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Encyclopedia > Office of Fair Trading

The Office of Fair Trading or OFT is a UK statutory body established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator. The OFT's goal is to make markets work well for consumers, ensuring vigorous competition between fair dealing businesses and prohibiting unfair practices such as rogue trading, scams and cartels. Its role was modified and its powers changed with the Enterprise Act 2002. Consumer protection is government regulation to protect the interests of consumers, for example by requiring businesses to disclose detailed information about products, particularly in areas where safety or public health is an issue, such as food. ... It has been suggested that this article or section be merged with antitrust. ... Regulatory economics is the economics of regulation, in the sense of the application of law by government that is used for various purposes, such as centrally-planning an economy, remedying market failure, enriching well-connected firms, or benefiting politicians. ... A confidence trick, confidence game, or con for short, (also known as a scam) is an attempt to intentionally mislead a person or persons (known as the mark) usually with the goal of financial or other gain. ... A cartel is a group of legally independent producers whose goal it is to fix prices, limit supplies and limit competition. ... Changes to the Law Governing Bankruptcy Since the 1st April 2004 there have been considerable changes to the laws concerning bankruptcy in England Previously, bankruptcy would typically last for a period of between 2 and 3 years, but now the majority of bankruptcies will be discharged after only 12 months. ...


OFT activities

Studies into how markets are working

The OFT investigates markets proactively to see whether they are working well for consumers. As well as business conduct, studies cover government laws and regulations to ensure a competitive environment for business and consumers. Where appropriate, studies will lead to market investigation references to the Competition Commission, to enforcement action, consumer awareness campaigns or to recommendations to government, which will be published.

Communication to explain and improve awareness and understanding

Showing how competitive markets that work well are important for consumers, fair dealing businesses and economic performance; explaining its decisions transparently; promoting compliance by explaining to business what the law is and how the OFT will apply it; promoting consumer awareness and confidence; coordinating effectively with enforcement partners locally, nationally and internationally, and advising government on how to achieve the most effective regime for competition and consumers.


The OFT has three main operational areas: Competition Enforcement, Consumer Regulation Enforcement and Markets and Policies Initiatives.

Competition Enforcement

  • Enforces European Community and UK competition laws including Articles 81 and 82 of the EC Treaty and the Competition Act 1998;
  • Stops cartels and other damaging anti-competitive agreements
  • Stops any abuse of a dominant market position
  • Investigates qualifying mergers under the Enterprise Act 2002
  • Promotes a strong competitive culture across a wide range of markets
  • Informs business, through a widespread education programme, about changes in legislation
  • Works with the European Commission and national competition authorities of other EU Member States on Article 81 and Article 82 cases

The European Community (EC), most important of two European Communities, was originally founded on March 25, 1957 by the signing of the Treaty of Rome under the name of European Economic Community. ... The Treaty of Rome signing ceremony Signatures in the Treaty The Treaty of Rome refers to the treaty which established the European Economic Community (EEC) and was signed by France, West Germany, Italy, Belgium, the Netherlands and Luxembourg on March 25, 1957. ... The Competition Act 1998 banned public schools from fee-fixing in the United Kingdom, which they had previously been allowed to do. ...

Consumer Regulation Enforcement

  • ensures that consumer legislation and regulations are properly enforced
  • takes action against unfair traders
  • encourages codes of practice and standards
  • offers a range of information to help consumers understand their rights and make good choices
  • liaisons closely with other regulatory bodies that also have enforcement powers.

Markets and Policy Initiatives

Based on expanded powers granted under the Enterprise Act 2002, the OFT explores how different market sectors operate, in order to help markets work well. They may research one particular market in detail or, for example, how codes of practice or professional rules operate across different markets in a range of businesses. The results of the research, which are published, help the OFT to assess what action, if any, needs to be taken to protect consumers' interests. They may recommend stronger enforcement, or a change in the regulations, or suggest an awareness raising campaign for consumers (but will not always recommend intervention and when this is the case, will ensure that any non-intervention decision is well-informed and open to public scrutiny).

In 2006, the OFT restructured in response to Treasury proposals for splitting the department into separate consumer and competition regulators. The OFT argued that to protect consumers effectively, it had to be able to use both consumer law and competition law approaches in a holistic fashion. Moving away from division by legislative area, the OFT created divisions based on market sector - Services, Goods and Infrastructure- with officials specialising in the different legal and regulatory regimes working closely together in each of the three market sectors. These officials are supported by a dedicated economics branch (the Office of the Chief Economist), legal specialist and a policy advisory branch.

