Market Regulation and Competition Policy –Towards a Dynamic Economy in the Benefit of Consumers

Market Regulation and Competition Policy –Towards a Dynamic Economy in the Benefit of Consumers By Francisco Beneke 1 & Manuela de la Helguera 2 Abstract Despite the many efforts in the advocacy of competition, we find a great difficulty in determining the appropriate mechanisms to introduce this discipline in the assessment of existing and proposed regulation. Many actors in the public sphere in charge of creating and implementing the regulatory regime ignore the great benefits that competition policy brings to society at large. In addition, when there is a certain level of awareness of such benefits, there is no consensus on the level of importance of analyzing market regulation through the lens of competition policy. This lack of consensus may be motivated by the fact that it is not easy to quantify the gains of eliminating the excessive restrictions on competition. Finally, some markets continue to be highly regulated for many different reasons, i.e. political and social goals, which can hinder the task of promoting the efficient allocation of resources. I. Introduction There has been a long debate over the effects of regulations on competition, and although there is no consensus on the right balance between their goals and competition policy principles, in essence the purpose of competition policy has been to achieve the least restrictive State intervention. To address this vital issue of competition policy, their most important aspects are discussed in the following five sections. Section II examines the problems that regulations intend to solve, the reasons why in some cases they restrict the market forces, and the incentives they provide to the different actors in the market. Then, section III identifies the ways in which regulations can restrict competition, and afterwards, section IV analyses the main benefits that the abolishing of such restrains can bring to society. Finally, section V identifies the main factors that have to be considered by competition authorities in setting out an agenda for the promotion of a competition culture among regulators, the business community, and the public opinion, and Section VI provides the conclusions of the analyses made throughout the present work. The methodology used includes the analysis of representative examples around the world on the different matters that are discussed, and therefore, it is not intended to give a regional approach to the arguments but rather a more general scope. Lawyer at the Intendence of Market Studies, Superintendence of Competition, El Salvador. The author can be reached at fbeneke@sc.gob.sv LL.M. in International Commercial Arbitration, Stockholm University. Lecturer, Escuela Superior de Economia y Negocios, El Salvador. The author can be reached at delahelguera@hotmail.com