Lobbying for restrictions on competition

Lobbying for restrictions on competition is a really simple phenomenon. It is a bit depressing that journalists reporting on various commerce associations' initiatives for "improving" the workings of the market. Currently, parliamentarians are concerned that instant/quick loans are offered at outrageous terms, in particular that the associated costs are very high. See the article in English at Helsingin Sanomat's website here.

The association of instant loan companies is of opposed to the proposed measures. However, they have a most "helpful" suggestion. They suggest that making instant loans should be a business subject to more regulation and licensing. Today, outrageously enough, anyone can start a instant loan company. This requirement of licensing would of course be in the interest of consumer protection, as the licensing would ensure that only "serious" companies engage in this business.

On the surface, this may sound sensible. But even the slightest scratching of the surface unveils a more plausible reason for the lobbying. Introducing licensing requirements increases the barriers to entry to the market. This reduces competition in the market, increasing profits. The currently active companies are likely to be in a good position to get licensed, as they already know the industry. Apparently they are also good at organizing themselves for lobbying for their industry, which might make it easier to ensure favorable regulation.