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How it all fits in with UK competition policy

Competition is essential if markets are to work efficiently. The aim of competition policy is to boost the competitive process. When a particular practice is found to be or likely to be against "the public interest", it can be prohibited. Generally, steps taken to promote competition will be to the benefit of consumers and in the wider public interest.

UK competition law rests on four pillars:

• 1973 Fair Trading Act - dealing with mergers and monopolies.
• 1976 Restrictive Practices Act - business agreements that limit freedom to act independently.
• 1976 Resale Prices Act - discussed above.
• 1980 Competition Act - dealing with anti-competitive practices.

The Secretary of State for Trade and Industry has overall responsibility for competition policy, but other important roles are played by the Director-General of Fair Trading, the Competition Commission (formerly known as the Monopolies and Mergers Commission) and the Restrictive Practices Court.

The Director-General (DG) may decide on a number of different courses of action to deal with uncompetitive practices. By looking at the case of monopolies we can illustrate these different options:

• if the DG decides further investigation is necessary, he/she conducts a preliminary enquiry
• he/she may then refer the case to the Competition Commission (CC)
• he/she may advise the Secretary of State to accept legally binding undertakings from the parties without referring the case to the CC
• if a referral to the CC is decided on, the DG doesn't specify company names or the practices to be investigated; rather, the CC's attention is drawn to the market as a whole.
• if the CC investigates, it submits a report to the Secretary of State, with recommendations for action. The DG helps the Secretary of State to decide an appropriate course of action.

This is a complex area of business law. As can be seen from the section above, the interaction between the Director-General of Fair Trading, the Secretary of State for Trade and Industry and the Competition Commission are crucial. But the D-G and members of the CC are appointed by the Secretary of State. Try to remember the relation between these three elements of UK competition policy when studying future cases.

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