Standard Form Contracts Competition Law

Standard Form Contracts & Competition Law: What You Need to Know

Standard form contracts are agreements that come with predetermined terms and conditions that are not open to negotiation. They are commonly used in various business transactions, such as for consumer products or when purchasing software. However, the use of standard form contracts has come under scrutiny from competition regulators due to the potential for anti-competitive behavior.

Competition law is an area of regulation that aims to ensure there is fair competition within a market. This means that businesses should not engage in anti-competitive practices, such as colluding with competitors or abusing their dominant market position. Standard form contracts can fall under the scope of competition law if they contain clauses that restrict competition.

One common example of anti-competitive behavior in standard form contracts is the use of exclusivity clauses. These clauses require the counterparty to only use the goods or services provided by the company offering the contract. This can prevent competition from other businesses in the market and restrict consumer choice. As a result, some competition regulators have taken action against companies using these types of clauses.

Another area of concern is the use of certain pricing or discount clauses. For example, a company may offer a discount if a customer agrees to purchase a certain amount of products or services. While this may seem like a good deal for the customer, it can also prevent other businesses from entering the market and offering competitive prices.

The European Union has taken a strong stance against anti-competitive standard form contracts. In 2019, the European Commission issued new rules that require companies to ensure their standard form contracts comply with competition law. This includes a ban on certain anti-competitive clauses, such as exclusivity and pricing clauses.

In the United States, the Federal Trade Commission (FTC) has also targeted anti-competitive standard form contracts. In 2018, the FTC settled with a company that had included a non-compete clause in their standard form contracts, which prevented customers from using competing services. The company was required to remove the clause and notify affected customers.

As a copy editor working in the fields of law and business, it is essential to be aware of the potential issues surrounding standard form contracts and competition law. If you are editing a contract that includes clauses that could be considered anti-competitive, it is important to flag these for review by legal counsel. Ensuring that contracts comply with competition law can help businesses avoid costly fines and penalties, as well as maintain a fair and competitive marketplace.