The Treatment of Dominant Firms in the UK Competition Legislation

Abstract

The first competition legislation, introduced in 1948, was predominantly concerned with cartels which were then the main form of industrial structure. A Monopolies and Restrictive Practices Commission was established as an independent investigatory body which conducted enquiries directed to it by the Board of Trade. ‘Monopoly’ was defined as a single firm, or group of firms acting together to restrict competition, and which controlled at least one third share of the market. There was presumption that monopoly as defined was per se detrimental. This was partly a consequence of earlier government encouragement to, and use made of cartels. There was a contrary belief that as much of industry was dominated by small and high cost firms, the efficiency of large scale firms would more than offset any adverse effects of single firm dominance. An economic definition of the public interest was laid down, and if monopoly of either kind met the performance tests which derived from the definition it was allowed to continue.