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Role of Regulation & Market Conditions in Competition Law & Effective Competition, Exercises of Engineering

Abasyn University Peshawar (AUP)Engineering

An overview of competition law, market failure, and the importance of effective competition. It discusses different types of anti-competitive conduct, such as abuse of dominant market power, and the role of price regulation, cost concepts, and pricing methods in competitive markets. The document also covers the benefits of competition and the conditions required for perfect and effective competition. It explores competition policy, competition laws, and regulation, including the investigation of mergers and the prevention of anti-competitive practices.

Typology: Exercises

2016/2017

Uploaded on 03/19/2017

riaz_ahmed
riaz_ahmed 🇵🇰

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Regulating effective competition
A Level Playing field
•Benefits of a competitive communications market.
•Implementation of regulation for a level playing
field.
•competition law, market failure, and ex ante vs.
ex post regulation
•Different kinds of anti-competitive conduct, such
as abuse of dominant market power and possible
remedies.
•Control of mergers
•The role of price regulation, cost concepts and
pricing methods
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Regulating effective competition

A Level Playing field

  • (^) Benefits of a competitive communications market.
  • (^) Implementation of regulation for a level playing field.
  • (^) competition law, market failure, and ex ante vs. ex post regulation
  • (^) Different kinds of anti-competitive conduct, such as abuse of dominant market power and possible remedies.
  • (^) Control of mergers
  • (^) The role of price regulation, cost concepts and pricing methods

Competitive Markets

  • (^) Benefits of Competition
  • (^) Competition policy are based on the principle

that the “public interest” or “social good” is

best served when markets work efficiently.

  • (^) Competition is the most efficient and

equitable mechanism available for

organizing, operating, and disciplining

economic markets

  • (^) Competitive markets distribute resources

efficiently and fairly

Competition in Mobile

Forms of Competition

• Perfect Competition

• Effective Competition

• Market Contestability

• Sustainable Competition

Effective Competition

  • (^) Effective competition occurs in economic markets when four major market conditions are present: - (^) Buyers have access to alternative sellers for the products they desire (or for reasonable substitutes) at prices they are willing to pay, - (^) Sellers have access to buyers for their products without undue hindrance or restraint from other firms, interest groups, government agencies, or existing laws or regulations, - (^) The market price of a product is determined by the interaction of consumers and firms. No single consumer or firm (or group of consumers or firms) can determine, or unduly influence, the level of the price,

Effective Competition

  • (^) In effectively competitive markets, consumers are protected to some degree from exploitative prices that firms, acting unilaterally or as a collusive bloc, could charge.
  • (^) Likewise, firms are protected from manipulation by large individual consumers (or groups of consumers) and from disruption or interference from other firms.
  • (^) Competition occurs on the basis of both price and the quality or features of the product. Products are often differentiated, that is they are not identical across firms. One form of a product is usually a reasonable substitute for another form of that product. This is often referred to as “functional equivalence”. Sellers may also offer product combinations or bundles that appeal to specific consumers or consumer segments.
  • (^) Effective competition can occur even in markets with relatively few firms that differ substantially in size, market share, and tenure. However, for such markets to be competitive, it is important that there are no barriers to entry and exit.

Sustainable Competition

  • (^) The overall aim of competition policy is to achieve sustainable competition, where competition occurs on a “level playing field” and consumers and operators are not subject to anti- competitive practices.
  • (^) The telecommunications marketplace is increasingly volatile. This has in turn slowed down the financing of some viable communications projects in developing countries.
  • (^) The regulators’ task of fostering the transition to sustainable competition is a complex one. Regulators may be tempted to micromanage the market to ensure that competition takes place.

Sector Regulation and Competition Law How to promote competition?

  • (^) Different approaches can be applied for promoting competition in the ICT sector. - (^) Competition policy - (^) Regulation. - (^) Ex ante and ex post regulation - (^) Regulatory forbearance (Self-Control)

Competition Laws

  • (^) Competition laws generally include provisions to: - (^) Prevent competing firms from banding together (“colluding”) to increase prices or reduce quantities of goods and services, or to exclude other firms from a market, - (^) Prevent firms with a dominant position, or SMP “significant market power”, from using their market power to exclude competitors from the market, - (^) Stop mergers or acquisitions that would reduce competition.

Regulation

  • (^) ICT regulation is widely used to promote prices that reflect efficient costs and promote universal access to basic services.
  • (^) Regulation should only focus on those parts of the ICT sector where there is a clear need for regulation and should only be a temporary measure.
  • (^) Over time, regulators should aim to establish or restore the conditions that provide for effective competition on a sustained basis. - (^) For example, removing or reducing barriers to entry and exit. - (^) It also involves enabling the market itself to prevent the incumbent from abusing its market power, for example, through the entry of additional competitors

The role of competition authorities and regulators

  • (^) In countries with both a competition authority and a telecommunications regulator, both agencies may have a mandate to investigate mergers in the telecommunications sector
  • (^) investigate mergers between telecommunications firms to determine whether or not the merger is “in the public interest”.
  • (^) Mergers, acquisitions, and joint ventures are all different ways for two or more firms to integrate or coordinate their operations

Regulatory Forbearance (self control)

  • (^) Regulatory forbearance is about focusing

regulation to where it is needed, and

withdrawing regulation in those parts of the

market where it is no longer necessary.

  • (^) The concept of regulatory forbearance has two

elements.

  • (^) A regulator may refrain (stop) from applying

certain regulatory conditions or from

intervening in certain markets.

  • (^) A regulator may reduce the scope of regulation

or withdraw entirely from regulating specified

markets.

Competition Analysis

  • (^) The first step in any competition analysis is to define the relevant market.
  • (^) A market exists where buyers wishing to buy a good or service come into contact with sellers wishing to sell that good or service, so that transactions occur.
  • (^) For competition purposes, a market includes all those suppliers, and buyers, between whom there is close competition,

1.Market definition

  • (^) Defining a market in the ICT sector can be difficult. Effective substitutes may not be limited to services supplied by similar telecommunications carriers (or by carriers at all)
  • (^) The definition of a market is based on the substitutability of differentiated products or services. Whether two differentiated products should be considered to be in the same market depends on the extent to which they are reasonable substitutes.