The problem is once you have a monopoly power interfering with regulatory power, regulatory capture by certain interests becomes inevitable. The very problem the regulators claim to prevent is what they will cause.
Perfect competition is not a necessary aspect of market economies any more than the assumption of perfect information and perfect rationality. A good economist must recognize that imperfect people with imperfect information and prone to errors in reasoning are the only market (and political) actors in any scenario.
Yup. And hence my (typically unpopular) suggestion that it should be a requirement for anyone to call themselves an "Economist" that they complete at least two years each of Industrial Psychology and Human Psychology. People don't behave like nice quantifiable numbers in a chart!
I prefer the Austrian school precisely because it begins with analysis of human action instead of some ivory tower academic model of idealized (and often completely imaginary) theories.