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Regulation. The supermarket sector is regulated by a great many factions and organizations all of which have different interests and agendas.

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Introduction

Definition Regulation is spoken of as if an identifiable and discrete mode of governmental activity. Selznick's notion of regulation as sustained and focussed control exercised by a public agency over activities that are valued by a community, has been referred to as expressing a central meaning. It is perhaps useful to think of the word regulation being used in the following different senses > As a specific set of command > As a deliberate state influence > As all forms of social control or influence. (Baldwin, R, Understanding Regulation) Introduction Due to its size, necessity and great public interest, the supermarket sector is regulated by a large variety of factions and organizations. The supermarket sector is primarily part of the food retail industry though it includes other areas of retail such as fashion and electronics. The U.K government, the E.U and U.N have several interests in this sector such as political, environmental social and economical factors. There are various factions who influence regulation of the sector including The Consumer Association, The National Farmers Union, British Retail Consortium and The Advertising Standards Association. The need for regulation Regulation is commonly used to correct market failure. Market failure is defined as when the uncontrolled market place will for some reason fail to produce behaviour or results in accordance with public interest. Public interest can be further subdivided into stakeholders. Supermarket stakeholders include employees, consumers and suppliers. The E.U. U.N and government are also stakeholders in the sector whose actions are in theory supposed to be in the public interest The oligopolistic nature of the supermarket sector means that the market is susceptible to market failure in various ways these are: > Collusion this is when firms in an oligopoly cooperate with each other and fix prices at artificially high rates, in order to maximise revenue. It is argued by many economists that such practice was apparent between Tesco's and Sainsbury's prior to Asda's rise in market share. ...read more.

Middle

Whilst it can be argued that the national farmers union only operates in its own interest of its members and not the public at large. Private interest groups This is where the role of private economic interests drives regulation as discussed above this is the view held by the national farmers union. Regulation in the supermarket sector is implemented by two major players, the U.K government and the E.U. Their role in the regulatory process is discussed below The U.K Government The U.K government Regulates the supermarket sector by implementing rules and procedure. The government concurs with regulatory bodies such as the Advertising standards authority and the consumers association. Legislation is passed by an act of parliament and the government investigates claims that acts have been broken. If it is ruled in court that an act is broken then fines are made and in severe cases criminal prosecution may occur. The government will operate procedure on both a national and local level. As discussed the government may not always act in the public interest and may be subject to corruption however Tiebout's local government context argues the government are forced to act in public interest because individuals can vote with their feet and can move to jurisdictions with the tax expenditure balances that meet their preferences this leads local governments to tailor their tax and spend regimes to the desires of residents if they do not do so they will be voted out of office or residents will move house out of jurisdictions. The same theory applies to national government, as they must satisfy public interest in order to ensure re-election The E.U The E.U is considered by many to be the most powerful and strongest regulatory body. Like the government the E.U fundamental aims are to look after the public interest of its members. E.U regulatory procedure works by conferring with member states who will also represent the view of regulatory bodies. ...read more.

Conclusion

Conflict concerning regulatory change is also present on an international level. Supermarkets and the U.K government and E.U appear to favour mandatory food labelling law as concerns the use of Gm food, America and Canada however wish to play down concerns. The U.N has yet to rule on the matter but there appears to be little room for compromise (BBC online Fight on GM food labelling Wednesday, 2 May, 2001,) Summary The supermarket sector is regulated by a great many factions and organizations all of which have different interests and agendas. As a result the development of regulation is often an expensive, burecratic and time consuming process. This is due to the nature of Europe's dispersed democratic structure. Democracy itself could be held largely responsible, because it allows the formulation of an unlimited number of interest groups, which with enough members and campaigns are capable of becoming players in the development of regulation. The situation is intensified further because of the U.K relationship with Europe. On many occasions this relationship has resulted in conflict of interests and defiance of E.U law. There are various ways these problems can be countered though none at present appear to be favoured by the majority of the British public. The options available are 1. Sever all links with the E.U. This would give the British government complete control of regulatory policy meaning decisions would be quicker as the E.U would have no control over regulation. However this decision could result in a significant reduction of trade with E.U nations. This would most likely leave the U.K economy unstable. Another option would be to give greater power to the E.U this would allow compatibility amongst E.U states and would result in greater compliance with E.U regulation. (This appears to be the direction the British government favours. This is illustrated by Mr Blair's readiness to hold a referendum as concerns the single European currency. At present opinion polls suggest this is not favoured by the British Public, however it is highly possible that opinion will change in response to Blair's impending pro euro campaign. ...read more.

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