How might the UK government via its competition policy promote competition post Brexit in both the retail and banking sectors. Contents Introduction ..................................................................................................................................... 3 Main body ....................................................................................................................................... 4 Conclusion ...................................................................................................................................... 7 References ....................................................................................................................................... 9 Introduction In the past, competition in the retail and banking sectors can be described as a source of controversy, both because of its advantages and disadvantages, though generally, the government has taken numerous measures to lessen or even eliminate such competitions. Nevertheless, this issue will also be addressed in detail in what follows. First and foremost, it is essential that this essay explains why Britain’s regulatory policies and systems may improve the UK economy post-Brexit, as well as describe how these reforms will reduce costs for small suppliers and help them achieve greater financial stability. This implies that there exists now a need to understand how competition can promote financial advancement for all stakeholders, including consumer (Kerber, 2019). Consequently, this paper focuses on the retail sector, which includes wholesalers, retailers, and banks, to see that these are three vital areas where changes to regulations will likely improve business performance and increase consumer confidence. In addition, the discussion will concentrate on the banking industry (Banks) where competition may potentially result in lower operational expenses, increased profit margins, and improved customer satisfaction. Finally, this paper will explain the possible effects of EU Competition Authorities’ decisions as they pertain to the banking sector (Gross & Shambaugh, 2019). Moreover, this section will explore the potential negative ramifications of EU competition authorities’ actions by studying the consequences of non-compliance with their guidelines. Overall, the research examines the importance of competition policy in each area mentioned, which will be further discussed in subsequent paragraphs (Whish, 2018). Main body The Importance Of Competitive Environments On British Retailing Industries Retail businesses have been significantly affected by European Union (EU) laws, specifically those related to product quality. For instance, EU rules restrict or prohibit some products from being resold (Lyons, 2021). As a result, certain goods are no longer available for purchase, while others appear to be out of stock (Lyons et al., 2017). There are several reasons behind such restrictive trade practices, but one is often overlooked – monopolies. Monopolies are dominant companies in an industry that control prices and market share (Wagner-von Papp, 2017a). They are responsible for pricing issues and manipulating the number of competitors. It leads to high cost of production and discourages new entrants. However, most industries are not perfectly competitive, meaning that some individuals can make a massive profit (Gross & Shambaugh, 2019). Another reason why competition in trading environments is important is because it affects profitability (Munger, 2010). When price competition occurs in the manufacturing/distribution channels, profits rise. More importantly, a competitive environment promotes greater productivity through efficiency gains and reduced wastage (Wagner-von Papp, 2017b). Therefore, competition should not only facilitate innovation, but also encourages investment in new fields and helps firms grow. Thus, competitive environments affect the overall economic growth, regardless of whether products and services are produced or distributed (Bower, 2021). The Impact Of Europe’s Competitor Regulation On International Business Behaviors International competitiveness is a factor that affects many markets as well, whether in developed countries or emerging economies. Most notably, it means that the level of exports or imports can determine whether a country can survive economically and remain prosperous (Gross & Shambaugh, 2019). Furthermore, international competition impacts consumer choice, income, and access to resources, primarily due to the fact that a large fraction of the global population uses foreign currencies to acquire goods and services. Economists point at two primary ways how markets have become more integrated over time – increased interdependence and the rise of multinational corporations. Additionally, it is evident that regulation plays a key role in fostering or reducing competitiveness through legislation in many cases. Notably, a great deal of attention is paid to the extent to which a particular legislation might hurt or benefit competition. Although governments and policymakers should consider these factors, it is essential to note that regulation can negatively impact the market by creating barriers to entry (Vickers, 2017). At the same time, if the benefits outweigh the harms, positive incentives in any form are encouraged (Munger, 2010). For example, countries with robust competitive regulations can experience higher levels of investments when compared to those whose regulations and protections are weak. Besides, some evidence suggests that non-competitive restrictions might reduce the size of oligopoly in markets, but overall these findings do not suggest whether regulation is beneficial or harmful to competition (Pan et al., 2019). The Effects Of Non-Compliance With EU Regulations On Bodies Like Banks. European Commission and other legislative agencies, such as the European Parliament, operate under European Union competition law (Rajput et al., 2022), which serves two purposes: establishing effective protection of customers and restricting unfair competition. Under EU law, “monopolists” must apply for permission or license to open up retail stores in a given area. A bank like Barclays, for example, could receive licensing approval based on their position in the field of online banking. Even so, some argue that not complying with the requirements set by the authority might pose severe problems for a firm. For instance, the bank has already had difficulties operating successfully in Ireland following a decision by Irish regulators to stop granting licenses to smaller banks (Gross & Shambaugh, 2019). Such examples show that even if a company adheres to the rules set by the authorities, some circumstances or violations occur, resulting in legal enforcement. Some observers believe that anti-competitive behavior in retail stores violates the principle of fair competition. That said, compliance to EU laws does not mean that the laws are always followed. Indeed, the commission reported in 2014 that approximately 20% of all financial institutions had experienced failures in terms of implementing antitrust laws (Munger, 2010). The main problem is that if a company fails to observe the provisions of the ruling, then they might face charges, particularly in states without explicit national laws protecting monopolies. Many economists expect that such situations will continue to arise, especially for large organizations. Overall, EU competition rules do not provide sufficient and uniform protection from state interference of monopolistic activities. The Current Regulatory Environment for Foreign Importers To Buy From Small Firms In the case of foreign importers’ exposure to the risks of doing business with a small company, it is necessary to look at similar concerns for domestic exporters. According to Hitt et al. (2014), domestic industries in developed countries have fewer opportunities to compete with larger rivalries than smaller ones do. One of the first causes is that small firms tend to lack capital. Nonetheless, in comparison to their export rivals, they usually make very few sales. They also have fewer production materials such as machinery and equipment. Next, small companies tend to be unable to afford marketing efforts, pay employees, pay taxes and payroll taxes, and pay insurance premiums (Hitt et al., 2014). These factors make them less able to withstand big rivalry with various entities. The next effect is that they rely heavily on public support. Hence, they might suffer setbacks when they do not have enough funds to finance themselves. Lastly, domestic producers have limited flexibility since they cannot easily implement alternative methods of production. For example, producing goods for the domestic market at low costs might be challenging due to the availability of raw materials, which the local small producer lacks (Zhang et al., 2020). All these differences in capabilities imply that small firms are more exposed to direct threats to their survival than their larger counterparts are . Conclusion It is apparent that the current EU approach to preventing commercial harm to consumers, known as competition policy has a significant adverse impact on consumers’ rights. One side effect of the EU approach to regulating competition is that it results in higher costs for small suppliers, while making it difficult for small firms to reach full scale scale operations (Rizk & Einarsen, 2016). Consequently, despite strict limits on prices, large enterprises still enjoy wider buying power via supply chain management. Other implications are that EU policies require major expenditures on information technology (IT) infrastructure and human resources at a much faster rate. While IT infrastructures are considered critical assets for modern businesses, small firms are expected to incur high upfront costs in order to develop innovative programs and attract staff. In addition, there are also significant limitations on individual choices for a consumer (Gross & Shambaugh, 2019). Individual rights, such as privacy and confidentiality, are severely restricted, especially in regards to private information (Gross & Shambaugh, 2019). Since customers have little control over what small companies do with their data, it becomes difficult to protect their interests . Consumers also feel betrayed when they discover that retailers use unethical and illegal tactics to gain advantage. Thirdly, EU competition policy puts the consumer at risk of missing out on crucial discounts or coupons offered by participating brands, leaving them worse off. Due to the existence of wide variety of options, however, it becomes harder for people to find a good deal. Fourthly, it might be argued that free markets are often created with some degree of governmental intervention. Hence, it appears to be unclear how any particular regulation influences economic development overall. However, critics of competition rules on small suppliers argue that excessive regulatory burdens make it difficult for new entrants to enter a regulated industry. References Bower, J. (2021). Varieties of capitalism, competition policy and the UK alcoholic beverages industry. Business History, 63(8), 1393–1412. https://doi.org/10.1080/00076791.2020.1753700 Kerber, W. (2019). Updating Competition Policy for the Digital Economy? An Analysis of Recent Reports in Germany, UK, EU, and Australia. 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