PROPOSALS TO STRENGTHEN CHAPTER MARKET INSTITUTIONS, REGULATION, 3 AND COMPETITION One of the most important goals of a successful competition policy is ensuring that government policies and regulations do not unnecessarily restrict entry, facilitate collusion, increase the cost of competing, or distort the level playing 昀椀eld by providing an undue advantage to speci昀椀c 昀椀rms. In 2016, Ukraine’s renewed commitment to enhance market competition resulted in the AMCU planning the adoption of a new National Competition Policy. As discussed above, weaknesses in the competition framework adversely a昀昀ect market outcomes in Ukraine. Many manufacturing subsectors are dominated by SOEs and politically con- nected 昀椀rms, and barriers to entry contribute to the formation of oligopolistic market structures. Constraints on competition are especially binding in network industries and productivity-enabling sectors, increasing production costs economy-wide. High levels of vertical integration, especially in public utilities such as electricity and gas, can increase the risk of market foreclosure if not prop- erly addressed through unbundling and e昀昀ective regulatory enforcement. While the country’s economic regulations are relatively progressive in principle, their uneven application prevents market institutions from ensuring a level playing 昀椀eld and maintaining competitive neutrality. Moreover, several key sectoral regulators and market institutions are not fully independent and cannot e昀昀ectively support competition. Addressing these challenges will require improvements in the country’s regulatory framework, institutional arrangements, and enforcement mechanisms. A holistic competi- tion policy must go beyond antitrust enforcement to: (i) ensure a competitively neutral administrative environment that minimizes the policy-based advantages of SOEs and politically connected 昀椀rms; (ii) improve the predictability, consistency, and transparency of the regulatory framework, both in principle and in application; and (iii) support the development of robust, independent market insti- tutions. Speci昀椀c recommendations for strengthening Ukraine’s competition policies and institutional arrangements are presented in Figure 32 and Table 3, below. 37