Competiton Policy

Question 1

Aims of CMA (3)

Answer 1

Increase Competition in a market
Resolve a misallocation of resources / monopoly failure
Protect consumer interest

Question 2

Key Tools of CMA (4)

Answer 2

Regulate Mergers
Investigate Price Agreements
Opening Markets
Financial Support

Question 3

How do the CMA monitor mergers ?

Answer 3

The CMA or European commission will investigate mergers to ensure that they can prevent mergers having a negative impact on market efficiency.

This ensures that a firm does not hold too high a market share leading to excessive monopoly power.

Question 4

How do the CMA investigate agreements ?

Answer 4

Agreements such as price fixing, splitting markets or limiting production are seen as anti-competitive, causing market inefficiency.

These agreements will be investigated.

Question 5

How do the CMA open markets ?

Answer 5

Govt. controlled markets can be opened up and exposed to free-market competition, following privatisation the CMA will monitor whether the firm becomes a private monopoly.

Question 6

How do the CMA provide financial support ?

Answer 6

If the Govt. in one EU country gives financial support to firms in a market, this may give them an unfair advantage over firms in other EU countries in that same market.

Question 7

Evaluation of Competition Policy (3)

Answer 7

Availability of accurate Information ?
Costs (eg. enforcement) vs Benefit ?
Regulatory Capture