External regulation of business

Question 1

Regulatory bodies

Answer 1

• Environment agency
• Information commissioner (data protection act and freedom of information act)
• Takeover panel (enforces city code on takeovers and mergers)
• CMA (competition act 1988 CH1 - anti competitive agreements, CH2 - Abuse of dominant power)

Question 2

Prohibiting cartels

Answer 2

- Can be fined 10% of worldwide revenue
Likely to occur when;
- few competitors in the industry
- little product differentiation
- established communication with competitors
- recession
- industry has excess capacity

Question 3

Business responses to regulation

Answer 3

• Non response (face consequences)
• Mere compliance (comply but pass on costs to customer)
• Full compliance (behaviour is changed and company adapts their products)
• Innovation (new products and methodologies)

Question 4

Regulation of people

Answer 4

• Insider trading (trading shares because of insider financial information)
• Market abuse (Distorting market prices)
• Fraudulent trading (where a company being wound up due to insolvency continues to trade with intent to defraud creditors)
• Wrongful trading (where a company continues to trade despite knowing it cannot avoid insolvency)
• Money laundering

Question 5

Regulators of international trade

Answer 5

• WTO

- EU

Question 6

Barriers to international trade

Answer 6

• Tariffs or customs duties
• Import quotas
• Embargoes (bans on certain products)
• Hidden subsidies
• Import restrictions