Competition Of The Free Market System Essay

832 Words Dec 13th, 2015 4 Pages
Competition is considered to be the chief component of the free market system. However, market can be manipulated when some businesses try to gain more market power than the others, this could distort competition and could also reduce economic efficiency. Hence, the presence of an effective competition and merger policy is vital to protect consumer interest, innovation of new product and technology and strong economic growth. “The necessity for competition policy was already recognised by Adam Smith when he wrote in the Wealth of Nations in 1776, where he stated that 'People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some instances to raise prices’.” (Hay, 1993 pg.1). It is also important to consider that for a successful competition policy, it is required that the design and implementation of the policy is appropriate. In the first section of the essay I will be exploring the role and significance of competition in protecting consumer interest, the innovation of new products and technologies, and strong economic growth. In the second section, my focus will primarily be on the CMA, I will look at the merger and policy design and attempt evaluate that. In addition, I will also use some of the case studies to analyse the performance of the CMA and the justification that the CMA uses.
Competition is essentially vital for everyone, whether it is consumers, businesses or the…

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