CMA Flashcards
Explain CMA fines?
Fines are 10% of annual turnover for duration of abuse (max 3years).
Whistleblower is exempt
EV point 1?
Investigation rate low due to funding, therefore conviction rate is also very low. Furthermore, convictions that do go through can be overturned through appeals.
EV point 2?
Fines are only 10%. This is relatively small amount of money, especially since anti competitive practices often will lead to a greater than 10% increase in turnovers, therefore a net gain is made even with the fines. This leads to persistence of anti competitive practices.
EV point 3?
.
Define the law of diminishing (marginal) returns?
The law of diminishing marginal returns states that in a production process, as one input variable is increased, there will be a point at which the marginal per unit output will start to decrease, holding all other factors constant.
Marginal cost and revenue tables?
Always leave first spot blank
Define PFI or PPP? (Private finance initiative or public private partnership?)
Means that private firms supply major projects that are rented or leased to the government.
2 advantages of PPP/PFI?
Profit motive from private firm can lead to higher efficiency than the public sector
Wider scope of projects being done because it means that projects that before were unfeasible before are now more likely to happen - taxes do not have to rise to do project
3 disadvantages of PFI?
Higher total cost than if paid for up front, leads to much higher debt
Long term (30year) contracts are difficult to get out of or change, meaning the tax payer may be paying for something that isn’t working well or efficiently
6 powers of the CMA?
Fines Prohibit mergers/ allow with conditions attached Directors imprisoned Raid offices and seize evidence Guilty until proven innocent Control prices (regulators)
