Business Environment

Photo Credit: http://www.enerpro.eu.com

Week 5

Competition Policy

And Regulatory Mechanisms

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Dr Shohail Choudhury

Learning Outcome

LO2: Understand the nature of the national environment in which businesses operate

2.2: evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organisationCourse Content

competition policy (up-to-date legislation including Competition Act 1998, Enterprise Act 2002); Competition Commission, Office of Fair Trading; Directorate General for Competition); European Commission); sector regulators eg Ofgem, Ofwat, Civil Aviation Authority; Companies Acts; regional policy; industrial policy; enterprise strategy; training and skills policy

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Today’s Lesson Plan

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What is competition?

The degree to which a market or industry can be described as competitive depends in part on:• how many suppliers are seeking the

demand of consumers• the ease with which new businesses

can enter and exit a particular market in the long run.

Highly competitive markets is where there are many sellersPure monopoly where a market is dominated by one single supplier

Monopolies etc• Monopoly where a market is dominated by one

single supplier. Pure Working

• Oligopoly - where a few producers dominate the majority of the market and the industry is highly concentrated.

• Duopoly is where two firms dominate the market although there may be many smaller players in the industry.

Video: Royal Mail Sell Off

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Activity on Video: 5 mins

• Changes in Policy can impact on competition.

• How privatisation of Royal Mail will impact competition?

• Discuss in pairs and present to the class.

COMPETITION AND LEGISLATION

• UK competition agreements between companies function to protect the consumer.

• This protection is embedded into five Act of Parliament in the UK.

• The EU has a Commissioner who works to ensure that all countries enforce competition law and that the laws are fair and barriers to entry are reasonable.

NHS: 5 Principles of competition

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Debate

Is competition good for patients service?

• Declare whether you are for or against the proposition

• Each participant will get 2 mins.• 1 for, then 1 against.

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Video: Is competition good for the NHS

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Activity: Research and PresentationTime: 20 mins

• Library – teams of 4

• Go to library and use internet.• Each team member will identify an unique piece of

information on the following Acts. • 5th one done together by all team members will be a

paragraph on it. »The Fair Trade Act 1973»Restrictive Practices Act 1976»The Competition Act 1998»The Resale Price Act 1976»Treaty of Rome – Articles 85 and 86

Regulatory Bodies

• The Competition Commission (1998) replaced the Monopolies and Mergers Commission.

• Usually cases for investigation are referred to the CC by the OFT or the Secretary of State. Is this merger against public interest?

• OFT was established by the Enterprise Act 2002 as an independent professional organisation.

Reading Material: CC

• Check your moodle for a reading material on competition commission

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Video: OFT for consumer rights

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From OFT’s Website• The OFT's mission is to make markets work

well for consumers. Markets work well when businesses are in open, fair and vigorous competition with each other for the consumer's custom. Our job is to make sure that consumers have as much choice as possible across all the different sectors of the marketplace. When consumers have choice they have genuine and enduring power.

We pursue this goal by:• encouraging businesses to comply with

competition and consumer law and to improve their trading practices through self-regulation

• acting decisively to stop hardcore or flagrant offenders

• studying markets and recommending action where required

• empowering consumers with the knowledge and skills to make informed choices and get the best value from markets.

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• As an independent professional organisation, the OFT plays a leading role in promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. Our tools to carry out this work are the powers granted to the OFT under consumer and competition legislation.

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Other Regulators

These bodies exist to protect the public interest where there is a limited amount of competition and promote choice in a market where suppliers are limited.• OFWAT – Water suppliers• GEMA – Gas and Electricity Makers • OFCOM – Media and

Telecommunications

Self Regulators

• PCC – Press Complaints Commission• Portman Group – Drinks industry and

promotes responsible drinking• FSA – Financial Services Authority

was set up by Act in 2000 to regulate financial services industry

• BMA – Protects doctors professional interests.

Video: Competition in EU

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Assignment Help

AC2.3 Using the same organisation, you are required to evaluate the impact of the UK government’s policy on competition and other regulatory mechanisms that could control the activities of the organisation.

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Video: Competition in Action

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References

• Times 100• Tutor2U• Business Case Studies.co.uk• OFT• GOV.UK

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