Global Communications Consortium: Protecting the Consumer Interest -- Is Competition Enough?
London, England
19 June 2007
Hosted By: London Business School
Dr. Mark Williams, NERA Director and Head of European Competition Policy in London and Brussels, spoke at a conference of the Global Communications Consortium at the London Business School. Dr. Williams presented "Switching Costs -- Impact on Competition and Consumer Choice."
Communications sector regulation worldwide has focused on the promotion of competition. Competitive markets, it is argued, should deliver the benefits of choice, value and innovation to consumers. Regulators should not micro-manage markets or try to secure particular outcomes. Critics of this approach have suggested that it takes an overly narrow utilitarian view of consumers' behavior and needs, and that a different model is needed -- with a real understanding of consumer behavior, and especially the switching costs, involved in making rational choices. This seminar examined the debate from several different perspectives and examined a range of practical steps for ensuring that consumers do benefit from competition in the sector. The event focused on whether competition in markets, is sufficient to maximize consumer welfare, or whether by contrast, consumer switching costs means the competition is impeded even though there are "sufficient" competitors.
Dr. Williams drew upon his work on switching costs, aftermarkets, and lock-in to discuss the conditions under which "competition is enough," while also placing the work in the context of market investigations in other sectors where key features of the market have included switching costs, consumer inertia, and even consumer irrationality. Consequently this type of analysis is relevant across a wide range of markets including the competition policy assessment of energy utilities, telecommunications, and banking and financial services.
Other speakers at the event included Professor Catherine Waddams, Director of the Centre for Competition Policy at the University of East Anglia, and speakers from the Office of Fair Trading, Ofcom, Postwatch, and the National Consumer Council.
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