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Oecd independent-regulators-ennis-dec2019

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This presentation by Sean Ennis, Director of the Centre for Competition Policy and Professor of Competition Policy at Norwich Business School, was made during the discussion “Independent sector regulators and competition” held at the 68th meeting of the OECD Working Party No. 2 on Competition and Regulation on 2 December 2019. More papers and presentations on the topic can be found at oe.cd/isrc.

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Oecd independent-regulators-ennis-dec2019

  1. 1. Independent sector regulators & their relationship with competition authorities Professor Sean F. Ennis Director of CCP and Professor of Competition Policy, NBS University of East Anglia www.competitionpolicy.ac.uk 1
  2. 2. Overlapping objectives, potential inconsistencies • Regulator and competition authority have overlapping objectives • Competition often furthers consumer welfare objective of regulator • Stimulate more effective competition through better regulation, such as through • interventions to tackle asymmetric information • limits on the exploitation of behavioural biases • reducing barriers to entry and • setting standards for access, portability or interoperability where appropriate. • Potential inconsistencies or externalities • Protect against expropriation, ensure stability, diversity of voice • Public interest is broader than consumer welfare • Conflicting decisions • Anti-competitive regulatory measures 2
  3. 3. Principle-based laws for regulators • When regulation is difficult to change, adapting regulation to new market circumstances is particularly difficult • In sectors with high technological change and uncertainty, sector regulators may be more effective with “principle- based” laws that allow regulators the flexibility to adjust their precise rules in light of evolving circumstances • Regulators can then issue secondary legislation that clarifies application of law and creates business certainty • Regulators can adapt secondary legislation more easily than updating their governing law • Competition authorities already benefit from this flexibility 3
  4. 4. Independent regulation rationale applies to “untraditional” sectors • The sectors subject to independent regulation may usefully include other sectors beyond those most traditionally associated with independent regulation • Self-regulation exists in many sectors • Cost-benefit judgment needed when deciding on independent versus government- or self-regulation • Targeted • Lower costs • Subject matter expertise • May create or sustain market power • Sectors to consider include • Ports • Education • Finance (fund transfer, jointly owned mortgage guarantors, alternative payment system) • Professions • Competition authorities can advocate for more independent forms of regulation 4
  5. 5. Routes for ensuring consistency between independent regulators and competition authorities • Ensuring consistency and convergence between sector regulator and competition authority objectives and actions is important • Difference in objectives between a regulator and competition authority • Difference in substantive rules • Difference in procedural rules and information collecting abilities • Difference in evaluation • Irony: independence can make ensuring such consistency through direct co-operation a challenge • Multiple mechanisms exist for achieving or encouraging such consistency • Organisational structures for co-operation • Integration • Concurrency • Common appeal mechanism • Co-operation instruments • Some combination of these merits consideration by designers of competition policy regimes 5

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