MONOPOLY has two perspectives - real monopoly and monopoly perception.
A real monopoly is an entity that only controls a product or service which leads to the concern that it will determine the price that consumers must pay.
The monopoly perception is that there are several players in the business but only one stands out either because it is efficient or is targeted by certain parties.
Last March, Prime Minister Datuk Seri Anwar Ibrahim while in Jeddah, Saudi Arabia reportedly said the government was reviewing all the monopolies in the system to ensure that the public enjoy fair and better services.
All ministries had been asked to study the rationale behind allowing monopolies so that there was a fair assessment of the issue, he said, when commenting on whether the government was looking to dismantle more monopolies following the decision to end Puspakom Sdn Bhd's monopoly on vehicle inspections.
Some parties reminded that Puspakom is one of the companies owned by tycoon Tan Sri Syed Mokhtar Albukhary, who is seen as close to Tun Dr. Mahathir Mohamad.
Perhaps for that reason, Anwar was later quoted: "The government will continue to help Bumiputera companies, but it must be done transparently to enable fair competition among competitors".
A true monopoly can be defined as setting a price higher than a competitive market.
Monopolies face inelastic demand and can therefore raise prices - giving consumers no alternative. For example, in the 1980s, Microsoft had a monopoly in PC software and charged high prices for Microsoft Office.
Monopolies can acquire political power and the ability to shape society in an undemocratic and unaccountable way.
This is especially visible to the big IT giants who have such influence over society and people's choices. There is growing concern over the influence of Facebook, Google and Twitter as they affect the spread of information in society.
Monopolies often have monopsony power in paying lower prices to suppliers.
For example, farmers have complained about the monopsony power of supermarkets, which means they receive very low prices for products. A monopoly may also have the power to pay lower wages to its workers.
Perception of monopoly
In the context of Malaysia, after the end of the Puspakom monopoly, the people urged the government to also end the monopoly of Telekom Malaysia (TM) in the internet and Astro as a digital television provider.
This is what is linked as the perception of monopoly. In the case of Astro, several efforts have been made to establish a similar digital television station. But the reach and reach of Astro's service, coupled with national exclusivity deals such as EPL live broadcasts, made it impossible for competitors to survive.
Many times the people have asked the government to intervene so that Astro lowers the subscription rate, or makes it easier for customers who want to stop subscribing.
For TM, we know this state-owned company dominates the large market for broadband but actually consumers now also have options for other broadband providers.
When talking about TM and the Internet, the latest developments related to Digital Nasional Bhd (DNB) cannot be avoided.
Earlier this month, Communications and Digital Minister Fahmi Fadzil announced the government's decision to allow the establishment of a second entity as the country's 5G spectrum provider.
Is it true that DNB is a monopoly?
DNB's business model of inviting all telecommunications providers to take shelter under DNB is actually a government method to eliminate the monopoly situation, because the government will have the voice of the people in making decisions.
Under the 3G and 4G implementation model, the country experiences a very wide digital divide between urban and rural areas. People in rural and rural areas wait years for 3G and 4G access that is managed separately by telecommunication companies.
Faced with this failure, in 2021 the then Minister of Communications and Multimedia Tan Sri Annuar Musa announced the government's intervention in bridging the country's digital divide through the National Digital Network (Jendela) plan focusing on 4G infrastructure.
Earlier in December 2019, the National 5G Task Force and the Malaysian Communications and Multimedia Commission (MCMC) released the final report on the allocation of spectrum bands for mobile broadband services.
The report which, among other things, proposed a single entity for the implementation of 5G spectrum through a consortium of operators.
After MCMC's proposal was not well received, the government decided to establish DNB as a company wholly owned by the Minister of Finance (Incorporated).
Isn't this a monopoly perception?
What exactly is the rationale behind the government's decision? What is the reason for eliminating the monopoly? By cancelling the entity established to abolish monopoly?
The above is also the hope of many that the government cleans up the real monopoly, not implementing the policy of "monopoly perception''.
Certain parties insisted that the Anwar administration examine all types of monopolies including electricity supply (Tenaga Nasional Bhd) and medical supplies to government hospitals (Pharmaniaga Bhd).
In addition, there is at least one case of very limited competition - that of sugar imports.
Although it is not a monopoly in the true sense of the word, the business is controlled by only two companies, MSM Malaysia Holdings Bhd and Central Sugars Refinery Sdn Bhd.
Individually, the market capitalisation of these companies is between RM629 million and RM19.95 billion.
Not all monopolies are bad. This includes the likes of TM and TNB which are in sectors that involve large overhead costs and have a strategic purpose.
The entry of new players in the sector will result in large investments already made being wasted and excessive duplication.
Monopoly is acceptable in situations where the costs and risks of investment are too high for competition or where private investors are too risk averse.
"Monopoly perception" measures like DNB must be avoided because the implications will be bad for the country from investors' point of view.
* The writer is a senior lecturer at UiTM's Faculty of Management & Business.