Institutional design of agencies
Pros and Cons: single vs two tier systems
Workshop ENTRANCE
22 April 2016
Prof. Annetje Ottow
Good Agency principles
LITER good agency principles
• (L) Legality: legal mandate
• (I) Independence: from politicis and market parties
• (T) Transparency: accountability and open
communication
• (E) Effectiveness: coordination with other agencies;
effective enforcement
• (R) Responsibility: shared responsibility
agency/companies; compliance, self-regulation
Personal experience
• OPTA: single regulatory body (post and
telecommunications) (NL)
• ACM: competition, regulator and consumer authority
(NL)
• CMA: competition and consumer authority
New trend?
In many countries restructuring of competition
agencies: from single agencies to multiple agencies
(e.g. UK, Spain, The Netherlands, Finland…)
New portfolio’s:
-
What is the optimal design?
How to ensure integration and cross fertilization?
Preventing silo’s and rivalty between departments?
Putting agencies under one roof does not mean
integration
Examples of recent mergers
• Finland (1 January 2013): merger of the Competition
Authority and the Consumer Agency into the Finnish
Competition and Consumer Authority (KKV)
• The Netherlands (1 April 2013)
• Spain (7 October 2013): merger of the Competition
Authority and six sector regulators into the National
Commission on Markets and Competition (CNMC)
• The UK (1 April 2014): merger of Office of Fair
Trading (OFT) with the Competition Commission (CC)
into the Competition and Markets Authority (CMA)
Types of multiple agencies
• Multisector regulation: communications, transport,
energy, infrastructure sectors (e.g. Bundesnetzagentur
in Germany; ILR in Luxembourg )
• Competition and consumer protection: e.g. FTC in
the US; new CMA in the UK; KFST in Denmark; KKV in
Finland
• Competition and (multi)sector regulation: e.g. old
Dutch cartel authority combining competition, energy &
transport (NMa); new Spanish CNMC which is a merger
of the competition authority with six sector regulators.
• Competition, consumer protection and multisector
regulation: (e.g. new Dutch ACM; Australian ACCC)
Country:
Agency:
Functions:
Brazil
CADE
Single function (competition)
Chile
FNE
Single function (competition)
China
NDRC
Single function (competition)
India
CCI
Single function (competition)
Japan
JFTC
Single function (competition)
Germany
BNetzA
Multisector regulation
Luxembourg
ILR
Multisector regulation
Denmark
KFST
Competition & consumer protection
Finland
KKV
Competition & consumer protection
France
DGCCRF
Competition & consumer protection
US
FTC
Competition & consumer protection
UK
CMA
Competition & consumer protection
New Zealand
NZCC
Competition & consumer protection
Spain
CNMC
Competition & multisector regulation
The Netherlands
NMa
Competition & multisector regulation
The Netherlands
ACM
Competition, consumer protection & regulation
Australia
ACCC
Competition, consumer protection & regulation
Different design models
• Coordination or integration model:
is rivalry between agencies a good or a bad thing?
• Combination of ex ante and ex post regimes:
can competition and regulation go together in one hand?
Why does it matter?
• Synergy effects? Better outcome?
• Cost reduction
• Influence of institutional design on the application
regulation and enforcement
• Relation between design and principles of good
supervision
Design and principles
• Inside and outside perspective:
* governance of the agency (institutional legitimacy)
* internal design
• The way agency is designed may influence
independence (avoidance of regulatory capture)
• Structure may influence effectiveness and therefore
outcomes
Advantages of multiple agencies
• More inter-sectoral consistency
• Integration of competition law and consumer
law/regulation
• Exchange of practices (cross border learning), cross
fertilisation
• Combination of enforcement instruments/toolkit
• Less coordination costs
• Lower risk of regulatory capture? Diversification
• Impuls for cultural changes (need major institutional
disruption)
Disadvantages of multiple agencies
• Loss of focus, policy objectives differ
• Diluted identity
• Choosing easy files
• Creation of new silo’s/rivalry between departments
• Lack of regulatory competition (to get things done)
• Too much focus on uniformity, less room for
differentiation
Key issues of design (1)
Hyman & Kovacic identified seven key factors of success
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•
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•
•
•
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Policy coherence
Credibility/branding
Capacity and capability
Resilience
Cohesion
Collateral effects on the regulatory ecosystem
Political support
Key issues of design (2)
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Complementary tasks? Otherwise remain silo’s
Clear mission and strategy? Branding
Setting priorities (making the right choices)
Capacity and capability? Expertise is key for credibility
and reputation (professionalism)
• Positive political context?
• Open to cultural change? ‘disruptive change’
• Leadership of the board and taking responsibility
External perspective
• Digital revolution: internet
• Fading borders, shifting roles
• Convergence of areas:
- Data protection
- Media
- Consumer protection
- Financial services
- Competition
• Convergence of the institutional silos is necessary
Design and the LITER principles
• Legality: new legal mandates are necessary
(convergence)
• Independence: multiple agencies less sentitive to
capture
• Transparency: single purpose agencies more
transparent
• Effectiveness: more cross fertilisation and combined
expertise with one tier agencies