3.6 Government intervention

Question 1

What is the role of the CMA

Answer 1

investigate mergers and enforce competition law

Question 2

Name a power of the CMA

Answer 2

Fine up to £30k for non compliance

Question 3

Name 3 things that the Competition Act 1988 bans

Answer 3

Anti competitive agreement e.g price fixing

Cartels

Abuse of a dominant position

Question 4

Name 3 methods of gov intervention to fix competition issues

Answer 4

Encourage small firms to grow

Lower barriers to entry

Punish firms for anti-competitive behaviour

Question 5

Define competitive tendering

Answer 5

introducing competition into the provision of public services e.g. outsourcing

Question 6

Define franchising and licensing

Answer 6

allowing pre-approved private companies to provide goods and services previously only provided by the state

Question 7

Name 2 advantages and disadvantages each of privatisation

Answer 7

Adv: Efficiency, raise gov revenue

Disadv: Externalities, privatised monopoly may be ineffecient

Question 8

How does government intervention impact price?

Answer 8

Price caps limit price

Question 9

How does government intervention impact profit?

Answer 9

Price caps may reduce profit

Question 10

How does government intervention impact efficiency?

Answer 10

Should make more competition but government failure means not always

Question 11

How does government intervention impact quality?

Answer 11

Should increase quality through regulation

Question 12

How does government intervention impact choice?

Answer 12

Should increase choice due to increased competi

Question 13

Name 3 reasons why government intervene

Answer 13

Promote competition - more choice

Increase competitiveness of UK firms

Ensure minimum quality