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Abstract

This article begins by describing the United Kingdom's policy toward outward and inward direct investment and then sets out the essentials of the competition laws that are among the major, nondiscriminatory regulatory mechanisms that affect corporate behavior and planning. The article also analyzes the development of competition policy as a microeconomic instrument along with its application to monopoly, oligopoly, and cartels involving transnational corporations. Competition policy, except for cartels, is shown to be relatively benign toward mergers until recently, and with respect to monopoly and oligopoly has sought remedies in regulation of prices and behavior rather than through structural change. Recent proposals, including a new Competition Act, are described. The analysis will show that although transnational corporations have been prominent in competition policy enforcement, substantial detriments arising from their transnational nature have not yet been identified, despite the presence of adverse effects on the public interest. Traditional fears associated with foreign investment in the United Kingdom do not, therefore, seem to be justified, insofar as the abuse of market power is concerned. In practice, the United Kingdom has relied principally on an effective tax system and competitive markets to ensure an equitable distribution of the gains from foreign direct investment, and there has been relatively little interference with inward flows of capital.