The OFT and Microsoft monopoly

 The OFT has received a number of complaints[1] about Microsoft, who has a dominate position in the operating systems (OS) market and other software markets. A dominant position is define as 40% (with exemptions) and 50% (with no exemptions)[2], IDC figures[3] give Windows 96% of the OS market. Of the remaining 4%, 2.3% (Mac OS) and 1.7% (Linux) most will soon be running on x86 computers. The reason the OFT give for not starting an investigation is that it would take to much money and time, even though the FT claims the European Union's efforts had a maximum of 6 people[4] working on it at any one time. The OFT did start a token investigation into per processor licensing in schools, to help the government bargain with Microsoft, the OFT quietly dropped the investigation[5]. The OFT say that they have had no "official" complaints, the distinction between a complaint and a "official" one is undefined. 

Microsoft Corporation, (NASDAQ: MSFT, HKSE: 4338) is a multinational computer technology corporation with global annual revenue of US$44. ... An operating system (OS) is a computer program that manages the hardware and software resources of a computer. ... Computer software (or simply software) refers to one or more computer programs and data held in the storage of a computer for some purpose. ... Microsoft Windows is the name of several families of operating systems by Microsoft. ... This article or section does not cite its references or sources. ... Linux, or GNU/Linux, refers to any Unix-like computer operating system which uses the Linux kernel. ... x86 or 80x86 is the generic name of a microprocessor architecture first developed and manufactured by Intel. ... The Financial Times (FT) is an international business newspaper printed on distinctive salmon pink broadsheet paper. ...

The OFT and credit card charges

In 2006 the OFT investigated the charges being imposed on customers of credit card companies. In its report, the OFT confirmed these charges were unlawful as they amounted to a penalty, rather than the actual losses suffered by the companies. It said it would be prepared to investigate any charge over £12, indicating that £12 would not be a "fair and acceptable charge" itself. The OFT said it would be up to a court to determine such an amount based on the established legal precedent that the only recoverable cost would be actual costs incurred, i.e. liquidated damages. Credit cards A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. ... Liquidated damages is a term used in the law of contracts to describe a contractual term which establishes damages to be paid to one party if the other party should breach the contract. ...

The credit card companies did not produce evidence of their actual costs to the OFT, instead insisting their charges are in line with clear policy and information provided to customers[citation needed]. Charges have been as much as £38 per item, which campaigners argue[citation needed] is well beyond the cost of sending a computerised letter.


  1. ^ Freedom of Information act request found 195 contacts with the OFT about Microsoft
  2. ^ OFT website
  3. ^ OSDL website
  4. ^ Financial Times
  5. ^ Ian Lynch (who complained) on uk.comp.os.linux http://groups.google.co.uk/group/uk.comp.os.linux/browse_thread/thread/15cb8ac3fe7febb4/353797fd05f930f4?lnk=st&q=&rnum=1

The Open Source Development Lab (OSDL) is a non-profit organization supported by a global consortium dedicated to advancement of Linux, an operating system. ... The Financial Times (FT) is an international business newspaper printed on distinctive salmon pink broadsheet paper. ...

See also

Annual Percentage Rate (APR) is an expression of the effective interest rate that will be paid on a loan, taking into account one-time fees and standardizing the way this rate is expressed. ... It has been suggested that this article or section be merged with antitrust. ... A competition regulator is a government agency, typically a statutory authority, which regulates competition laws, and may sometimes also regulate consumer protection laws. ... Which?, until September 2004 known also as the Consumers Association, is a consumer rights organisation in the UK, founded in 1957 by Michael Young. ... Consumer protection is government regulation to protect the interests of consumers, for example by requiring businesses to disclose detailed information about products, particularly in areas where safety or public health is an issue, such as food. ... In the United Kingdom, the Consumer Credit Act 1974 regulates the commercial provision of money loans and of good and services on credit to consumers. ... Merger Control refers to the procedure of reviewing mergers and acquisitions under antitrust / competition law. ... The UK default charges controversy is an on-going issue in consumer law, relating to the level of fees charged by banks and credit card companies for late or dishonoured payments, exceeding credit limits, etc. ...

External links

  • Office of Fair Trading



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