What the government does: competition policy

What does the Office of Fair Trading do?
Moniters changes in market structures and responds to comp;aints about anti- competitive activities. Supervises aspects of consumer protection laws
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What powers does the Office of Fair Trading have?
Enterprise act gave considerable power. Company directors can be imprisioned for upto 5 years and fines 10% of annual global turnover. Can force companies to reduce prices or market share by selling off part of the company. Scrutinises takeover bids.
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What is a super complaint?
Some consumer groups can directly refer their complaint to the OFT who has to respond within 90 days
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What is the Competition Commission?
An independent public body. The conduct in depth inquiries into mergers, markets and the regulation of major industries.
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What powers does the Competition Commission have?
Can impose changes on companies and ban mergers.
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What is the main difference between competition law in the UK and the EU?
The EU focuses on issues that cross European boarders and the UK focuses on issues within the UK.
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What rules does the EU impose on businesses?
No price fixing, No market sharing, Can sqeeze out smaller competitors, Can't merge if it would allow them to control the market, Larges companies can't merge without permission.
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What powers does the European Commission have?
Impose fines of upto 10% of global sales.
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Why might a business whistleblow?
Can get total or partial immunity from fines.
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What are the positives of anti-competitive policies?
Companies have been uncovered and prosecuted, markets are more competitive, more competitive firms are more likely to succeed overseas, consumers benefit from lower prices and more choice, cases deterr others.
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What the the problems with anti-competitive policies?
Government failure can occur, Investigations take time slowing down mergers to the detriment of the businesses involved, Unknown number of cartels undetected, Judgements may be criticised in hindsight, Increasing market concentration.
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What is regulatory capture?
When the regulator is influenced by the industry's point of view instead of the consumer.
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What is government failure?
When government intervention makes the situation worse. One source of market imperfection is solved but another is created.
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What are contestable markets?
Markets that have low barriers to entry and new entrants can set up without having to invest serious amounts of capital. This can make markets competitive even when there are relativly few sellers.
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What are the positive effects of a competition policy for businesses?
Vunerable small businesses protected from anti-competitive practices. Barriers to entry less, Highly competitive industry's creates external economies of scale, Competitive businesses better foreign markets, Lower prices improves standard of living
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What are the negative effects of a competition policy for businesses?
Investigations can be lengthy delating business activities, Complying with laws reduces profits + is costly, Costly to challenge rulings + appeal, Business may be unable to get economies of scale, Businesses have to be aware to avoid breaking the law
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Card 2

Front

What powers does the Office of Fair Trading have?

Back

Enterprise act gave considerable power. Company directors can be imprisioned for upto 5 years and fines 10% of annual global turnover. Can force companies to reduce prices or market share by selling off part of the company. Scrutinises takeover bids.

Card 3

Front

What is a super complaint?

Back

Preview of the front of card 3

Card 4

Front

What is the Competition Commission?

Back

Preview of the front of card 4

Card 5

Front

What powers does the Competition Commission have?

Back

Preview of the front of card 5
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