Sunday, February 26, 2012

Less Regulators in Spain (by Francesc Trillas)

The Spanish conservative government, recently elected after the November 20th General Election, just decided to eliminate the telecommunications (CMT) and energy (CNE), among others, sectoral regulatory agencies and absorb their functions in a new super competition policy regulator. The directors of the new super-agency will be appointed by the government, although they will have to pass a hearing in Parliament, who will be able to remove the candidates by overall majority (the same that requires the appointment of the government). So much for the idea of independent regulation.
The idea of better coordination of regulatory agencies among themselves and with the rest of government is not a bad one. However, it says little in favour of regulatory predictability and credibility to decide such a change in a rush after a government change. In any case, the notion of independent regulation keeps showing signs of weakness, after a similar move took place in Danish telecommunications some months ago after the socialdemocrats winning an election. The institution has proven much less durable than initially expected. However, network industries, like other industries, do need to be regulated, and the input of independent experts is necessary to achieve a better functioning of public, democratic intervention in these sectors. Probably, independent, insulated experts are more desirable when their task is of low dimensionality, because this facilitates expertise and accountability. Big regulators and independent regulators are a difficult marriage. Competition is possible and desirable in parts of these industries, and this competition will not be possible without intelligent regulation. While the Spanish government signs manifestos with other European governments (like the Brittish and the Italian, who show no temptation to abolish regulatory agencies) to introduce more liberalization in services, it also promotes the demolition of the institutional apparatus that is necessary to achieve effective liberalization.

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