What the government does A2 Economics and Business Unit 4B By Mrs Hilton for revisionstation

Lesson Objectives To be able to discuss the role of the Competition and Markets Authority (CMA) (formerly the OFT and the Competition Commission) To be able to discuss the role of the EU commission To be able to discuss the provision of legal framework by the government for consumer protection To be able to answer past paper questions based on the topic area

Starter Have you ever bought some clothes then found they were ripped? What did you do? Video – your rights as a consumer

OFT and Competition Commission – new name: This is mentioned in the Edexcel spec for this exam but has since closed down It is now known as the competition and markets authority From their website: We work to promote competition for the benefit of consumers, both within and outside the UK. Our aim is to make markets work well for consumers, businesses and the economy. They acquired their powers on 1 April 2014 when they took over many of the functions of the Competition Commission (CC) and the Office of Fair Trading (OFT).

Responsibilities of the CMA investigating mergers which could restrict competition conducting market studies and investigations in markets where there may be competition and consumer problems investigating where there may be breaches of UK or EU prohibitions against anti-competitive agreements and abuses of dominant positions bringing criminal proceedings against individuals who commit the cartel offence enforcing consumer protection legislation to tackle practices and market conditions that make it difficult for consumers to exercise choice

Examples of the CMA in action

Consumer protection laws Government intervenes to make sure that consumers are protected against bad practice so they can shop with confidence. There are several laws that govern what businesses can and cannot do. They are designed to protect consumers from unfair trading in businesses. The Trade Descriptions Act 1968 The Sale And Supply Of Goods Act 1979 The Consumer protection Act 1987 Unfair trading Regulations 2008

Consumer protection In total, 31 unfair trading practices are banned outright when trading with consumers. They include: advertising special offers just to bring in customers when you do not really expect to be able to supply the products (so-called bait advertising) pretending that an offer is only available for a very limited time to pressure customers into an immediate decision promoting a product similar to another manufacturer's in a deliberate attempt to make the customer think that the product was made by that manufacturer advertising that directly encourages children to buy a product or persuade their parents to do so pyramid schemes bogus competitions visiting a consumer at home and ignoring requests to leave (door-stepping) unreasonably pestering customers (eg repeated, unsolicited phone calls) supplying products without being asked for them and then requiring payment (inertia selling) Advice from citizens advice

Example – Google in app purchases

Example – ban on dipping bowls

Sale of Goods Act 1979 The Sale of Goods Act 1979 was created to protect consumers and states that and products or services that are sold must be as described, of satisfactory quality and fit for purpose. This Act says that all products have to be of a 'satisfactory quality'. This means that they have to:  be safe  last for a reasonable amount of time  be fit for their intended purpose  have nothing wrong with them (unless the defect was noted at the time of sale) watchdog

Unfair trading regulations 2008 The Unfair trading regulations makes it an offence for a trader to make false or misleading statements about goods or services. It carries criminal penalties and is enforced by Trading Standards Officers, making it an offence for a trader to:  apply a false trade description to any goods  Use aggressive door to door sales techniques

Which of these is a good dea l ?

BBC Video

European Commission This is the official website – you can “like” it on facebook and even add it to twitter

Role of EU commission video

Sample question 1 [5]

Answer question 1 Knowledge 2, Application 2 Analysis 1 Knowledge up to 2 marks: The Commission has no power to conduct inquiries on its own initiative (1 mark). Its work is to make sure that competition remains the driver of the long-term competitiveness of UK industry (1 mark). The key point is that this should ensure greater consumer choice (1 mark) and competitive pricing (1 mark). Application up to 2 marks: CC can prevent mergers if market share exceeds 25% (1 mark) and not in the public interest (1 mark). It can force a company to sell off parts of its business (1 mark). Can request undertakings from companies under investigation (1 mark). Can make orders to regulate restrictive trade practices (1 mark). Can recommend new legislation to Government (1 mark), but can act independently of Government without reference (1 mark). Analysis 1 mark: The Beer Orders are an example of the CC’s powers being exercised.

Revision Video – EU trade policy

Revision game – consumer rights