2.5.2 Legislation

• Dominant Position Law:

  • businesses have a dominant position if they have a market share of at least 50%
  • to stop them abusing this position:
  • they cant demand 'exclusivity' from wholesalers/retailers
  • no tying - force retailer to buy 2nd type of product to buy a popular product
  • cannot sell goods at a loss to force smaller competitors out the market (predatory pricing)
• Minimum Wage : paid to those over 16

  National Living Wage : paid to those over 22

  • ensures employees are paid enough to 'live' reasonably
  • if found to be underpaying employees they will:
  • have to reimburse staff for the total they have been underpaid
  • fined up to £20,000 or even prosecuted
  • living wage is usually lower than independently calculated living wage
• Competition Policies : encourage fair policies which allow for good quality products at reasonable prices and give customers choice by differentiation (Competition Act 1988, EU competition law, Competition & Markets Authority CCMA)

  • breaking these laws result in heavy fines or criminal prosecution
  • may investigate competitor breaking the law
  • business' can't conspire to fixed prices
  • can't conspire with competitor to limit production to charge higher prices due to shortage
  • can't divide up market to avoid having to compete