Almost every country regulates monopoly and oligopoly because they tends to decrease consumer welfare and result in economic inefficiency. Antitrust regulation mostly focuses on behavioral regulation of a firm, either ex-ante or ex-post, usually both. Sometimes, however, more drastic measures such as divesture orders are used when ordinary behavioral regulations can not achieve the goal of enhancing and protecting competition without correcting the monopolistic market structure itself.In this study, we investigate those correction measures of market structure, what they are, when they should be used, and what are the policy issues when they are introduced into the real world. Especially by comparing institutional arrangements of Korea with those of the US, we concentrate on the regulational consistency between antitrust regulation and the prudential regulation in the financial sector, where the separation of banking and commerce is an important policy goal.Our findings are as follows. First, there is little technical difficulty in introducing correction measures of market structure such as divesture orders/motions. Second, the notion of “related parties” and/or “affiliates” frequently found in financial regulation can be useful when it becomes hard to define to whom the divesture orders are made. Third, it is more preferable in terms of institutional consistency to apply common correction measure to both nonfinancial and financial sector rather than introducing separate correction measures into the financial regulation laws for the affiliated financial institutions controlled by large conglomerates.
Almost every country regulates monopoly and oligopoly because they tends to decrease consumer welfare and result in economic inefficiency. Antitrust regulation mostly focuses on behavioral regulation of a firm, either ex-ante or ex-post, usually both. Sometimes, however, more drastic measures such as divesture orders are used when ordinary behavioral regulations can not achieve the goal of enhancing and protecting competition without correcting the monopolistic market structure itself.In this study, we investigate those correction measures of market structure, what they are, when they should be used, and what are the policy issues when they are introduced into the real world. Especially by comparing institutional arrangements of Korea with those of the US, we concentrate on the regulational consistency between antitrust regulation and the prudential regulation in the financial sector, where the separation of banking and commerce is an important policy goal.Our findings are as follows. First, there is little technical difficulty in introducing correction measures of market structure such as divesture orders/motions. Second, the notion of “related parties” and/or “affiliates” frequently found in financial regulation can be useful when it becomes hard to define to whom the divesture orders are made. Third, it is more preferable in terms of institutional consistency to apply common correction measure to both nonfinancial and financial sector rather than introducing separate correction measures into the financial regulation laws for the affiliated financial institutions controlled by large conglomerates.
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