Independent Sector Regulators and Competition

Independent regulators are those that operate autonomously and with no undue influence from political forces or private entities. This independence, and their relationship with competition authorities that focus on merger control and antitrust enforcement, is important as an effective regulator can helpfully complement the role of the competition agency and thereby ensure a consistent and coherent competition policy for the sector. It can do so not only by avoiding unnecessary anti-competitive regulatory measure in pursuit of its broader objectives, but also by stimulating more effective competition through better regulation, such as through interventions to tackle asymmetric information, limits on the exploitation of behavioural biases, as well as by reducing barriers to entry and setting standards for portability or interoperability where appropriate.

Given the broad adoption of independent regulators in utility industries it is therefore surprising that many other regulated markets lack an independent regulator (with regulations set either through self-regulation or by government ministries). In addition where there are independent regulators there remain a wide variety of different approaches to ensuring consistency between the regulator and the competition authority.

In December, 2019, the OECD therefore held a roundtable discussion to explore these issues, giving the opportunity to learn from the experiences that delegations have had in advocating for (or against) the creation of, and co-operating with independent sector regulators. 

All related materials for the discussion are available on this page.

• Where there are market failures, independent regulation serves a crucial role in creating effective markets and protecting consumers from the exploitation of market power. 
• The relationship between independent regulators and competition authorities is particularly important because they often share the common objective of achieving competitive outcomes. 
• Broad economic oversight roles with quasi-judicial responsibilities may require independence. Equally, a sector specific focus can necessitate strong independence. International benchmarking of independence can provide a useful way to preserve and improve that independence.  
• At times of rapid technological change, independent sector regulation can benefit particularly from principle-based rules, such as those of competition authorities, that allow regulators to update their frameworks, without new parliamentary legislation, to reflect new circumstances.  
• When industry self-regulation exists and appears not to resolve market failures, there may be benefits from the creation of new independent regulators. However, it is important to carefully weigh costs and benefits of introducing new regulatory obligations. 
• Consistency and co-operation between competition authorities and regulators can be facilitated by institutional design and application of instruments of co-operation.

OECD note  •  Note de référence de l'OCDE

Executive summary with key findings | Synthèse des points clés

Detailed summary of the discussion  | Résumé détaillé de la discussion