No prizes for guessing that this is the Dragon version of Centipede, the copyright of which is one of those held by Atari UK. It is licensed from an American outfit called Tom Mix Software.
You move a small oval base around the bottom of the screen while firing upwards at long centipedes/caterpillars, each of whose segments has a life of its own. The playing field is scattered with mushrooms which take four shots to destroy. New mushrooms appear whenever you hit a caterpillar segment. They also appear in the wake of the creatures (fleas in the original but described as spiders in the introduction to katerpillar) that occasionally hurtle down at you from the top of the screen.
Katerpillar is fast with good graphics and sound. It isn't as exciting as the Atari Cartridge version, but is less than a third of the price. My only major criticism is that the base will only move very slighty in a vertical direction so that it is virtually impossible to escape the caterpillar segments when they reach the bottom!