Government Regulation of Business – SS3 Commerce Lesson Note (First Term)

Government regulation of business is the set of rules and controls through which the government oversees how businesses operate. It protects consumers, owners of ideas and the public, and it raises revenue for the country.

Behavioural objectives

1. Define government regulation of business.
2. Discuss the methods through which the government regulates businesses.
3. Distinguish between patent, copyright and trademark.
4. Name regulatory bodies in Nigeria and state what each does.
5. Give reasons why the government regulates businesses.

What are the key terms in government regulation of business?

Five terms are used again and again in this topic: regulation, consumer, monopoly, tax and regulatory body.

• Regulation: a rule or control made by the government that businesses must obey.
• Consumer: a person who buys and uses goods and services.
• Monopoly: a market in which one seller controls the supply of a good and can fix high prices.
• Tax: a compulsory payment made to the government, for example on the profits of a business.
• Regulatory body: an agency set up by the government to enforce rules on businesses.

What are the methods of government regulation of business?

There are five main methods: registration and reporting, protection of ideas and brands, standards and product safety, licensing and price control, and taxation and enforcement agencies.

1. Registration and reporting

• Registration of businesses: The Companies Act requires every company to register with the Corporate Affairs Commission (CAC) before it starts business.
• Certificates: The company is issued with a certificate of incorporation and a certificate of trading before it can commence business.
• Publication of accounts: Public limited companies (Plc) must publish their annual reports for the general public.

2. Protection of ideas and brands

• Patent rights: A right granted to an inventor over his invention for a stipulated period, to prevent fakes and imitation.
• Copyright: The sole right the copyright law gives a person to reproduce and market an intellectual, literary, artistic or musical work.
• Limit of copyright: Copyright does not last forever. The law fixes the number of years it runs.
• Trademark: An identification mark registered by the owner to distinguish his products from those of competitors.

3. Standards and product safety

• Standard weights and measures: Businesses must use approved units, such as the kilogram, litre and metre, for the goods they sell.
• Safe and healthy products: The government makes sure that goods offered for sale, such as food and drugs, are safe to use.
• Quality standards: Goods must meet set standards before they are sold to the public.

4. Licensing and price control

• Licensing: Some businesses, such as banks, insurance companies and pharmacies, need official permission before they operate.
• Withdrawal of licence: A business that breaks the rules can be fined or lose its licence.
• Price control: The government may fix the price of certain essential goods so that sellers do not overcharge.
• Anti-monopoly rules: Laws stop one firm from controlling a market and exploiting buyers.

5. Taxation and enforcement agencies

• Taxation: A tax is imposed on the profits of business enterprises. The money is used to run the country.
• Regulatory bodies: The government sets up agencies to enforce the rules, such as NAFDAC and SON.

What are patent, copyright and trademark?

Patent, copyright and trademark are three legal rights that protect the owner of an idea, a creative work or a brand.

• Patent: protects an invention. The inventor alone may make and sell it for a stipulated period.
• Copyright: protects a creative work, such as a book, song or painting. Only the owner may reproduce and market it.
• Trademark: protects a mark, name or logo that identifies a product or firm.

How do patent, copyright and trademark differ?

Which regulatory bodies control business in Nigeria?

A regulatory body is a government agency that makes sure businesses obey the rules, and Nigeria has several of them.

Why does the government regulate businesses?

The government regulates businesses to protect the public, raise revenue and keep trade fair.

• Safe and high-quality goods: Rules keep harmful or substandard products away from consumers.
• Revenue: Taxes from businesses pay for infrastructural projects such as roads and hospitals.
• Curbing monopoly: Rules stop one seller from controlling the market and fixing high prices.
• Availability of goods: Regulation helps to ensure uninterrupted supply of goods.
• Uniformity: Common rules and standard measures bring uniformity to commercial activities.
• Economic growth: Fair rules encourage investment, which supports growth and development.
• Compliance: Regulation ensures that rules and regulations are obeyed.
• Protection of owners: Patents, copyrights and trademarks reward inventors, writers and brand owners.

Evaluation

1. Define government regulation of business.
2. Discuss the methods through which the government regulates businesses.
3. Give reasons why the government regulates businesses.
4. State the difference between a patent and a trademark.
5. Name two regulatory bodies in Nigeria and state the duty of each.

Assignment

1. Write short notes on patent rights, copyright and trademark.