34 REDUCING MARKET DISTORTIONS FOR A MORE PROSPEROUS UKRAINE FIGURE 31 An Analysis of Implementation Issues in Ukraine Using the Markets and Compe- tition Policy Assessment Tool Market features Economies of scale vs Multi-market contact Vertical integration SOEs and PCFs market size Government regulations Pro-competition interventions aim at:  Opening markets to entry, reducing rm dominance  Eliminating rules that could be conducive to collusion or increase the cost to compete  Leveling the playing eld for players in the market  Enforcing eective antitrust policy Public implementation  Requires an adequate institutional set up  Commercial, regulatory and political objectives must be separate and independent Firms react to market features and government interventions, leading to market outcomes Market outcomes Anticompetitive Concentration and Investment Productivity behavior market entry Source: Author’s elaboration Note: The grey arrow represents the in昀氀uence of SOEs and politically connected 昀椀rms over regulatory design and enforcement, which directly—and negatively—impacts market outcomes. is expected to work with sectoral regulators and line ministries to identify and address competition con- straints in key sectors of the economy. However, the AMCU’s enforcement capacity is inadequate to police cartel behavior and discourage harmful abuses of dominance. The AMCU’s independence vis-à-vis the state and the private sector remains inadequate, and its existing institutional guarantees and 昀椀nancial and human resources are inadequate to ful昀椀ll its mandate. In addition, the unclear prioritization of com- petition principles across all stages of the public procurement process and the limited enforcement of rules against bid rigging compromise public expenditure e昀케ciency and distort the competitive playing 昀椀eld. To minimize competitive distortions associated with state aid, both to private 昀椀rms and SOEs, the authorities should begin by carefully review-ing the state aid granted to large SOEs—especially those with poorly de昀椀ned public-service obligations—and to politically connected 昀椀rms, with a view toward minimizing preferential treatment and strengthening the overall state-aid control framework.