Aspects of the Independence of Regulatory Agencies and Competition Advocacy

This paper aims at assessing the degree of independence of sectoral regulatory agencies of a sample of countries the international Competition Network (ICN)

Independent regulators are important for the advocacy work insofar they are less subject to be captured by specific groups and by political interest. Therefore, competition concerns tend to be given more attention by independent regulators.

Moreover, literature on the institutional design assumes that a good regulatory policy stimulates efficiency and private enterprise. The manner in which the political and social institutions of a country interact with the regulatory process influences economic conditions, directly investors’ confidence and the performance of the regulated sectors. In fact, the Organization for Economic Cooperation and Development (OECD) identified that sectors with independent regulatory agencies had better benefits with the opening of the market, suggesting that independence is an important characteristic for regulation.

Nevertheless, there is not a standard way to measure independence. Neither is there a systematic data bank containing relevant information about the different aspects of independence.

This paper approaches independence of sectoral regulators in three ways. First, we summarize how the literature has measured agency independence. Second, we propose a methodology for calculating an independence indicator, II, and apply it to a sample of countries of the ICN. The information obtained will be available for researchers and delegates and may help future studies, including the elaboration of alternative independence indicators. Third, we compare our indicators with the results of other studies and test a few preliminary hypotheses about agency independence.