Competition Commission


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Competition Commission (CC)

a regulatory body established by the COMPETITION ACT 1998 which was originally set up in 1948 as the Monopolies Commission (1948-65), then the Monopolies and Mergers Commission (1965-98), which is responsible for the implementation of UK COMPETITION POLICY. The basic task of the Commission is to investigate and report on cases of MONOPOLY/market dominance, MERGER/ TAKEOVER, and ANTICOMPETITIVE PRACTICES referred to it by the OFFICE OF FAIR TRADING (OFT) to determine whether or not they unduly remove or restrict competition, thus producing harmful economic effects (ie. economic results which operate against the ‘public interest’). The Commission is also required by the OFT to investigate cases of ‘illegal’ collusion between suppliers ie. cases where the OFT has good reason to suspect that an ANTI-COMPETITIVE AGREEMENT/RESTRICTIVE TRADE AGREEMENT prohibited by the Competition Act, 1998 is continuing to be operated ‘in secret’. (This task was formerly undertaken by the RESTRICTIVE PRACTICES COURT).

Under UK COMPETITION LAW, monopoly/ market dominance is defined as a situation where at least 40% of a reference good or service is supplied by one firm or a number of suppliers who restrict competition between themselves (CONCERTED PRACTICE OR COMPLEX MONOPOLY situation). Mergers and takeovers fall within the scope of the legislation where the market share of the combined business exceeds 25% of the reference good or service or where the value of assets being merged or taken over exceeds £70 million. Anti-competitive practices are those which distort, restrict or eliminate competition in a market.

Cases referred to the Competition Commission are evaluated nowadays primarily in terms of whether or not the actions of suppliers' (MARKET CONDUCT) or changes in the structure of the market (MARKET STRUCTURE) are detrimental to the potency of competition in the market and hence prejudicial to the interests of consumers and other suppliers, (the so-called ‘public interest’ criterion found in earlier legislation). In cases of monopoly/ market dominance the Commission scrutinizes the actions of dominant firms for evidence of the ‘abuse’ of market power, and invariably condemns predatory pricing policies which result in excessive profits. Practices such as EXCLUSIVE DEALING, AGGREGATED REBATES, TIE-IN SALES and FULL-LINE FORCING whose main effect is to restrict competition have been invariably condemned by the Commission, especially when used by a dominant firm to erect barriers to entry and undermine the market positions of smaller rivals. In merger and takeover cases, again the emphasis is on competitive impact. A merger or takeover involving the leading firms who already possess large market shares is likely to be considered detrimental. (See MARKET CONCENTRATION).

In all cases the Commission has powers only of recommendation. It can recommend, for example, price cuts to remove monopoly profits, the discontinuance of offending practices and the prohibition of anti-competitive mergers, but it is up to the Office of Fair Trading to implement the recommendations, or not, as it sees fit.

Competition Commission (CC)

a regulatory body established by the COMPETITION ACT 1998 that was originally set up in 1948 as the Monopolies Commission (1948–65), then the Monopolies and Mergers Commission (1965–98) and that is responsible for the implementation of UK COMPETITION POLICY. The basic task of the Commission is to investigate and report on cases of MONOPOLY/MARKET DOMINANCE, MERGER/TAKEOVER and ANTI-COMPETITIVE PRACTICES referred to it by the OFFICE OF FAIR TRADING (OFT) to determine whether or not they unduly remove or restrict competition, thus producing harmful economic effects (i.e. economic results that operate against the ‘public interest’). The Commission is also required by the OFT to investigate cases of ‘illegal’ collusion between suppliers, i.e. cases where the OFT has good reason to suspect that an ANTICOMPETITIVE AGREEMENT/RESTRICTIVE TRADE AGREEMENT prohibited by the Competition Act 1998 is continuing to be operated ‘in secret’. (This task was formerly undertaken by the RESTRICTIVE PRACTICES COURT.)

Under UK COMPETITION LAW, monopoly/ market dominance is defined as a situation where at least 40% of a reference good or service is supplied by one firm or a number of suppliers who restrict competition between themselves (CONCERTED PRACTICE or COMPLEX MONOPOLY situation). Mergers and takeovers fall within the scope of the legislation where the market share of the combined business exceeds 25% of the reference good or service or where the value of assets being merged or taken over exceeds £70 million. Anti-competitive practices are those that distort, restrict or eliminate competition in a market.

Cases referred to the Competition Commission are evaluated nowadays primarily in terms of whether or not the actions of suppliers (MARKET CONDUCT) or changes in the structure of the market (MARKET STRUCTURE) are detrimental to the potency of competition in the market and hence prejudicial to the interests of consumers and other suppliers (the so-called ‘public interest’ criterion found in earlier legislation). In cases of monopoly/market dominance, the Commission scrutinizes the actions of dominant firms for evidence of the ‘abuse’ of market power and invariably condemns predatory pricing policies that result in excessive profits. Practices such as EXCLUSIVE DEALING, AGGREGATED REBATES, TIE-IN SALES and FULL-LINE FORCING, whose main effect is to restrict competition, have been invariably condemned by the Commission, especially when used by a dominant firm to erect BARRIERS TO ENTRY and to undermine the market positions of smaller rivals. A merger or takeover involving the leading firms who already possess large market shares is likely to be considered detrimental. (See MARKET CONCENTRATION.)

In all cases, the Commission has powers only of recommendation. It can recommend, for example, price cuts to remove monopoly profits, the discontinuance of offending practices and the prohibition of anticompetitive mergers, but it is up to the Office of Fair Trading to implement the recommendations, or not, as it sees fit.

References in periodicals archive ?
The statement said the online merger filing system helps all undertakings to submit the required documents electronically using a pre-defined format through an online software application that has been provided by the Competition Commission of Pakistan.
Appeals from decisions of the OFT and Competition Commission are heard by the CAT.
Aer Lingus said it "looks forward to continuing to assist the UK Competition Commission in its investigation".
The Competition Commission also looked at purely competitive aspects of the market, in other words it considered whether big four' firms engage in tacit collusion; whether they bundle audit and non-audit services together in order to raise barriers to expansion to other firms; and whether they target the customers of mid tier' firms with particularly low prices.
We have provisionally decided that these significant concerns merit a more in-depth investigation by the Competition Commission.
According to the UK-based Builders Merchants Journal, the Office of Fair Trading (OFT) has referred a proposed UK construction materials joint venture between Tarmac UK parent company Anglo American and Lafarge to the Competition Commission, The parties propose to establish a 50-50 joint venture to which each of them would contribute the bulk of their construction materials businesses in the United Kingdom.
In truth, the draft GCA Bill represents a significant dilution of the remedy recommended by the Competition Commission to address the competition problems it found.
UK culture secretary Jeremy Hunt will send News Corpa[euro](tm)s (NASDAQ:NWSA) proposed deal to buy out British pay-TV company BSkyB (LON:BSY) to the Competition Commission for a full review, the minister told parliament on Monday.
The Competition Commission has opened a consultation into the local bus market after an 18-month national investigation found "too many operators face little or no competition in local areas".
A statement from the Competition Commission said: "The Court of Appeal today overturned a Competition Appeal Tribunal judgement in favour of the Competition Commission.
Auto Business News-31 August 2010-Australian Consumer and Competition Commission recalls Fiat 500 vehicles with side airbags(C)2010 ENPublishing - http://www.
February 24 2010 -- The South African Competition Commission today confirmed investigations are under way into the country's poultry industry.