Reforms in Competition Policy in the UK Essay Example | Topics and Well Written Essays - 1500 words

Reforms in Competition Policy in the UK - Essay Example This research will begin with the statement that in any business environment, competition is a vital element that brings about both positive and negative results. This is because it is seen as a sort of reward for innovation and efficiency, it is also enhances productivity within any given country or region. In addition, competition ensures that customers can get low price and more choices. Besides this, their living standards are raised. Indeed, if competition is supported by the right competition policies, then a country can be well on its way to achieve economic prosperity. In this context, policies in this area are necessary to ensure that trade practices are regulated, undue competition is restricted through legislature and that markets are strengthened so that businesses can become viable in the global market. Competition policies are designed to ascertain that the financial market is opened up. Besides this, it also floats the country's currency and decreases trade barriers. T here are a number of direct benefits that come out of competition policies to businesses; some of these include low costs for utilities like electricity, telephones and other telecommunication charges. Transportation costs are also reduced like rail freights and port. However, country's undertaking such policies should be aware that this involves a high cost to them. There are a large number of parties that are affected negatively by this kind of scheme. The first are industries, the second are households, the third are industries and even regions n general. Households are the ones who have to bear the burden of job cuts and consequently loss of income spiralling from competition policies. Prime Minister Gordon Brown believes that the function of competition policy is to promote competition and to reinforce markets. He believes that its purpose is to regulate the business environment such that purchasers and challenges can be protected. In addition, incentives in business mustn't be obliterated; they should still be able to create, invest and take risks. Recent changes in competition policy have been centred along these latter mentioned principles. The UK parliament has looked at merger laws that were passed in the competition policy of 1998. This merger law has been placed under scrutiny by parliament through the Enterprise bill. This Bill that was passed in the year 2000 was designed to regulate mergers within the business environment. The law stipulates that mergers should be made only when they do not limit competition. Mergers that give such indications are to be taken to the Office of Fair Trading. This body will determine whether the merger should be subjected to further scrutiny under the Competition Commission which has the mandate to halt or allow progress of the merger. These reforms are aimed at providing some additional safeguards against unfair trade practices. Some business owners contemplating mergers may have unfair possession of assets if the mergers are completed thus justifying the need for regulations. There are a number of services that have blockages in regards to mergers. An example of an unhealthy merger that was prohibited in the year 1999 was the Manchester United/ BSkyB merger. Such a merger would present considerable problems to the business environment surrounding media communications. Firstly, the merger was going to give the media Company undue vertical privileges that would inhibit other players in the industry. Consequently, this effect would then trickle down to the final consumer and cause dissatisfaction because only one company has exclusive privileges and will therefore have more market power. Restrictions of competitive agreements and dominant positions in the market Competition policies in the recent past also regulate provision of services that are outside the traditional domain of any business. This has received a lot of emphasis after technological advancements.