“Silent monopolies”: When choosing is no longer an option

A market can list three, four, or even 10 companies and still offer customers very few meaningful alternatives. Conversely, a highly concentrated market can show strong rivalry through lower prices, better service, and innovation. The key question is not simply how many firms operate, but how much power customers retain to leave when they want to.

That is the idea behind “silent monopolies,” a term that does not describe a legal category. It describes markets in which one company, or a small group, accumulates enough power to weaken the force that normally disciplines businesses: the customer’s ability to walk away.

Paraguay’s Competition Defense Law does not punish a dominant position by itself. It punishes the abuse of that position. But the economic question comes earlier: what incentive remains to improve when losing customers is no longer a credible threat?

The cement sector offers one example. It has historically had few competitors, while the state-owned Industria Nacional del Cemento held 27% of the market in 2023 and ended 2025 with 33%.

Electricity presents the clearest case. The charter governing the Administración Nacional de Electricidad, or ANDE, grants the state utility exclusive rights to supply public electricity and lighting nationwide, while preserving existing concessions. For most users, changing distributors simply is not an option. Poor service or an unattractive offer therefore cannot produce the usual competitive penalty of customer losses. Pressure must come through investment, regulation, quality standards, and oversight instead.

A recent change affected another part of the system. Law 7599/2025 and Decree 6034, issued in May 2026, created a framework for non-hydroelectric renewable generation, self-generation, cogeneration, and distributed generation, including the injection of surplus power into the National Interconnected System. The framework did not alter users’ structural dependence on the distribution network.

That leaves a central question for Paraguay’s markets: when customers cannot punish poor performance by changing suppliers, what mechanism can create equivalent pressure? The same question appears in private markets built around networks that are difficult to replicate. In payment processing and acquiring, the National Competition Commission sanctioned a case in 2, but the supplied article ends before giving further details.