8 Competition policy

4 pillars of competition policy

Antitrust and cartels

market liberalisation

State aid control

merger control

main function of CMA

to ensure that competition and markets work in favour of consumers.

who is the competition regulator in the UK

CMA - competition and markets authority

why is the EU Competition Comission importaint for the uk

UK does significant business with the EU and EU law still applies to UK companies trading in the EU

New UK-EU competieion coorperation agreement

Announced in 2024

allow for closer coooperation between CMA and EU’s compertition authorities

“shared recognition of the importance of international cooperation in an increasingky globalised economy” - Business and trade secretary - Jonathan Reynolds

Antitrust and cartels pillar

Invloves the elimination of collusive agreements and other abuses by firms that hold a dominant market position

dominant market position is defined as

having a market share greater than 40%

market liberalisation pillar

introducing competition in previosly monopoly sectors

merger control pillar

involves the investigation of mergers that would result in dominanant market position

example of a merger that was prevented by the CMA

Sainsbury Asda Murger

blocked in 2019 due to concerns over reduced competion and higher prices for consumers

the deal would have created UK’s biggest supermarket chain, accounting for 1 out of every £3 spent on groceries

megrer that was investigated and approved by the CMA

Vodafone and Three

18 months of analysis by cma

vodafone + three has commited £11 bn investment program to create an advanced 5g network reaching 99% of the UK population (leagally binding commitment to invest in UK mobile network infrastructure for 8 years)

will create UK’s biggest mobile network

state aid control

ensures that subsidies do not distort the level of competiton in the market

benefits of CMA

lower prices for consumers → prevents monopolies from overcharging

makes markets more contestable → increased innovation

fair market conditions → prevents abuse of power → benefits small firms → increases consumer choice

costs of the CMA

regularoty capture

regulatorty compliance costs for businesses → ATC shift up

enforcement costs → opportunity cost of CMA

lengthy approval process for mergers

unintedend consequences → eg breaking up a large firm to increase competiton will reduce economies of scale