Briefly Outline the Main Features of, and Rationale for, Uk Competition Policy. Is It Possible to Have an Effective Policy When There Are so Many Large Multi-National Corporations Operating Across the Global Economy?
Summative Assignment March '07
Microeconomics for Business
Briefly outline the main features of, and rationale for, UK Competition Policy. Is it possible to have an effective policy when there are so many large multi-national corporations operating across the global economy?
UK Competition Policy can be broadly defined as "a means by which governments hope to improve the competitive environment in which firms operate, in order to enhance the overall performance of the economy."(Lees and Lam, 2001) Competition law is enforced by the Office of Fair Trading. Their aim is to make the market place fair, by eliminating any unfair practices. Under the title of Competition Policy, a number of factors are taken into account. Competition Law is used to impose certain regulations on companies. A number of different Acts are used to implement the law. The Competition Act of 1998 covers such issues as the prevention of cartels, and the prevention of the abuse of a dominant market position. The Enterprise Act of 2002 allows mergers to be investigated. Other activities carried out by the Office of Fair Trading include educating businesses about any changes to the law that may affect them, and the promotion of a "strong competitive culture across a wide range of markets," (Competition Enforcement webpage.) Many UK companies will also be affected by other international laws. Articles 81 and 82 of the European Community will be considered for some cases.
One of the main features of UK Competition Policy is that it tries to stop firms from abusing their dominant market position. Some firms become very successful and powerful within the industry that they are operating in. "European firms suspected of gaining monopoly power through creating barriers to entry, colluding over prices, or through merger activity, can be investigated under European Union law," (Lees and Lam, 2001) A dominant market position usually occurs for one of two reasons; either the firm is performing
Microeconomics for Business
Briefly outline the main features of, and rationale for, UK Competition Policy. Is it possible to have an effective policy when there are so many large multi-national corporations operating across the global economy?
UK Competition Policy can be broadly defined as "a means by which governments hope to improve the competitive environment in which firms operate, in order to enhance the overall performance of the economy."(Lees and Lam, 2001) Competition law is enforced by the Office of Fair Trading. Their aim is to make the market place fair, by eliminating any unfair practices. Under the title of Competition Policy, a number of factors are taken into account. Competition Law is used to impose certain regulations on companies. A number of different Acts are used to implement the law. The Competition Act of 1998 covers such issues as the prevention of cartels, and the prevention of the abuse of a dominant market position. The Enterprise Act of 2002 allows mergers to be investigated. Other activities carried out by the Office of Fair Trading include educating businesses about any changes to the law that may affect them, and the promotion of a "strong competitive culture across a wide range of markets," (Competition Enforcement webpage.) Many UK companies will also be affected by other international laws. Articles 81 and 82 of the European Community will be considered for some cases.
One of the main features of UK Competition Policy is that it tries to stop firms from abusing their dominant market position. Some firms become very successful and powerful within the industry that they are operating in. "European firms suspected of gaining monopoly power through creating barriers to entry, colluding over prices, or through merger activity, can be investigated under European Union law," (Lees and Lam, 2001) A dominant market position usually occurs for one of two reasons; either the firm is performing
References: Lees, H. and Lam, P.L. (2001), Managerial Economics: An Analysis of Business Issues, Third Edition, Pearson Parkin, M et al. (2003), Economics, Fifth Edition, Pearson Competition Enforcement webpage; www.wikipedia.co.uk Ofwat Economic regulatory webpage; www.ofwat.gov.uk Consumer regulations website, OFT; www.crw.gov.uk Vernon, R. J-stor website; www.jstor.com DTI Benchmarking Study by PricewaterhouseCoopers. Word Count: Approximately 1500