The government restricts competition. This can be overt (say, if the government announces that only Southern California Edison may install electric lines in Los Angeles). Or it can be more indirect (for example, the government passes a 2000-page securities regulation act that de facto requires anyone in the business to spend millions on lawyers to help them comply with the law). In general, bigger companies are better able to cope with regulations, because they have advantages from the scale of their business that helps them handle large overhead expenses, and government regulations indeed produce large overhead expenses. But this is exactly what is bad for consumers, who are left with only a few, large, companies from which to choose.
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