INDUSTRIAL POLICY: Includes Competition Policy

Monopoly Theory- little recap:

  • Can take advantage of customers by exploiting producer sovereignty by manipulating consumer wants and restricting choice. – can also price discriminate aswell
  • Do this by using dominant power to restrict output to raise up prices. 
  • Utility firms are said to be NATURAL MONOPOLY. 

The Competition Commission and Office of Fair Trading are said to be responsible to a government ministry.

OFT would help to monitor and investigate any anti competitive behaviour in the market and if they find any they would refer this evidence to the Competition Commision for further investigation. The CC would investigate how this behaviour would affect the market and they themselves would refer to the Department of Business, Innovation and Skills to make a decision whether or not action should take place. Very seldomly there is action but on the extreme it can cause this monoply to split e.g. the selling of their assets. 

However there are alternatives to this 

  • Compulsury break up of monopolies
  • Private Ownership(Privatisiation)
  • Public Ownership
  • Taxing Monopoly profits 
  • Removing Barriers of Entry 

Merger Policy: 

Restrictive Trade Practices: Examples would include the supplier restricting supply unless the distributor supplies all their product range. In contrast if there is a cartel to be found it would be referred to the RPC= Restrictive Practice Court for summoning. If guilty there would be huge fines.

Not all cartels are against the public interest for example such Collective Training scheme for workers have jointly helped each other in research and development 

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