Abstract

Advocating for competition in financial markets can be more challenging than in other markets since other policy goals can take precedence over efficiency considerations. Competition authorities therefore have to cooperate effectively with financial regulators and powerful central banks if they are to use market studies or their other tools to advocate for policy solutions that take into account efficiency concerns in addition to other government objectives such as market stability and consumer protection. Financial markets can also be different (and difficult) because the framework for merger review in financial markets often differs from other markets, meaning that the competition authorities’ role can be limited or less decisive. Furthermore, while competition authorities typically retain their role in enforcement against anticompetitive conduct in financial markets, they nevertheless need to cooperate effectively with financial regulators and central banks in order to take advantages of the opportunities that exist in these investigations. This issues paper looks at the ways in which agencies in Latin America and the Caribbean can ensure they cooperate effectively. Effective cooperation is particularly important when conducting market studies, both because of the expertise that the financial regulator and central bank can bring to the study, and because the way in which the market is regulated may be a relevant feature of the market that is found to have an impact on competition. In addition, effective cooperation that increases the quality of the market study can help to build the credibility of the study, which in turn increases the likelihood of recommendations being acted on. We therefore look at the experiences that competition authorities in Latin America and the Caribbean have had in conducting market studies in the financial sector.

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