Sri Lanka's competition policy is designed to create competitive market structures and discourage monopolistic practices. The Fair Trading Commission (FTC), established under the provisions of the FTC Act No. 1 of 1987, is the body empowered to control monopolies, mergers & anti-competitive practices, in addition to being responsible for formulating and implementing national pricing policies.

Following the liberalization of trade in 1977, internal trade policy in Sri Lanka has been geared to provide a more important role to market forces in trading activities relating to trading in goods and services. State intervention in internal trade is confined to maintaining price stability and ensuring an adequate supply of essential goods. State trading organizations under the Ministry of Internal and International Trade & Shipping Development & the two regulatory bodies -Department of Internal Trade & the FTC -play an important role in ensuring fair competition in a liberalized economy.