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Market Power, Competition and Regulation: Anti-Competitive Behaviour - Activity

The Aim:

This Activity is based around the issue of regulation and the issues that arise when companies act in an anti-competitive manner or are alleged to breach such regulations.

The Task:

You will work in groups and investigate a case where companies have been alleged to be breaking competition laws or where complaints have been made against the business or industry. Your task is to give a short presentation outlining the case, explaining why it was against competition law and what the outcome of the case was.

Below is a list of stories/areas that have recently been investigated or highlighted in relation to the regulatory framework. Some are news stories that have appeared in trade magazines, others are directly linked to the Office of Fair Trading (OFT) and the Competition Commission, the government's two main agencies that seek to regulate competition and anti-competitive practice. Both the OFT and the Competition Commission provide reports of their investigations either through press releases, often a user-friendly way to find out what has happened, or through their official reports. These official reports can often be lengthy technical documents so you need to be selective in your reading - look to find the background information and then the summary conclusions - these are often enough to get the flavour of what you are looking for.

There will invariably be lots of news stories linked to these items - use a search engine to find relevant news items - you do not need to use more than one otherwise there is the tendency to collect too much information but not do anything with it! Useful sources for such information are also given below. The key is to be selective! The range of cases is intended to give plenty of choice and also to highlight the diversity of the work of the regulatory authorities.

A pub

Image: Pubs have come under scrutiny as being examples of where businesses with monopoly power can limit competition and choice for the consumer. Copyright: Patrick Zangerlé

  • BT accused of 'anti-competitive behaviour' - outlines the case against BT who are accused of using 'inside knowledge' from its wholesaling arm to steal a march on its competitors in the provision of Broadband services. (http://news.zdnet.co.uk/internet/0,39020369,2107679,00.htm)
  • Office of Fair Trading (http://www.oft.gov.uk)
    • An investigation into allegations of anti-competitive behaviour in the horse racing industry
    • The supply of beer - the tradition of tied pubs leading to less consumer choice and higher prices
    • The restrictions on the import of CDs into the UK
    • The investigation into the provision of extended warranties with electrical goods
    • The provision of private dentistry services in the UK
    • An investigation into the provision of funeral services in the UK
    • The purchasing and sale of second hand cars
    • Price fixing and football kits
    • The gambling, prize draw and competitions industry
    • The selling of consumer IT goods and services
    • The market for scientific, technical and medical journals
    • Car servicing and repairs
    • Hasbro/Argos/Littlewoods - price fixing of toys
    • Private schools and fee fixing
  • Competition Commission (http://www.competition-commission.org.uk)
    • Mobile phones - pricing structures
    • The merger between Safeway and Morrisons
    • The provision of banking services
    • The merger between Interbrew (brewers of Stella Artois) and Bass
  • Advertising Standards Authority - the work of the ASA is diverse - look into some of the adjudications (decisions) they have made but restrict your search to the last four weeks otherwise the list is too long! The Coors Brewery Ltd and SSL International PLC are particularly interesting cases! Some of these adjudications show how much time and effort some companies put into researching the adverts before placing them - again raising costs! (http://www.asa.org.uk)

Useful additional sources of information:

  • BBC News - use the search engine (http://news.bbc.co.uk)
  • The Guardian - use 'archive search'. Typing in something like 'Hasbro price fixing' or 'price fixing' will get you better results than just 'Hasbro'.(http://www.guardian.co.uk)

Key Skills:

You will be expected to utilise the following skills in making your presentation:

  1. Research a topic in an efficient and effective manner - collect relevant information and synthesise that information to communicate the key ideas effectively. You will have to organise material effectively and be selective in which information you use and which information you do not use (often as important!).
  2. Identify the key points related to the theory of market power and competition and how the case is relevant to that theory.
  3. Offer an outline explanation of the case investigated, explain the key points and summarise the outcome.
  4. Demonstrate key presentation and communication skills using appropriate methods (e.g. ICT).