The role of the Office of Fair Trading

/ April 15th, 2012 / Comments Off on The role of the Office of Fair Trading

The Office of Fair Trading

What is it?

The Office of Fair Trading (OFT) is a governmental body that aims to ensure that the market is consumer-friendly. The OFT’s mission is to enforce strong consumer protection and competition law which prohibits unfair practices. The OFT exists to control the competiveness of businesses and promote consumers’ interests.

Why is competition good?

If there is only one source for a product, that source may provide a product of deficient quality for a very high price knowing that if consumers want the product they have nowhere else to go. Where several sources of a product compete for the custom of a pool of consumers it is in their best interests to provide the highest quality product for the lowest price to prosper in that market. Some sources will make their products more suitable to certain groups of people in order to target a sector of the pool of consumers. In this competitive environment consumers are offered high quality goods at a good price and the range and variety of those goods is more likely to be suited to their specific individual needs and wants.

What can go wrong?

There are a number of ways to breach the rules of competition law. Companies who trade in the same industry can meet together and arrange how to price the goods they offer. This is called price fixing and means that the consumer is no longer getting the most competitive price on what they buy. Businesses that have a large share of a particular market are in a position which they could easily abuse and must abide by a stricter set of rules as a result. There are also many laws in place to protect consumers in their day-to-day transactions. All of these are regulated, monitored and enforced by the OFT in an effort to make markets work well for consumers. The maintenance of competitive markets is not only good for consumers but for the business operating in those markets as well as the economy as a whole. The government would hope that the taxpayer’s money spent on the running of the OFT is recouped by its positive effect it has on the country’s economy.

What does the OFT do?

Much of the OFT’s work lies in informing and educating consumers about their rights and recommended good practice in avoiding getting stung. This way, problems can be stopped from happening rather than trying to deal with a situation that has already gone wrong. The OFT further promotes self-regulation, fair practice and educates businesses about the various laws which regulate their operation by working with businesses themselves.

The OFT keeps a constant eye on the operation of markets and trading behaviour in order to react when necessary. They monitor various sources to gather intelligence on trends and behaviour and log complaints from all sources. If a complaint is made on mass or by a very reputable source then the OFT act on it by investigating. They also identify areas which need to be analysed to a higher level and organise studies and surveys to fulfil that purpose.

The nature of the work is such that the OFT must decide which areas need the most work rather than where the problem is. Hence they actively prioritise in order to best use the resources they have on the most pressing problems.

The OFT cannot manage all their tasks on their own and use a series of connections to best fulfil their role. They work in unison with the national courts, other government organisations, the European Commission, Trading Standards and regulators. The maintenance of good relationships with these entities is essential in the smooth operation of the OFT.

The powers

The OFT act under many powers granted to them by various acts of parliament. These include powers to investigate illegal conduct, prosecute companies who are suspected of breaching legislation and impose penalties on businesses who have been found to have acted illegally.

The OFT fulfils many roles and as business practices change so must the role of the OFT. What must remain the same and at the heart of the OFT is their dedication to achieving legal, fair and effective markets for consumers.

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