3.6

Question 1

What are the aims of competition policy?

Answer 1

• Technological innovation which promoted dynamic efficiency in different markets
• Effective price competition between suppliers
• Safeguard and promote the interests of consumers through more choice and lower prices.

Question 2

What are the main pillars of UK competition policy?

Answer 2

• Anti-trust and cartels; eliminating agreements that restrict competition including price-fixing by firms with a dominant market position.
• Market liberalisation; introducing competition in previously monopolistic sectors such as energy supply, retail banking and mobile telecoms.
• Merger control; investigation of mergers and take-overs which could result in firms dominating the market.

Question 3

What can the CMA do?

Answer 3

• Examine mergers if the merger entity ahs a turnover of £70m or more or controls over 25% of the market.
• They can block acquisitions if they find that the integration of 2 businesses will lead to significant lessening of competition in one or more markets at local, regional or national level.
• They aim to ensure that all mergers don’t lead to worse outcomes for consumers, e.g. through higher prices, lower quality or reduced choice.
• they can allow mergers to go ahead, providing certain conditions are met e.g. selling off other parts of their company.