4.1.8.7 Competition Policy

Competition and Markets Authority(CMA)

A government body responsible for promoting competition and preventing anti-competitive practices to protect consumers and businesses

Competition laws and investigates mergers, cartels, and market dominance abuse

The CMA enforces:

Promote fair competition, Protect consumers, Prevent market failure caused by monopolies and anti-competitive behaviour

UK competition policy aims include:

impose fines, block mergers that reduce competition

What can gov. do on firms engaging in unfair practices?

Ofcom(telecommunication), Ofgem(energy)

Other regulators oversee other industries to ensure fair pricing

efficiency, lower prices, innovation, benefits both business and consumers

Competition policy encourages:

prevents monopolies, encourages more firms to enter the market, forces firms to be more efficient, increases consumer choice

Advantages of competition policy

prevents firms from achieving market power to set artificially high prices

How does competition policy prevent monopolies?

reduces barriers for more firms to enter the market=>more competition=>more supply=> lower prices

How does competition policy encourage more firms to enter the market?

more competition=>incentive to compete with prices=>lower prices=> as a result of having to be more efficient due to competition

How does competition policy force firms to be more efficient?

more competition=>more firms=> more alternatives => more goods/services for consumers to pick from

How does competition policy increase consumer choice?

Ticketmaster, Meta, JD Sports

Application for Competition policy

misleading customers in Oasis concert in 2025; charged 2.5 times normal price for standard tickets labeled as ‘platinum’

Why was Ticketmaster investigated by the CMA in 2025?

fined for not improving pricing transparency, consumer protection laws to investigate if customers were misled

What power did the CMA use on Ticketmaster in 2025?

Merger with Giphy in 2020 could possibly limit access of Giphy’s gifs by other companies, harming competition

Why was Meta investigated by the CMA in 2020?

merger control powers to prevent Meta from taking unfair advantages whilst investigations are ongoing, showed it can fine businesses that don’t follow the rules

What power did the CMA use on Meta in 2020?

bought footasylum which could limit the sportswear market

Why was JD sports investigated by the CMA?

power to block mergers, demonstrated why restrictions must be followed by fining JD sports

What power did the CMA use on JD sports?

effectiveness of enforcement, market structure, global business influence

Competition policy evaluation

firms can bypass regulations, depends on how well anti-competitive behaviour can be monitored and penalised

Evaluation of Effectiveness of Enforcement of Competition Policy

markets with high barriers to enter may be minimally impacted, depends on contestability of market

Evaluation of Market Structure of Competition Policy

Firms may be able to bypass enforcement by relocate production, depends if firms operate in multiple nations or not

Evaluation of Global Business Influence of Competition Policy

higher output leads to lower average cost

Economics of Scale