Championing competition
An Office of Fair Trading case study

Page 1: Introduction - the importance of championing competition

We live in an economic system that is generally good at channelling scarce resources towards meeting consumers' needs. One reason for this is that markets are efficient at processing data. Every day, the preferences of millions of consumers are fed into the market e.g. when we buy biscuit B rather than biscuit A and book holiday D in preference to holiday C. Our spending preferences act as signals...
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Page 2: The Office of Fair Trading

In the UK, the Office of Fair Trading (OFT) has the job of ensuring that markets are competitive, that firms conduct their business fairly, and that consumers' wishes and interests are properly considered. The OFT is an independent organisation. Its powers come from consumer and competition legislation, including the Competition Act 1998. It is currently headed by the Director General of Fair...
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Page 3: The OFT in action

The primary aim of the OFT is to 'make markets work well for consumers'. It is involved in three key areas of activity:InvestigatingEnforcingCommunicating.
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Page 4: Investigating

This work includes:investigating complaints from consumer bodiesresearching how markets workexamining the impact on markets of new and existing legislation.The OFT investigates whether markets are working well for consumers e.g. are consumers well served by a system under which local authorities control the number of taxis licenced to operate in their area? In particular, the OFT advises the...
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Page 5: Enforcing

The OFT can require firms to stop practices that are against consumers' interests e.g. firms' attempts to restrict competition. Firms often have an incentive to restrict competition because reduced competition will lead to higher profits and an easier existence. The ways in which firms may seek to restrict competition are many and various. For example, a firm may try to:reach agreement with...
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Page 6: Communicating

The OFT liaises with government departments and international organisations, as well as answering queries from individual consumers and providing information about consumers' rights.It communicates with consumers, businesses, the government and others regularly. Through its announcements, publications and press releases, the OFT:explains its decisions openly to all shows how efficient, competitive...
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Page 7: Conclusion

The OFT helps to make markets work better for consumers through its roles of investigation, enforcement and communication. Sometimes the OFT is obliged to take action against firms that operate against consumers' interests, but more often than not, the mere existence of the OFT is enough to give businesses the incentive to engage in fair and open competition. Being able to select from a variety of...
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