The political economy of multi-tiered regulation in Europe

Abstract

The European Union (EU) faces a problem of uneven implementation of its rules by national authorities. Agreement on common rules at the Community level does not necessarily translate into commitment by national authorities to apply those rules coherently and effectively. The EU has responded to this problem by making its rules more detailed, and by empowering the Commission to monitor decisions of national regulatory authorities (NRAs). A 'multi-tiered' system of regulation has emerged in the EU. On the basis of a model of delegated implementation responsibility in the context of economic integration, this article examines how NRAs may be made more accountable. The model suggests that the delegation problem is actually worse, as NRAs tend to act asymmetrically. However, this asymmetry also offers a tool for controlling NRAs through benchmarking. The advantage of this is that it allows NRAs to retain a considerable degree of decision-making autonomy. Although recently introduced EU rules and procedures promote co-operation between NRAs, the problem with this approach is that the pivotal position of the Commission may lead to excessively homogeneous regulation across Member States. This defeats the purpose of endowing NRAs with decision-making discretion in the first place. A more explicit process of comparing and evaluating the actions and performance of NRAs avoids this problem.