Competition in the UK and EU

Question 1

3 reasons for competition policy?

Answer 1

To ensure free and fair trade

Better allocation of resources

providing protection to the consumer

Question 2

What is the competition policy in the UK called?

Answer 2

Office of Fair Trading (OFT)

Question 3

What are the two areas of operation of the OFT?

Answer 3

Anti-competitive practice: investigates to see if there is anything like price fixing or predatory pricing. Fines can be issued at 10% of the firms turnover.

Takeovers and mergers: Refers these to the Competition commission to look into these

Question 4

4 reasons why competition policy may be ineffective?

Answer 4

Difficulty to prove: Discounting could have the effect of predatory pricing.

Fines being ineffective: Some large can afford to pay the fines.

Regulatory capture

Government failure: OFT and Competition commission makes mistakes