When two of your most important economic sectors turn out to have major regulatory issues that have inflicted serious damage on consumers and customer businesses, it’s a good idea to consider if governments have failed in their entire approach to them — and how to remedy it.

The problems with banking and the power sector have been apparent for a long time, but have only reached a critical mass in the last twelve months, with the Turnbull government dragged kicking and screaming to intervention — a royal commission it didn’t want into banks, and reregulation and pseudo-nationalisation on power and gas. Each sector has their own specific problems and circumstances, but both have massively harmed consumers and both represent what happens when powerful oligopolies wield market power.

Competition is a source of innate tension in neoliberalism. There is no better way of driving efficiency and low prices in markets, to the benefit of consumers and businesses. But corporations have mixed views: they want lots of competition in the markets that supply them, and lots in the markets they sell into, but they hate it in their own markets, and will go to extremes to kill it. There’s a lot of talk about how good competition is, but your average business executive can usually be found lobbying to be allowed to reduce competition, via a merger or acquisition.

To resolve this, business and its economist handmaidens devised the bigger-is-better rationale to justify market concentration — bigger companies had fewer internal costs per unit of output and could achieve greater economies of scale, meaning lower prices for consumers. That’s why every merger or acquisition subject to regulatory scrutiny these days is sold on the basis of how great it will be for consumers and other businesses that a firm can be more efficient.

As we’ve seen, that’s nonsense — more market concentration means greater mark-ups, not to mention the additional problems that bigger firms reduce investment and cut wages.

Competition has decreased across the globe in recent decades, as waves of mergers and acquisitions in the 1980s, 1990s and 2000s produced ever-bigger companies, before the FAANGS emerged in the last decade. But Australia, as a medium-sized economy on a large landmass, is particularly susceptible to oligopolies and duopolies. Whatever the problems of decreasing competition, we’ve had them with interest. Rather than address this, however, successive governments have taken a relatively hands-off approach, with only the most egregious mergers deemed to fall foul of the long-term core competitive test, “substantial lessening of competition” .

The result, as Labor’s Andrew Leigh has spelt out repeatedly, is a high level of concentration across the economy. Petrol is another key sector where oligopolies gouge consumers and businesses — and, as the Caltex example has shown, rip off workers as well. Health insurance, while not as central to the functioning of the economy, is another area where concentration has accompanied huge price increases, poorer service and massive profits for market participants. Supermarkets are only a partial example — there, the anti-competitive pressure is applied to suppliers, while consumers benefit from intense competition. Leigh cites a range of other industries, including beer and beverage manufacturing, alcohol retailing, aviation, telecommunications and ISPs.

One of the reactions to the ACCC’s electricity report yesterday was industry relief that it didn’t recommend forced divestiture as a remedy for the dearth of competition. Divestiture is the nuclear option of competition policy, never used except voluntarily by corporations hoping to win approval of their merger. But how, otherwise, are we to remedy decades of flawed policy? Many within the government are delighted the ACCC wants the government to underwrite new entrants into the generation market, seeing that as the figleaf needed for wasting money on new coal-fired power. But the ACCC’s recommendations are too little, too late for a market that has already yielded billions in profits from ongoing gouging. And many of the regulatory measures already in place to prevent the big three gentailers from harming consumers actually place additional cost burdens on smaller firms, making it even harder for them to compete with AGL, Origin and Energy Australia.

If we’re serious about learning the lessons from energy and banking, we need to start discussing divestiture, not fiddling at the margins and trying to make a rotten oligopoly work slightly better.