Competition policy (T.O.T.F) Flashcards
What are the two main aims of competition policy
Promote competition
increase efficiency within markets
What does competition policy aim to ensure
-Innovation which promotes dynamic efficiency
-Price competition
-Safeguard of consumers
What are the 3 pillars of competition policy
Anti- cartels
Market liberalisation
Merger control
What is market liberalisation
Involves introducing competition in previously monopolistic sectors such as energy, banking and postal services
Who appoints a regulator
The government
Who is the main regulator in the UK
The CMA
What is a regulator
A rule enforcer appointed to oversee how a market works and the outcomes that result for producers and consumers
Give a real life example of when the CMA prevented two companies from mergers to align be within the consumers interest
Asda and Sainsburys
The CMA said the merger could lead to a ‘poorer shopping experience ‘ As the firms would have the power to drive up prices
What is the counter argument as to why a merger forming one larger firm may be in the consumers interest
Economies of scale suggests that prices would decrease due to firms ability to purchase in larger quantities, reducing costs
What are three examples of competition policy
De regulation
Privatisation
Tough laws on anti competitive behaviour
Give examples of de regulation as a competition policy
- Reducing barriers to entry
- Preventing mergers which create a monopoly
Give a real example of de - regulation
Laws which introduced competition into the postal services industry
Give a real example of privitisation
Circulating shares of royal mail
What is the practice of circulating shares called
Stock floatation
Give two real examples of tough laws on anticompetitive behaviour
-Companies breaching UK competition rules risk fines of up to 10% of global turnover
- Senior executives can be jailed if negative outcomes occur due to their actions
