This document summarizes an economic regulation and antitrust intervention experience in Italy regarding the gas, electricity, and railways sectors. [1] It finds that incumbents from the formerly state-owned monopolies still dominate the industries despite partial liberalization, and lack of proper sectoral regulation in railways hampers advancement. [2] Joint action from sectoral regulators and the competition authority helps ensure competition is preserved by sanctioning collusive practices and that firms do not abuse dominance in monopolistic segments to block competition in competitive ones. [3] Sectoral regulators provide ex ante direction while the competition authority focuses on ex post anti-competitive practices.

1. Reviewing the Global Experience with Economic Regulation
A Forward Looking Perspective
New Delhi, April 18-20, 2011
Economic Regulation and Antitrust Intervention:
Experiences in Gas, Electricity,
and Railways in Italy
Alberto Asquer
Dipartimento di Ricerche Aziendali
Faculty of Economics
University of Cagliari, Italy

2. Introduction
Economic regulation as functional equivalent to competition
and as provisional substitute to competition ('holding the fort
until competition arrives').
Many industries subjected to regulation do not necessarily
evolve into competitive regimes:
What is the role played by regulatory authorities in industries
partially opened to competitive pressures while retaining
monopolistic traits in some segments?
What is the role played by antitrust authorities, and how do
they complement with sectoral regulators in steering the
behaviour of firms?

3. Introduction
Economic regulation: various meanings (Jordana and Levi-
Faur, 2004; Baldwin et al., 1998)
Different models of infrastructure regulation (Gomez Ibanez,
2003)
- Public ownership of infrastructure firms
- Franchise allocation
- Discretionary regulation
- Private ownership of infrastructure in conjunction with
liberalisation of access, prices, and quality
Three cases of regulatory regimes: gas, electricity, and
railways in Italy.

4. The gas sector Competition
Authority
Infrastructure/service delivery system features Main actors
Local governments
Nation-wide infrastructure,
National government
Internationally connected Mandated
Energy & Gas Authority
(Some) vertical segmentation ENI to do
ENI group
Local government-owned Investment
firms plan
Industry community features
Business companies
Incumbents' dominant position
Selected performance aspects
Local governments' ownership
National government
ownership Prices relatively stable
(increasing?)
Investments less than
Regulatory system features expected
Franchise allocation Evaluation / Issues
Price cap
Import quotas
Tender offer competition
Long-term import contracts

5. The electricity sector Competition
Authority
Infrastructure/service delivery system features Main actors
Local governments
Nation-wide infrastructure,
National government Mandated
Internationally connected Energy & Gas Authority ENEL to sell
(Some) vertical segmentation
ENEL group to qualified
Local government-owned customers
firms at regulated
Industry community features
Business companies price
Incumbents' dominant position
Selected performance aspects
Local governments' ownership
National government
ownership
Prices relatively high
Regulatory system features
Franchise allocation Evaluation / Issues
Price cap
Generation quotas
Tender offer competition
Long-term contracts

6. The railways sector Competition
Authority
Infrastructure/service delivery system features Main actors
CIPE (inter-ministerial
Nation-wide infrastructure,
committee economic Mandated
Internationally connected
planning) FS to remove
Ministry of Treasury surcharge for
FS group ground-based
Industry community features Business companies SCS
Incumbent dominant position Selected performance aspects
National government
ownership
Prices relatively low
Investments less than
expected
Regulatory system features
Evaluation / Issues
Licences
Price cap (somehow)
Regulatory governance
Tender offer competition
Regulatory independence

7. Discussion
Common traits: formerly state ownership of national
monopolies, currently partial opening to competitive
pressures with former monopolists retaining dominant or
highly influential position.
Differences: electricity unbundled and relatively more open
to competitive pressures, while gas and railways vertically
integrated and less open; sectoral regulator for electricity
and gas, no proper regulator in railways
Electricity Gas Railways
Partial opening Some competition, Modest levels
to competition esp. downstream of competition
Fragmented
Sectoral regulator AEEG regulation

8. Discussion
Interventions of the competition authority influential in all
three industries – on the way incumbent operators seemed
to exploit their control of monopolistic segments of the
infrastructure industries for hampering the development of
competitors in the competitive segments.
– E.g., ENEL's potentially collusive behaviour and
contractual practices; ENI's investments in the capacity
of international gas pipelines
Different attitudes of the competition authority and sectoral
regulators, in part accounted for by differences in statutory
roles and responsibilities.
– E.g., Stove agreement in gas. → Sectoral regulator
more 'benevolent' if behaviour ensures continuity and
reliability of service, at the expense of barriers to entry

9. Conclusions
Incumbents persist having a dominant role in the regulated
industries, and the lack of a 'proper' sectoral regulator may
hamper advance in the liberalisation process.
Sectoral regulation, however, does not ensure that firms do
not engage in anti-competitive practices. The joint action of
the competition authority and sectoral regulation ensures:
- competition is preserved where barriers to entry are
lowered by sanctioning collusive practices,
- firms in monopolistic segments do not abuse their
dominant position for blocking competition in the more
competitive ones.
(Sectoral regulator provides ex ante direction, while
competition authority focuses on ex post anti-competitive
practices)

10. Thank you for your attention