The document discusses the relationship between independent sector regulators and competition authorities, highlighting their overlapping objectives and potential inconsistencies. It advocates for principle-based laws to enhance regulatory flexibility and argues that independent regulation can apply to non-traditional sectors. Furthermore, it suggests various mechanisms to ensure consistency between independent regulators and competition authorities.

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
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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
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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
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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
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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
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