The Government Policy/Authority On Supervising the Market.

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THE GOVERNMENT POLICY/AUTHORITY ON SUPERVISING THE MARKET

Business 2

Alleyn Wang

Terry Chen

Instructor   David Jones

27th MAY 2003

Abstract

The UK government has taken lots of forces on supervising the market, both in policy and departments. With the development of the market, the focus for government supervising regularly moves on to the monopoly related activities nowadays. Hence some related and specific legislations and organizations are issued and formed to fight against the informal and unequal business activities, especially the monopoly affairs. Then with the intervention of EU laws and organizations, the UK original ones were forced to be re-fixed or replaced, in order to better fit into the uniform EU market. Al though the UK policies and legislations have been changed several times, since they were issued/formed, lots of UK business have been successfully investigated and supervised, such as the supermarket. Generally, the UK have done well on supervising the market running well before, as the market becomes more and more complex, the UK government need to better improve itself to keep the market running and growing on track.

Introduction

The UK market has been grown over ages; it is now a relatively mature and formal market. There are nearly all kinds of business factors coexisting in this mature economic system, such as, consumers, normal firms, laws, investigators and even monopoly. The monopolies are defined as the dominant firms with a market share over 25 per cent. And similarly, a merger could be referred to the MMC if the combined market share exceeded 25 per cent. Also a kind of agreement, which is called as the restrictive trade practices (RP), are being widely used/signed between firms in order to reduce the impact of competition. They are all the potential factors in the current market, which could result the market failure. With these worries, government formed some investigating organizations, such as MMC (the Monopolies and Mergers Commission), and issued some competition laws, in order to protect the interests of consumers and small businesses and also strengthen the dominant firms’ competitiveness and consequently avoid the market failure. Here below we will expain some details of policies and legislations that the government gave out, and a further research on how the legislation and department are dealing with the monopoly affairs.

Results and Analysis

Currently in the, there are two main acts in the field of anti-monopoly legislation, namely the Enterprise Act and the Fair Trading Act. Both of them are commonly used by government during investigating the irregular business activities. For the former, its aim is to ensure that business in the can compete on the ground of no anti-competition practice by marking those behaviors as illegal. In the Chapter 1 and 2 of this act, Anti-competitive practice and abuse of dominant place in the market are defined and the consequent legal action is listed. For example, any firms fixed their price together in order to get a higher market share will be fined by as much as 10% of their turnover in the if their market share together exceeds 25% in the market they operate. Also, other legal action will be taken if a firm show bias on different customers or add unrelated supplementary items to the contracts resulting over 40% of the market share. As to the Fair Trading Act, it entitle the OFT (OFFICE of Fair Trading) a set of authority to investigate and report as well as review the Anti-competition practice in the market. First of all, under this act, the OFT are legitimate to require the companies breach the legislation again and again to make an assurance and take them to court if the assurance is also breached. Also, they can initiate any investigation by requiring information formally and informally by requiring information from any party involved. Moreover, they have the power to refer to any organization under investigation to the Competition Commissions so that further legal action will be taken. Lastly, OFT is also required by law to be the source of advice of the Secretary of State.

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Recently, because of the influences of European Union, the UK laws have been changed a lot. The early PRM Act in 1964, which referred to the Price Maintenance Act, was replaced by the Competition Act in 1998 with the regular consummating of the UK domestic economic system. Subsequently, under the big impact of the EU approaches, especially the EU competition law, the Competition Act 1998 was being further improved into the Enterprise Act at last year, which is 2002. Under the requirement of European Act, a set of reforms has been carried out, which aimed at higher position of ...

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