Europe and Investment in Infrastructure with Emphasis on Electronic Communications

Abstract

This essay looks into the influence of European law and policy on infrastructure investment decisions. After a brief survey of how EC law generally affects regulatory decisions concerning infrastructure, the mission paradox arising from the separation of regulatory and operational functions and the creation of regulatory externalities are dealt with in greater length. Afterwards, electronic communications provides the backdrop for an examination of the key issues arising in the current discussion of the appropriate framework for investment in infrastructure. First of all, structural solutions may be attractive, but they also carry certain costs and risks. If they are not retained, behavioral regulation (including regulatory holidays) is called for. Here the ex ante/ex post distinction obscures the debate; from a legal perspective, the appropriate standard should be that investors are not subjected to more risk than they would incur with comparable investments elsewhere. An ex ante statement of the conditions under which ex post intervention will take place might be the best option. Finally, the need for coordination at EC level can be overstated: some measure of divergence is also useful to gather empirical information about the various regulatory solutions. In any event, infrastructure investments are likely to be regulated differently from one location to the other at a fairly granular level, even within a single Member State.