Competition Enforcement and Regulatory Alternatives

Economic regulation and competition policy are largely interdependent instruments of economic policy. However, they differ in aims and methods . t may be said that both competition policy and economic regulation seek to achieve the benefits from workable competition, but go about it differently – with competition law seeking to strengthen the workings of markets by prohibiting certain forms of anticompetitive behaviour, while economic regulation entails the imposition of public constraints on business behaviour to address ‘market failures’. However, the goals of competition policy and economic regulation are not necessarily aligned. Sometimes, economic regulations protect and promote competition; at other times, regulations limit competition for the sake of achieving other valuable public goals (Shelanski, 2019, p. 1923[3]). Regulation can have the effect of stifling competition, and thereby deprive customers of its benefits, for example by raising barriers to entry. But regulation can also play an important role in supporting competition, for example by providing the legal and economic frameworks within which competition takes place. Utimately, competition law and economic regulation are distinct but overlapping, largely complementary but occasionally in conflict. The purpose of this Background Note is to explore this relationship from the angle of competition enforcement. In particular, this note will explore the role that regulation can play in competition enforcement – by constraining or influencing it –, and how regulation can both substitute and complement competition enforcement in practice.