Why does the government try to tackle restrictive practices?
to promote free enterprise and competition
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The government aims to tackle restrictive practices for various reasons. Restrictive practices refer to any behavior or actions that limit competition, restrict business opportunities, or harm consumers. These practices may include collusion between firms, price-fixing, market sharing, or abusing dominant market positions.
The government intervenes in order to promote free and fair competition for the benefit of the economy and consumers. Some of the key reasons include:
1. Protecting consumer interests: Restrictive practices can harm consumers by reducing choice, increasing prices, and lowering the quality of goods and services. By addressing these practices, the government aims to protect consumers and ensure they have access to a competitive market with fair prices, quality products, and a range of alternatives to choose from.
2. Fostering innovation and economic growth: Restrictive practices can hinder competition and prevent new entrants from challenging established firms. By addressing these practices, the government encourages innovation as it allows new businesses to compete on a level playing field. This competition promotes a dynamic marketplace and stimulates economic growth.
3. Maintaining market efficiency: Restrictive practices may create artificial barriers to entry that prevent efficient players from entering the market. By removing these barriers, the government promotes efficiency and ensures that resources are allocated in the most productive manner. This leads to increased productivity and economic efficiency.
To tackle restrictive practices, various government agencies implement competition laws, such as antitrust laws or competition policies. These laws enforce regulations, investigate anti-competitive behaviors, and impose penalties on offending firms. Additionally, governments establish regulatory bodies or competition authorities to monitor and ensure fair and competitive markets.