1. Competition in Regulated Industries
Brian Telpner
Deputy Assistant Director
Mergers III Division
Bureau of Competition
US Federal Trade Commission
Note: To create a Small Caps Effect in the title, Decrease the font size of all but the first letter of every word by 4 points.
6th Competition Forum of Ukraine
March 2-3, 2017
The opinions expressed are those of the speaker and not the FTC or any individual Commissioner

2. Why Regulate?
Competition leads to the best overall outcomes for consumers
In very few “natural monopoly” markets, competition can lead to inefficient outcomes
Natural monopolies are regulated to curb potential abuses of market power
Examples
Water supply
Natural gas distribution

3. Nature & Scope of Regulation
Most government regulation has little effect on competition
Key types of regulations that affect competition
Price controls
Entry restrictions or other rules protecting incumbency advantage
Rules that authorize or encourage otherwise prohibited conduct

4. Deregulating the Railroads
Sector regulator granted broad regulatory powers (1887)
Price
Control over entry, exit, and mergers
Innovation restricted
Highly stagnant industry ill-equipped to compete with other modes of transportation
Deregulation in late 1970s
Led to better terms and prices for customers
Led to greater innovation in shipping services

5. Competition in Regulated Industries
Competition law remains in force, unless
State clearly articulates a policy goal to limit competition, and
State actively supervises regulatory scheme
Merger example: ETE/Williams (2016)
Merger of regulated natural gas pipelines serving Florida
Unregulated aspects of business raised competitive concerns
Discounts off full tariff rate
Decisions to expand