Restriction of free market competition by transnational corporations

The nature of transnational corporations dictates certain patterns of behaviour which may restrain competition. While the allocation of markets may be rational from the viewpoint of an enterprise when it is engaged in activities across national boundaries, it is almost certain to clash with the interests of some countries. Mergers involving foreign firms may be beneficial to the enterprises involved, but the resulting changes in industrial structure may be contrary to the domestic or international public interest. In establishing affiliates in host countries, transnational corporations may find themselves competing with local firms. This increased competition may be beneficial, but it may also result in the take-over or elimination of local firms, which for various economic, political and social reasons may be an undesirable development. Some transnational firms retain acquired companies' names to give the appearance that the market is not dominated by one giant brand. The low profile approach also de-fuses resentment against foreign business. Indeed, many transnational corporations' methods may be termed covert, in the light of increasing sensitivity to their presence.

Domination of a market, or restrictive business practices within it, by transnationals, may therefore go undetected until a rather late stage when considerable harm may have already been done.