No Anticompetitive Conduct, No Unearned Advantage:
Effective Competition Depends on Merit

For 40 years, regulation has struggled with this question:  How do we bring effective competition to industries dominated for decades by government-protected monopolies?  The struggle persists, because no one loses his monopoly lightly:  not only in the traditional sectors—telephone service; natural gas transportation; and electricity generation, transmission, and retail services;— but in new areas like internet content and delivery, distribution-level electricity resources, and electric vehicle charging stations.  We want competition to produce diversity, yet the major players remain the same.  One reason:  We address only anticompetitive conduct while ignoring unearned advantage.  The competition that results is not competition on the merits.

 

"Effective" competition:  The adjective "effective" forces factual analysis into a topic too often discussed rhetorically.  Effective competition is not mere rivalry.  It is competition on the merits, competition won through performance.

Scherer and Ross describe effective competition in terms of market structure and seller conduct.  They identify three structural characteristics:  (a) The number of sellers is "at least as large scale economies permit"; (b) there are no "artificial inhibitions on mobility and entry"; and (c) the products offered have "moderate and price-sensitive quality differentials."  Within that market structure, the conduct among competitors should have these six characteristics:  (a) Competitors have "some uncertainty. . . as to whether one rival's price moves will be followed by the others"; (b) the competitors are not colluding; (c) there are no "unfair, exclusionary, predatory, or coercive tactics"; (d) inefficient suppliers are not somehow protected from competition;  (e) "sales promotion should be informative, or at least not be misleading"; and (f) there is no "no persistent, harmful price discrimination". . . .  

Services

Testimony, Papers, and Presentations

The testimony relates to AltaGas’s proposed acquisition of WGL Holdings, Inc. and Washington Gas Light Company.
The testimony addresses the following: the effect of the transaction on consumers, including: (1) reasonableness of the purchase price, including whether the purchase price was reasonable in light of the savings that can be demonstrated from the merger and whether the purchase price is within a reasonable range; (2) whether ratepayer benefits . . .
Testimony addresses the issues of whether the proposed transaction affects the interests of ratepayers; the ability of JCP&L and MAIT to provide safe, adequate, and proper utility service at just and reasonable rates; and whether the proposed transaction is in the public interest.
This expert report was submitted to a federal trial court in May 2016 on behalf of City of Jacksonville, Florida. The litigation, and report, involve a 1943 disaffiliation of a gas corporation from its holding company, as mandated by the Public Utility Holding Company Act of 1935. The report explains why the disaffiliation did not prevent liability for the costs of environmental cleanup, if such liability exists under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, from passing to the new corporation.

Books by Hempling

Regulating Public Utility Performance

“[A] comprehensive regulatory treatise …. In all respects, it merits comparison with Kahn and Phillips."

Regulating Public Utility Performance:  The Law of Market Structure, Pricing and Jurisdiction

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Preside or Lead

Preside or Lead?
The Attributes and Actions of Effective Regulators

Now Available on Kindle

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Hempling Appearances

Energy Bar Association
Panel on Practice Principles for New Regulatory Lawyers


UDC Law School Panel
Is the Exelon Takeover of Pepco in the Public Interest?


Nigeria Electricity Regulatory Commission
3rd Judges’ Seminar


Telecom Forum
Asamblea Plenaria REGULATEL


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Electricity Jurisdiction

Testimonials

Working with Scott Hempling is both a pleasure and an honor. Ethical, fair-minded, and dedicated—these are a few of the attributes that Scott brings to his work and his clients. His pursuit of justice is to ensure that a practical outcome will ensue. Scott recognizes the significance of every issue and its implications for any person involved either directly or indirectly. His wide-angle lens encompasses a broad and deep technical legal knowledge that allows him to decipher and give insight into every challenge.
— Elise Herzig, President and CEO, Ontario Energy Association