Are Spanish plans to set up a sole market watchdog sound?

By Juan Pedro Marín Arrese, in Madrid | Sector regulators in Spain will melt into a single one, following the government announcement last Friday. Efficiency and savings are portrayed as the main reasons to make the move. While the first one rises a fundamental issue, reducing running costs of existing entities amounts to a trivial one. After all, cutting off expenditure by €4 million per year will not bring much help to budgetary balance.

Is it sensible to merge regulators dealing with such a wide range of duties as telecoms, energy and lotteries? After all, each of them serves a specific purpose and uses concrete methods in doing so. True enough, they share a common aim to foster competition by ensuring an even playing field between operators in the market. If we follow that reasoning, accommodating them into a single melting pot would make sense if only to avoid differing approaches to the fundamental goal of fair trade and consumer protection.

But there is more to it. Past record shows that sector regulators all too often bend to pressures exerted by powerful sector lobbies thus failing to impose an effective discipline. Policing network industries does not amount to simply securing fair access to common infrastructure. Complex product pricing and effective unbundling seems vital to preserve competition. In performing this task, shortcomings have become all too evident. The telecom regulator has repeatedly forced Brussels to redress the situation. As regards electricity, the drive for diversified energy sources has resulted in a set of unjustified countervailing amounts unduly increasing the costs for users.

The new single market regulator is bound to do away with many of these comfortably entrenched privileges. It should cast a less patronising view on industries demands, focusing instead on preserving users’ rights and open trade. In a country where sector lobbies have effectively undermined competition and exposed regulators’ failure to curb blatant abuses, the move to a unified watchdog is highly welcome. Time will say if results match those expectations.

* Juan Pedro Marín Arrese is an economist.

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