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 Monopolies Commission takes the view that a purely preventive regulation--irrespective of potential abuses--is not currently warranted.
In any other area of commercial enterprise the Monopolies Commission would be holding an enquiry.
In fact if it wasn't for the arrival of Boom Street, it might even be a job for the Monopolies Commission.
THE RACE RICHARD HANNON must be in danger of being referred to the monopolies commission, such is his domination of Goodwood's main two-year-old races.
IF the Monopolies Commission were to turn their attention to rugby, they might well have a word to say about Dan Parks.
Tesco has neatly sidestepped the Monopolies Commission (which is specifically set up to ensure fair trading) by being allowed by successive Governments to split its superstores from its smaller "in town" enterprises, and neatly avoiding attaching the profits from Tesco Garages, which are located strategically on the same sites as the superstores (despite the fact that points gained by shopping in the store can be attached to benefits in lower petrol costs).
They are currently facing a court battle as a result of the Monopolies Commission questioning their position in the market.
This concentration of economic power should not have been allowed by the FSA, Monopolies Commission, Bank of England or the governments of the day.
It is time somebody put these facts concerning Tesco to the Monopolies Commission before this city becomes Tesco Town.
FOLLOWING our pondering yesterday on why Equality Ministers are always female, reader Julie Carden emailed to ask: why is there only one Monopolies Commission? And there was another imponderable question, from reader Jane Brechin: if a man is speaking in the forest and there is no woman around to hear him...
The FA and the Monopolies Commission should intervene in this attempt to de-list the club from the stock market.
The approval of the Federal Monopolies Commission is still pending.