Understanding Regulation

Facts, Analysis and Comment

Competition Policy

Also known as Anti-Trust

This part of this website introduces you to UK Competition Policy. A short introduction to UK competition policy (written especially for economics students) is here. Follow the links below for detailed information.

Other things being equal, it is a good thing if firms compete hard with each other. It encourages them to be efficient and innovative, and to meet the needs of consumers. In principle, therefore, it is a good thing if there are hundreds of firms all competing to sell similar goods and services, and if their customers have reliable and comprehensive information about all the goods and services that are on offer.  However:

On the other hand, large manufacturing companies, companies which are subsidised, or companies which dominate an industry can too easily become complacent and inefficient; and they may go even further and exploit their positions in order to charge higher prices and make excessive profits.  Governments in all modern economies have accordingly developed a range of policies which seek to balance one need (to grow large and efficient companies) against the other need (to protect customers against exploitation). These policies target these

Seven Types of Potentially Anti-Competitive Behaviour 

  1. Government protection, preference and subsidies
    • (These behaviours are tackled in the European Union by developing and defending the single market for goods and services, and by prohibiting most state aids.)
  2. Protecting inventions etc.
    • (Intellectual property legislation forbids the copying of new inventions for a number of years, but then competitors are then allowed to make their own copies)
  3. Price fixing ("cartels")
  4. Abuse of dominant position
  5. Merger Control
  6. Inefficient Markets ("Market Studies and Investigations")
  7. Utility monopolies and oligopolies

In addition, the UK government is increasingly keen to see customers claim compensation (by taking private actions) when a cartel or dominant company causes them damage. 

Then, as well as following the above links, you may wish to consider these ...

... Key Issues in Economic Regulation

The Agencies

Within the UK government, policy development in most of the above areas is the responsibility of the the Department for Business. Day-to day, however, all the policies (except private actions) are delivered through specialist agencies, as follows: