Ec Competition Policy

When different companies try to provide the best quality at the lowest price, they want to make sure that they get the most out of it. This means that most of the consumers will spent their money at the company's stores. To increase the number of consumers who make purchases at their stores, they need to outperform the competition.

Sometimes it happens that different companies set agreements with other companies to raise prices. Those are called cartels. If a companies form a cartel, they usually neither provide high quality, nor low prices. This is bad for the consumers as they buy low quality good at high prices.

Similiar to cartels are monopols. A monopol exist, when a company is the only seller of a certain product.In the UK for instance a company is already considered as a monopol, if it has a market share over 25 percent. This position enables the company to determine the price of its product. As it is also the only one who sells it, the company does not need to improve the quality of the product, because there are no other sellers who could provide better quality. There are also legal monopolies such as the royal mail. In addition, companies who invent a special product such as a certain chemical, often apply for a patent to protect their invention. This is not illegal.

When two companies consolidate they are called mergers. This might occur when one company buys another. In the case that both companies have an advantagde when they work together, this is called a joint venture.

Many companies strive for mergers to gain competitive advantages like lower production costs, more resources aswell as better use of machines and other capacities. Even this would benefit the customers there are some mergers doing more damage than good because of loss of competition. The European Commission Stepps in if the annual turnover of the combined businesses exceeds specified thresholds in terms of global and European