What is the meaning of a Monopoly under competition law ?
Monopoly refers to a market structure or market situation where a single seller dominates the sales of a unique product or commodity in the market . In a monopoly market , because the seller is the sole dominant of the goods of which there are no close substitutes to such product , the seller faces no competition . The single producer of the goods may either be an individual owner , a single partnership or a joint stock company . Because the monopolist has full control over the supply of a commodity being the sole seller of it , he possesses the power to set the price and becomes the market controller .
What are Pure Monopolies ?
A pure monopoly is said to exist when there is only one producer of a good / product and there are no other competitors to it .
A company is said to have a pure monopoly in the market when such a company is the sole seller in the market of a product with no other close substitute .
What are Natural Monopolies and the power of Patent ?
When a company becomes a monopoly due to high fixed or start - up costs in an industry , is said to develop a natural monopoly .
Natural monopolies also develop when an industry is a specialised industry where only one company can meet the needs of the demand or industries that require some unique raw materials or technologies .
When companies manage to acquire patents on their products , such products become patented products that prevent competitors from developing the same product in a specific field , there can have a natural monopoly .
After patenting a product , the patent enables the company to earn profits of the product for several years without the fear of any competition to such a product .