Contestability pt4

Question 1

Aim of competition policy

Answer 1

To promote competition and make markets better, contributing to improved efficiency and enhanced competitiveness. It ensures:
-Technological innovation which leads to dynamic efficiency
-Effective price competition between suppliers

Question 2

The 4 key pillars of competition policy in the UK and EU

Answer 2

-Antitrust and cartels
-Market liberalisation
-State aid control
-Merger control

Question 3

Antitrust and cartels

Answer 3

This involves the elimination of agreements that restrict competition including price fixing and other abuses by firms who hols a dominant market position

Question 4

Market liberalisation

Answer 4

Involves introducing competition in previously monopolistic sectors e.g. retail banking

Question 5

State aid control

Answer 5

It analyses state aid measures to ensure that such measures do not distort the level of competition in a market.

Question 6

Merger control

Answer 6

Investigation of mergers and takeovers between firms.

Question 7

What are regulators?

Answer 7

The rule enforces appointed by the government to oversee how a market works and the outcomes for producers and consumers. The main competition regulator is Competition and Markets Authority (CMA)

Question 8

Examples of competition policy in action

Answer 8

-Deregulation-Laws to reduce monopoly powers
-Privatisation-Transferring ownership of public services
-Tough laws on anti-competitive behaviour
-Reductions in import controls like import tariffs