Regulatory reform good for Swedish consumers

The reform of former monopolies in Sweden has boosted consumer benefit and economic efficiency, says the Swedish Competition Authority. When markets are opened to competition, clearly defined rules are required as well as active regulatory bodies.

The Competition Authority has made these points in its comments on the report of a Swedish government inquiry into regulatory reform.

Studies of regulatory reform, it notes, have shown that such measures help generate both greater economic efficiency and more efficient markets, which work to the benefit of consumers. The regulatory reforms introduced in Sweden have in all essentials proved effective, and a return to the old system of monopoly markets is neither desirable nor possible.

“Regulatory reform has been a success, despite some teething problems,” says Director-General Claes Norgren. “Not least because consumers have gained from it through a wider range of products and greater pressure on prices. Today, they can also switch to another telecom operator or electricity distributor if they’re not satisfied, or choose a different airline.”

But the transition from monopoly to diversity has not been a totally smooth one. The Competition Authority notes that it has sometimes had to intervene under the Competition Act to prevent state owned companies such as Telia, Posten, SJ and SAS from abusing dominant market positions.

“We must monitor our markets once they have been subjected to regulatory reform and opened to competition,” says Claes Norgren. “The old monopolies must respect the competition rules so that new players are not excluded from the market.”

In its comments on the government report, the Competition Authority emphasises the importance of facilitating market entry for newcomers in the electricity sector. Transmission capacity to other countries needs to be expanded. The Swedish government should also take initiatives to transfer Vattenfall’s ownership of the electrical power cable to Poland to Svenska Kraftnät (the Swedish National Grid) and to ensure that the agreement giving Vattenfall right of use to the cable be phased out. A development of the natural gas market would also boost competition in the energy markets.

The Competition Authority also stresses the importance of investigating price trends in all areas subjected to regulatory reform, and proposes that Statistics Sweden be instructed to join the relevant sectoral authorities in collecting price data from companies active in these markets.

Active and well-informed consumers have every chance of influencing production and the market through the choices they make, says the Competition Authority, and their position in the reformed markets should be strengthened. This could be done for instance by setting up a government-financed joint advisory bureau for the electricity and telecom markets in place of the present system operating in the electricity market, run by the Swedish Consumer Agency in collaboration with the Swedish Energy Agency and the industry itself (Swedenergy).

For further information, please contact:
Mikael Ingemarsson, Competition Counsellor, tel +46 (0)8 700 16 41
Jimmy Dominius, Press Officer, tel +46 (0)8 700 15 80 or +46 (0)73 773 15 80