Competition policy provides a set of tools to promote sustainable competition and to preserve a market environment in which such competition can flourish. Competition policy may be implemented through general competition laws or through competition enhancing rules in specific sectors. In the ICT sector, such rules might include:
- General prohibitions on anti-competitive behaviour and mergers or acquisitions that would reduce competition (as in the case of Hong Kong), or
- Specific rules designed to encourage competition in the sectors, such as interconnection requirements or unbundling policies.
Competition laws (or “antitrust laws”, as they are called in the US) aim to promote efficient competition by penalizing or undoing conduct that reduces competition in a market. 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 “significant market power”, from using their market power to exclude competitors from the market, or otherwise reduce competition,
- Stop mergers or acquisitions that would reduce competition.
With the exception of provisions for mergers and acquisitions, competition laws are generally ex post regulation. They give the competition authority or the courts powers to respond to anti-competitive behaviour once it has occurred.
RELATED materials
Module 2, section 2.3.2, Regulation
Module 2, section 2.3.3, Ex Ante and Ex Post Regulation
Module 2, section 2.3.4, Advantages and Disadvantages of Ex Ante and Ex Post Regulation