "trust" arrangements, big company groups with intricate power sharing schemes. This is where their word "antitrust" comes from. The legislation was modelled on the restraint of trade doctrine they had inherited from English law. After the Second World War the American version of competition policy was imposed on Germany and Japan. It was thought that one of the ways Hitler and the Emperor had been able to assume such absolute power was simply by bribing or coercing the relatively small numbers of big cartel and zaibatsu chiefs into submission. Economic control meant political supremacy, and competition policy was necessary to destroy it. Under the Treaty of Rome, which founded the European Economic Community, competition laws were inserted. The American jurisprudence was naturally influential, as the European Court of Justice interpreted the relevant provisions (now Article 81 and Article 82) through its own developing body of case law.
In the mean time, Britain's own approach moved slowly, and saw no urgency for a similar competition law regime. The common law continued to serve its purpose, and debate about economic policy had become radically different after the First World War. A number of key industries had been nationalised, and the new Labour Party was committed to a socialist economic agenda: progressive democratic ownership of the means of production. In other words, the debate about economic policy was being had on a totally different level. Controlling private industry from arms length regulatory mechanisma was neither here nor there. After the second world war, this case was strengthened, yet Clement Atlee's Labour government did introduce the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948. Far more limited than the Americanesque versions, this was updated in 1953 and added to with the Monopolies and Mergers Act 1965.
[edit] European Union law
Main article: European Community competition law


The signatories to the Treaty of Rome which covers EU competition laws
The United Kingdom joined the European Community with the European Community Act 1972, and through that became subject to EC competition law. Since the Maastricht Treaty of 1992, the EC was renamed as the European Union. Competition law falls under the social and economic pillar of the treaties. So where a British company is carrying out unfair business practices, is involved in a cartel or is attempting to merge in a way which would disrupt competition across UK borders, the Commission of the European Union will have enforcement powers and exclusively EU law will apply. The first provision is Article 81 EC, which deals with cartels and restrictive vertical agreements. Prohibited are...
"(1) ...all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market..."
Article 81(1) EC then gives examples of "hard core" restrictive practices such as price fixing or market sharing and 81(2) EC confirms that any agreements are automatically void. However, just like the Statute of Monopolies 1623, Article 81(3) EC creates exemptions, if the collusion is for distributional or technological innovation, gives consumers a "fair share" of the benefit and does not include unreasonable restraints (or disproportionate, in ECJ terminology) that risk eliminating competition anywhere. Article 82 EC deals with monopolies, or more precisely firms who have a dominant market share and abuse that position. Unlike U.S. Antitrust, EC law has never been used to punish the existence of dominant firms, but merely imposes a special responsibility to conduct oneself appropriately. Specific categories of abuse listed in Article 82 EC include price discrimination and exclusive dealing, much the same as sections 2 and 3 of the U.S. Clayton Act. Also under Article 82 EC, the European Council was empowered to enact a regulation to control mergers between firms, currently the latest known by the abbreviation of ECMR "Reg. 139/2004". The general test is whether a concentration (i.e. merger or acquisition) with a community dimension (i.e. affects a number of EU member states) might significantly impede effective competition. Again, the similarity to the Clayton Act's substantial lessening of competition. Finally, Articles 86 and 87 EC regulate the state's role in the market. Article 86(2) EC states clearly that nothing in the rules cannot be used to obstruct a member state's right to deliver public services, but that otherwise public enterprises must play by the same rules on collusion and abuse of dominance as everyone else. Article 87 EC, similar to Article 81 EC, lays down a general rule that the state may not aid or subsidise private parties in distortion of free competition, but then grants exceptions for things like charities, natural disasters or regional development

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