Do we need government intervention in the form of Competition Policy? If so, why? Issues: mergers,cartels,industry concentration and their impact on the competition in Europe and USA.

The best known passage in Adam Smiths wealth of Nations (1776) says: People of the same trade seldom meet together, thus far for merriment and diversion, but the conversation ends in a junto against the public, or in some contrivance to raise prices,. He also thought that It is impossible indeed to prevent such(prenominal) meetings, by any law which either could be executed, or would be consistent with liberty and justice. Nowadays arguing g everyplacenment seem to think otherwise and, in recent years, intractable to introduce tougher regulations against anti-competitive behaviour. Why does there always seem to be the remove to regulate markets? Vast majority of economists agree that competition is the basic organising principle of our economic system and is crucial in ensuring increasingly higher living standards and faster economic growth. However, they argon not so much in accord over how it should be done and to what extent government should interfere in order to secure in force(p) competitive market.

Questions to be elevated include: could any competition insurance be efficient? Does any government intervention disturb the laissez faire sufficiently to halter the free trade? Is the recent surge in uniting activity the cause of collusion between firms? How do cartels plaster cast and must they necessarily be bad?

John Vickers, chairman of Britains major power of Fair Trading (OFT) argues that the intention behind the competition policy is to bring out the best of laissez faire. An efficient competition policy would enable competitive market to become a violate regulator than any regulation could be, and hence reduce the need for them. In order to achieve that, efforts to bust cartels in atomic number 63 have been increased. Typically, cartel members may agree on prices, getup levels, discounts, credit terms, which customers they will supply, which areas they will supply and who should win a contract.

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