Government intervention - competition policy
Author: Geoff Riley Last updated: Sunday 23 September, 2012 The aim of competition policy is promote competition; make markets work better and contribute towards improved efficiency in individual markets and enhanced competitiveness of UK businesses within the European Union single market. Competition policy aims to ensure
Wider consumer choice
Technological innovation which promotes dynamic efficiency
Effective price competition between suppliers
There are four key pillars of competition policy in the UK and in the European Union Antitrust & cartels: This involves the elimination of agreements that seek to restrict competition including price-fixing and other abuses by firms who hold a dominant market position (defined as having a market share in excess of forty per cent). Market liberalisation: Liberalisation involves introducing fresh competition in previously monopolistic sectors such as energy supply, postal services, mobile telecommunications and air transport. State aid control: Competition policy analyses examples of state aid measures to ensure that such measures do not distort competition in the Single Market Merger control: This involves the investigation of mergers and take-overs between firms (e.g. a merger between two large groups which would result in their dominating the market). Main Roles of the Regulators
Regulators are the rule-enforcers and they are appointed by the government to oversee how a market works and the outcomes that result for both producers and consumers. Examples of regulators include the Office of Fair Trading and the Competition Commission. The European Union Competition Commission is also an important body for the UK economy. The EU Competition Commission is an important regulator of business activity in the single market. The main UK regulators (namely the Office of Fair Trading and the Competition Commission) are to merge in 2011 as part of a competition reform by the new coalition government. Monitoring and regulating prices: Regulators aim to ensure that companies do not exploit their monopoly power by charging excessive prices...