Antimonopoly control of tariff regulation: objectives and drawbacks

This article is devoted to the analysis of threats to competition, arising within the tariff regulation in network industries under deregulation. In certain cases incorrectly established regulated tariffs can negatively influence both regulated activity and downstream markets and, as a result, harm customers. Both tariffs for final customers and tariffs for access to the essential facilities influence incentives of new entrants, the market and finally the competition. Possibilities of the use of antitrust enforcement in order to prevent the competition restrictions are analyzed with international experience in regulated network industries being used. In this respect the important specific features of Russian antitrust legislation and enforcement are highlighted. In particular, we show ambiguity of the fact that the proposed amendments of Russian competition law would prevent competition restrictions in regulated industries for several reasons: the specific features of regulated tariffs affect competition and potential contradictions between the principles of industrial regulation and the requirements of Russian antitrust legislation. Moreover, it is difficult to consider the remedies, taking into account all possible consequences for the competition. Several alternative approaches to improve tariff regulation for the goal of competition protections are analyzed.