Regulation And Competition Policy Flashcards
What is the CMA
Is the competition and market authority which regulates markets within the UK
What are the two reasons CMA will investigate a merge
1- if the merging will make the market share for the company more than 25%
2- if the turnover of the combined companies annually is more than 70m
What are the two examples of investigation that the CMA has done
1- blocking the merge of O2 and three because it makes the market share 31%
2- investigation of the merge of orangeTM and T mobile but it was not blocked because it was beneficial to consumers
What is price regulation
The CAM regulates the increase in prices to protect consumers
What are they two types of price caps
1- RPI+k
2- RPI-X
What is RPI+K and give me example
RPI is inflation and K is percentage that the company chooses to increase it
E.g ofwat is a water company it uses RPI+K as the increase in prices proportional to increase in. Inflation did not meet consumer needs so a higher [percentage was added
What is RPI-X with an example
E.g ofgem were they had a monopoly which led to low competition and low productivity so the X o percentage was decreased from prices to push them to be more productive for profit
What is regulatory capture
Where regulators Favour companies they are regulating giving them the benefit to increase profit without baring the intended consequences. E.g allowing low quality products in the Uk which does not benefit consumers also they can make K higher or X too low
What is profit regulations with example
Where the profit is caped and taxed forcing them to invest their profit
E.g America in the 70s they wanted water companies to be more efficient
What is performance target and quality standards with example
E.g scotrails has performance target of 91.3 % of trains being on time if it falls below that they will be fined and shamed in media
NHS has to respond to accident in less than 4 hours ad the head could be fired if they did not meet it
How does deregulation and privatisation promote contestibility with example
American airline deregulation allowing more airlines to fly certain locations with increased efficiency and better quality customer services
When BT was sold to private investors which put pressure on BT and increased efficiency
What is competitive tendering
Is when private sector competes to win a contract leasing the government getting the best deal, e.g the NHS catering food contract
Give me three anticompetitive practices with examples
1- predatory pricing (South Korea with machines)
2- price collusion. \
3- vertical integration for example pharmaceuticals with epilepsy drugs
What is nationalization
Where the private ownership is transferred to government ownership
