Regulators' attempts at de-regulation
1.35. Regulators have taken important steps to
de-regulate but there is still room for progress. Alternatives
to classic rule-based regulation, such as risk-based and principles-based
regulation, can assist sectoral regulators in moving towards an
ex-post competition authority approach and there is a case
for providing regulators across the board with a duty to promote
self-regulation. (para 7.32)
1.36. It might be possible for sectoral regulators
to disappear but certainly not in the immediate future. If sectoral
regulators are phased out, the core, irreducible functions that
they perform would have to be performed by other organisations,
such as the competition authorities. If possible, it would be
worth instituting measures that lead in this direction without
necessarily expecting the demise of sectoral regulators to come
soon. (para 7.45)
1.37. We recommend that the sessional Select
Committee proposed in paras 1.29-1.30 takes on the duty to ensure
that the sectoral regulators it oversees are promoting competition
and withdrawing from sectoral regulation wherever appropriate.
(para 7.46)
1.38. We recommend that, subject to any restrictions
imposed by its statutory remit, the Competition Commission conduct
a periodic review on whether effective competition exists in the
markets overseen by sectoral regulators, with the aim of scaling
back sectoral regulation to the greatest extent possible. (para
7.47)
1.39. We endorse the OFT's proposal (in response
to the joint report by the DTI and HM Treasury on concurrency)
that it reports to the Joint Regulators' Group on an annual basis,
providing an overall view about whether competition law is being
applied consistently and pro-actively across all the sectors.
The OFT could also report on the compliance of regulators with
the Better Regulation Executive's (BRE's) principles of good regulation.
(para 7.48)
The impact of regulators on the
competitiveness of UK firms
1.40. Economic regulators promote competition
which, in turn facilitatesbut does not ensurecompetitiveness.
The positive effect that regulators have on competitiveness is
achieved indirectly because promoting the competitiveness of UK
firms does not normally form part of the regulators' remit. Given
the importance of the role played by the regulated sectors in
supporting UK industry, we think it is vital that economic regulators
fully consider the impact of their decisions on UK firms' competitiveness.
(para 7.68)
1.41. We recommend that, as legislative opportunities
arise, economic regulators be statutorily required to facilitate
the competitiveness of UK firms by: i) promoting competition;
and ii) removing regulatory burdens from firms wherever possible.
(para 7.69)