Competition Policy and Regulation

Active learning turns abstract policy tools into concrete decisions students must defend, mirroring how regulators and firms actually operate. By stepping into roles, analyzing cases, and testing outcomes, students move from passive note-taking to active reasoning about market power and remedies.

• Year 12
• Economics
• 4 activities
• 35 min–50 min

Learning Objectives

1. Analyze the economic rationale for government intervention in markets to promote competition.
2. Evaluate the effectiveness of specific competition policy tools, such as fines and divestiture orders, in addressing anti-competitive practices.
3. Compare the regulatory approaches used for natural monopolies, including price caps and yardstick competition.
4. Critique the potential trade-offs between competition policy and innovation.

Case Study Analysis

⏱ 45 min·Small Groups

Role-Play: CMA Merger Hearing

Divide class into CMA panel, firm lawyers, and consumer reps. Groups prepare 5-minute cases on a mock supermarket merger using provided data. Panel questions and votes on approval or remedies. Debrief links decisions to policy goals.

Prepare & details

Explain the rationale behind government competition policy.

Facilitation Tip: In the CMA Merger Hearing role-play, assign clear roles (CMA panel, merging firms, consumer advocates) and require each to prepare a two-minute opening statement using evidence from provided merger documents.

Setup: Groups at tables with case materials

Materials: Case study packet (3-5 pages), Analysis framework worksheet, Presentation template

• Analyze
• Evaluate
• Create
• Decision-Making
• Self-Management

Case Study Analysis

⏱ 50 min·Small Groups

Case Study Carousel: Anti-Competitive Practices

Set up stations with UK cases like fuel surcharges or online marketplaces. Small groups spend 10 minutes per station noting tools used and outcomes, then rotate. Class shares findings in a whole-group summary.

Prepare & details

Analyze the tools used by competition authorities to prevent anti-competitive practices.

Facilitation Tip: During the Case Study Carousel, rotate groups every 10 minutes so students compare anti-competitive practices across industries, noting which CMA tools apply to each scenario.

Setup: Groups at tables with case materials

Materials: Case study packet (3-5 pages), Analysis framework worksheet, Presentation template

• Analyze
• Evaluate
• Create
• Decision-Making
• Self-Management

Case Study Analysis

⏱ 40 min·Pairs

Debate Pairs: Natural Monopoly Regulation

Pairs research and argue for or against price cap effectiveness using rail or water examples. Switch sides midway for rebuttals. Vote and discuss evaluation criteria as a class.

Prepare & details

Evaluate the effectiveness of regulating natural monopolies.

Facilitation Tip: For the Debate Pairs on natural monopoly regulation, give students 5 minutes to prepare arguments using data on economies of scale before pairing them against each other.

Setup: Groups at tables with case materials

Materials: Case study packet (3-5 pages), Analysis framework worksheet, Presentation template

• Analyze
• Evaluate
• Create
• Decision-Making
• Self-Management

Case Study Analysis

⏱ 35 min·Pairs

Market Simulation: Monopoly vs Competition

Individuals or pairs bid in a simulated market first as monopoly, then with rivals added. Track prices and profits on worksheets. Compare results to discuss intervention needs.

Prepare & details

Explain the rationale behind government competition policy.

Facilitation Tip: In the Market Simulation, set a strict 15-minute timer for firms to set prices and output, then have students graph outcomes to compare monopoly versus competitive scenarios.

Setup: Groups at tables with case materials

Materials: Case study packet (3-5 pages), Analysis framework worksheet, Presentation template

• Analyze
• Evaluate
• Create
• Decision-Making
• Self-Management

Teaching This Topic

Teachers should anchor theory in lived regulatory practice, using the CMA’s real cases and tools to show how policy responds to market failures. Avoid overgeneralizing remedies; instead, emphasize that competition policy is iterative, data-driven, and context-specific. Research shows students grasp complex interventions better when they experience the tensions between efficiency, equity, and enforcement in real time.

What to Expect

Successful learning looks like students confidently distinguishing between structural and behavioral remedies, weighing trade-offs of regulation, and applying CMA tools to real cases. They should articulate why some monopolies require regulation while others need intervention, backed by evidence from simulations and debates.

Watch Out for These Misconceptions

Common Misconception

During the Market Simulation, watch for students assuming all monopolies harm consumers equally.

What to Teach Instead

Use the simulation’s outcomes to highlight that price and output changes differ by market structure; then contrast this with natural monopolies where economies of scale justify regulation rather than breakup.

Common Misconception

During the Case Study Carousel, watch for students assuming competition policy only involves splitting firms.

What to Teach Instead

Have groups compare their case cards to identify which CMA actions used fines or conduct rules instead, then present findings to the class to clarify tool diversity.

Common Misconception

During the Debate Pairs on natural monopoly regulation, watch for students assuming regulation always succeeds without costs.

What to Teach Instead

Prompt students to cite evidence from their debate prep on how price caps may reduce innovation incentives; use this to redirect their focus to trade-offs in policy evaluation.

Assessment Ideas

Discussion Prompt

After the CMA Merger Hearing role-play, present the hypothetical scenario about the online retailer merger. Ask students to identify two concerns the CMA might have and two tools they could use, then facilitate a class vote on the most persuasive arguments based on the hearing's evidence.

Quick Check

During the Case Study Carousel, ask students to complete a one-sentence definition of 'natural monopoly' and provide one UK industry example on a sticky note. Collect notes to check for accurate identification of scale economies and relevant sectors.

Exit Ticket

At the end of the Market Simulation, ask students to write one benefit and one drawback of government regulation of monopolies on an exit ticket. Review responses to assess their understanding of policy trade-offs beyond surface-level pros and cons.

Extensions & Scaffolding

• Challenge students finishing early to design a new merger scenario with a less obvious competition issue, then draft a CMA investigation plan.
• For students who struggle, provide a graphic organizer listing CMA tools (fines, divestment, conduct rules) with space to match each to a case study example.
• Use extra time to run a gallery walk of student simulation results, inviting students to annotate graphs with explanations of efficiency losses under monopoly conditions.

Key Vocabulary

Monopoly	A market structure where a single seller or producer dominates the entire market, facing little to no competition.
Cartel	A group of independent firms or individuals who collude with each other to limit competition, artificially inflate prices, and increase their profits.
Merger	The combination of two or more companies into a single, larger corporation, often subject to regulatory review to prevent market concentration.
Price Cap	A maximum price set by a regulator for a good or service, typically used to control the prices charged by natural monopolies.
Competition and Markets Authority (CMA)	The primary competition and consumer authority in the United Kingdom, responsible for enforcing competition law and promoting consumer interests.