Business Legislation

Question 1

What is the consumer protection act (1987)?

Answer 1

Says that new consumer goods must be safe.
There are also other, more specific regulations.

Question 2

How can policies affect Businesses?

Answer 2

Can attract customers if they are abiding by environmental laws
Can cause fines if they do not follow laws
Can limit production quantity and efficiency
Can disrupt production if told to stop making noise or smoke at night

Question 3

What are competition policies?

Answer 3

Encourage businesses to provide good quality products at a reasonable price
Need to make sure they abide by laws or competitors can report them to the authorities to investigate

The Law states:
- businesses cannot conspire with competitors to fix prices
- businesses cannot conspire with competitors to limit production leading to shortage and higher prices charged
- businesses can’t divide up the market to avoid having to compete

Question 4

What laws stop a company from abusing a dominant position?

Answer 4

Dominant position = market share of at least 50%

Cannot demand exclusivity
Cannot tie products (Tying) retailers must buy more than one product in order to buy the popular one they really want
Cannot sell goods at a loss to force smaller competitors out of the market (predatory pricing)