When competition cannot be perfect: adapting antitrust to small and insular economies

Antitrust

When competition cannot be perfect: adapting antitrust to small and insular economies

• 4 May 2026

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Small and insular economies play an important role in global trade. For many businesses - especially small- and medium-sized firms - they are essential markets and trading partners. Yet these economies face structural challenges that make competition look very different from that in large markets.

This ICC report developed together with the Institute for Small Markets Law and Economics (ISLE) and Primerio draws on insights from a survey of competition authorities in small and insular economies. It shows that while core competition principles remain the same, they cannot always be applied in a one-size-fits-all way and sets out practical recommendations for effective competition policies that that are adapted to local realities.

What unique competition challenges do small and insular economies face?

Competition policy in small and insular economies cannot simply apply models developed for big jurisdictions. Limited market size, geographic isolation, high transport costs and dependence on imports often mean fewer players, higher concentration and limited scope for new entrants - even when markets are functioning as they should.

Does high market concentration automatically mean competition policy is failing?

No. In many small and insular economies, high concentration is not the result of weak rules or poor enforcement, but of structural constraints. Concentration alone should not be treated as proof of anti-competitive behaviour. Rather than chasing a 'perfect competition' ideal, policy should focus on preventing abuses of market power, stopping collusion, and ensuring fair and transparent access to essential infrastructure such as ports, energy and telecommunications. This approach protects consumers while recognising economic realities.

Policy recommendations for competition policy in small and insular economies:

Based on insights from competition authorities on the ground, ICC analysis highlights the need for greater international recognition of competition policies that are adapted to local realities - while still upholding core competition principles. ICC's core policy recommendations include:

1. Adopt a contextualised approach to competition enforcement
2. Prioritise conduct over structure
3. Use market studies and advocacy as core enforcement tools
4. Implement targeted enforcement prioritisation
5. Strengthen cooperation with sector regulators
6. Promote regional and international cooperation
7. Support capacity-building and technical assistance

Who participated in the survey?

The competition authorities of the Cayman Islands, Eswatini, the Faroe Islands, French Polynesia, Guyana, Mauritius, New Caledonia, Seychelles, and Trinidad and Tobago participated in this survey.