The introduction of greater competition in regulated sectors has required establishing new regulators or seriously rethinking what existing regulators were doing, bringing to the fore important questions concerning the proper relationship between sector specific regulators and economy – wide competition agencies. On the one hand, competition agencies have a comparative advantage over regulators when it comes to ensuring that anti-competitive conduct an d mergers do not undo the benefits expected to flow from introducing greater competition into regulated sectors. There should be a strong presumption in favour of leaving these functions in the hands of a competition agency. On the other hand, sector-specific regulators have a comparative advantage in obtaining and analysing the cost data needed for economic regulation and for some aspects of access regulation. This favours leaving regulatory functions to sector-specific regulators. The assessment should also consider synergies and the ability to resist regulatory capture. In sectors expected to soon become competitive, transitory economic and access regulation might be better left to an economy-wide competition agency. At the same time, in sectors where there is likely to be a long term need for regulation, that task should probably be left to sector-specific regulators.
Relationship between Regulators and Competition Authorities