What does Competition Commission do?
Government has many ways of controlling businesses in the economy. Government attempt to encourage and promote competition between firms by passing laws which:MAIN.jpg "competition")
- Control monopolies and make it possible to prevent mergers,
- Limit or outlaw uncompetitive practices between firms.
One of the ways is by setting up Competition commissions which prevents unfair competition. Competition commissions usually look into
1. Antitrust pleas
Competition is a basic mechanism of the market economy and encourages companies to provide consumers products that consumers want. It encourages innovation, and pushes down prices. In order to be effective, competition needs suppliers who are independent of each other, each subject to the competitive pressure exerted by the others.
Competition Commission might inquire cases where they find that
- Agreements between two or more firms is restricting competition
- Firms in a dominant position may abuse the position
2. Mergers
Some mergers may reduce competition in a market, usually by creating or strengthening a dominant player. This is likely to harm consumers through higher prices, reduced choice or less innovation. Increased competition within the market and globalisation are among the factors which make it attractive for companies to join forces.
3. Cartels
A cartel is a group of similar, independent companies which join together to fix prices, to limit production or to share markets or customers between them.
Instead of competing with each other, cartel members rely on each others’ agreed course of action, which reduces their incentives to provide new or better products and services at competitive prices. As a consequence, their clients (consumers or other businesses) end up paying more for less quality.
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