HNC/HND Unit Competition Policy

 To explore the role of market legislation and regulation in the UK. In particular the role of the Competition Commission and other regulatory bodies such as Oftel, Ofgem etc

 To explain the role of the Competition Commission and other regulatory bodies in the UK.  To discuss their impact on organisations and consumers

 You are required to produce an essay of no more than 3000 words (font size 12) which answers the following question:  “The market environment and the national environment in which an organisation operates shape the decision making, behaviour and activities of that organisation” Discuss using examples.  You will be expected to describe and evaluate the following in relation to your chosen organisation: ◦ The type of economic systems that exist (free market, closed economy etc.) ◦ Governmental policies regarding fiscal and monetary policies ◦ Competition policy and regulatory practices. ◦ Different market types (monopoly, oligopoly etc.) ◦ Market forces (supply and demand, economies of scale etc.) and organisational responses to these forces.

 In the United Kingdom regulation takes different forms: ◦ Legislation ◦ Competition Policy ◦ Office of Fair Trading (OFT) ◦ Competition Commission ◦ Regulation of former nationalised industries ◦ Self-regulation

 The Fair Trading Act (1973) The Fair Trading Act (1973)  Dealing with monopolies and mergers  The Competition Act (1988) The Competition Act (1988)  Dealing with anti-competitive practices  Ch I: Prohibition of anti-competitive agreements, based on Article 81 of EC treaty  Ch II: Prohibition of abuse of a dominant position in a market, based on Article 82 of EC treaty  Articles 85 and 86 of the Treaty of Rome Articles 85 and 86 of the Treaty of Rome  Where restrictive practices and mergers have an effect on interstate trade

 Main areas of concern to competition authorities are: ◦ Resale price maintenance permitting max or min prices to be fixed by producers ◦ Exclusive distribution agreements ◦ Exclusive dealing agreements ◦ Tie-in sale agreements ◦ Quantity forcing downstream firms to purchase min quantities

 Established by the Enterprise Act 2002  Members are appointed by Secretary of State for a maximum of 5 years  OFT’s job is to make markets work well for consumers ◦ Ensuring fair and open competition ◦ Ensuring consumers have as much choice as possible

 Brief history ◦ The CC replaced the Monopolies and Mergers Commission in 1999, following the Competition Act ◦ The Enterprise Act 2002 introduced a new regime for the assessment of mergers and markets in the UK. ◦ The CC’s legal role is now clearly focused on competition issues. ◦ The Enterprise Act also gave the CC remedial powers to direct companies to take certain actions to improve competition.

 Conducts in-depth inquiries into mergers, markets  Regulates the major regulated industries  Inquiries initiated by the Office of Fair Trading or Secretary of State, or the

 Regulate the former nationalised industries  The regulators influence pricing policy, competitive strategy and the structure of the industry

 On the next slide there are links to information about a range of regulatory bodies  Find out about the most recent activities / reports of one of the mentioned regulatory bodies.  What issues have they scrutinised in relation to these industries?  What is the impact on the organisations and their consumers?

 Ofwat Ofwat  Ofgem Ofgem  Ofcom Ofcom  Ofsted Ofsted  Office of Rail Regulation Office of Rail Regulation

Body Issues Impact

 Main legislation and regulation relating to market control  Competition Commission  Regulatory bodies