UK Competition PolicyUK competition policy can be defined broadly as "a tool through which governments hope to improve the competitive environment in which companies operate businesses, in order to improve the overall performance of the economy."( Lees and Lam, 2001) Competition law is enforced by the Office of Fair Trading. Their goal is to make the market fair, eliminating any unfair practices. Under the heading of Competition Policy, numerous factors are taken into consideration. Competition law is used to impose certain regulations on companies. Different laws are used to implement the law. The Competition Act 1998 covers issues such as the prevention of cartels and the prevention of the abuse of a dominant market position. The Enterprise Act of 2002 allows mergers to be investigated. Other activities carried out by the Office of Fair Trading include educating businesses on any changes to the law that may affect them and promoting a "strong competitive culture across a wide range of markets" (competition enforcement webpage). Many UK businesses will also be affected by other international laws. For some cases, articles 81 and 82 of the European Community will be taken into consideration. One of the key features of UK competition policy is that it seeks to prevent companies from abusing their dominant market position. Some companies become very powerful and successful within the industry they operate in. “European companies suspected of acquiring monopoly power through the creation of barriers to entry, collusion on prices or through merger activity, may be investigated under European Union law,” (Lees and Lam, 2001) A position dominant in the market usually occurs for one of two reasons; either the firm is doing well and a natural monopoly occurs, or the firm is behaving unfairly. UK competition policy exists to eliminate abuse of position, not the fact that they are in this position, i.e. it deals with the second of these reasons. This is different than in the United States, where firms are “prohibited from monopolizing or attempting to monopolize a market, and the growth of a dominant position is curbed at an early stage” (Lees and Lam, 2001.)
tags