Are Regulator Efficient and Independent? – Effective Consumer Advocacy Required

New Delhi, March 24, 2007

Regulatory agencies face a number of constraints in implementing their mandate. These range from political interests to business interests. Powerful political interest and powerful business interest will attempt to capture regulatory agencies, while disorganised consumers find it difficult to organize themselves into coalitions due at to a number of reasons.

It was in this context the symposium emphasised the role of consumer advocacy in attempting to bring consumer interest to the forefront. Another theme that cut across all the different sessions of the symposium was ‘political will’.


Experts highlighted that despite all good intentions in framing competition policies, their implementation was dependent upon the will of the government to take the process forward. India’s example, where the fiercely independent media played a major positive role during the transformation was cited as a lesson for other developing countries.

Local conditions or the institutional context was another theme that reverberated across the sessions. In designing an institutional framework for a new regulatory agency, a US type independent regulatory agency could be an option, as could regulation by contract. Besides these two polar cases, a hybrid system combining attributes of the two was proposed as a model for utility sectors especially water.

In the water sector, private participation is most frequently structured as a concession or lease contract, to be monitored by specialized regulatory agencies or courts. But most governments have not used contracts since they are incomplete and compliance is voluntary and it is accepted that welfare outcomes are better under a regulatory agency.

In judging performance of a regulatory agency, the outcomes could be quantitative but what variables determine performance may be subjective. It could be overall FDI as one paper argued or it could be the effect on price, quality of service, access to the services etc. Which outcomes matter or are important would again be a function of the local context.


One area of future research highlighted in the discussion was to develop measures of effectiveness of regulatory agencies. And to make the regulatory regime of developing countries more effective, technical assistance was proposed as an instrument. While technical assistance in needed, a word of caution was sounded in that ‘airlifting’ developed country regimes on to the developing country context is neither desirable nor optimal.

For small developing countries, other policy instruments could be considered complementary to establishing regulatory regimes. If the size of the market makes it inefficient to establish single sector or single country regulators, two possibilities exist. Either one could have a multi sector regulator in a small country like Barbados or a multi country, single sector regulator is an option through regional cooperation arrangements as in the Caribbean.

Country based studies voiced concern on independence (autonomy), expertise and accountability of competition and regulatory authorities in developing countries. The concerns mostly relate to funding of regulatory agencies and their hiring (and firing) practices. Developing country studies showed how difficult it is for governments not to get involved in funding and in hiring decisions of regulatory agencies. Interestingly, the paper from Belgium echoed similar concerns for developed countries