Well, I wasn't being entirely serious, but... I meant government intervention into the economy through fiscal, monetary and legal policy. I observe that the UK, and the continental Europe especially, has a much more flat income distribution than the US. This tells me that either high earnings are taxed in a much more confiscatory manner, or there is excessive regulation of the economy; something is suppressing entrepreneurship that produces these high earnings. As a result, the market does not develop through healthy, or sometimes ruthless competition, business doesn't grow and consumers have less wealth and purchasing power. Government intervention only helps markets up to a certain point; eliminating deception and fraud, for example, is essential.
I don't know the exact specifics of what makes the UK market so uncompetitive, but it's clearly not a properly functioning retail market because it doesn't translate the wholesale cost of discs (which is somewhere in the neighborhood of 20-30 US cents a disc for 8x media at the moment) into a good retail price. That may be due to cost of capital, or tax policies, or such mundane things as local regulations preventing large business development, as we have in some urban areas here. It should be clearer to you than me.
Oh, and a simple observation: the 34-40 cents/disc prices you hear about are sale prices. Many people who shop in electronics and office stores are not sensitive to prices to the point where they pick only the brand that is on sale. They will happily pay 80 cents/disc, which is a typical shelf price at the moment, to get their preferred brand. They try a brand that is perceived to be good-quality (such as Sony), find that it works well and stick with it. This is why you typically see a wide selection of media in one store. It allows the retailer to extract higher prices from a good portion of the buyers. Media that is on sale is designed to extend the customer base to include price-sensitive shoppers. Plus, it creates additional store traffic (who doesn't like weekly bargains?) that translates into more sales of higher-priced items. This is what allows low-priced accessories like discs to be sold under wholesale cost (8x DVDs have been discounted to 40 cents/disc since last October).