The competition commission is the UK body set up in 1998 to regulate mergers and monopoly power in UK markets. It replaced the Monopolies and Mergers Commission.
It often deals with issues referred to it by the Office of Fair Trading OFT
The competition commission only makes recommendations, enforcement of rules is done by the OFT and the government.
Competition Commission and Mergers
The competition commission have an important responsibility to weigh up whether a merger is in the public interest. They will look at factors such as:
- Market share of new firm
- Local monopolies
- Economies of scale in industry
- Importance of research and development
Competition Commission and Supermarkets
When Tesco wished to merge with Safeway, the competition commission investigated and decided that firm would have too much monopoly power. They allowed a merger between Safeway and Morrisons but on the condition Morrisons got rid of some southern stores where there was an overlap between the two.
Competition Commission Groceries market
The competition commission can also investigate markets to see whether firms are abusing monopoly power. Between 2006 and 2008, the Competition commission delivered a report on the grocery sector. View report here
The commission reported that generally the British consumer got a good deal from supermarkets and the market was fairly competitive.
However, they singled out two practices which were considered anti competitive
- Selling goods below cost (unfair competition)
- Variations in geographical prices reflecting diverging levels of geographical competition.
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