Sector-specific Regulation Research Articles

Employer Engagement and Active Labour Market Policies. Evidence from a Norwegian Multi-Method Study

Using Work Training in Norway as a case, this article provides insight into motivation and structural factors that impact employer engagement with active labour market policies (ALMP) targeting young people. Drawing on mixed-methods data, we find a substantial proportion of Norwegian employers engage in Work Training. Both social responsibility and the economic interests of the company influence employers’ motivation for committing to Work Training. The findings reveal that the structural factors of business size and sector are crucial determinants of employer behaviour when it comes to hiring Work Training candidates. Although improved outreach activities by local job centres may be important, the article argues that efforts towards opening up sectors closed by sector-specific regulations on hiring, and increased awareness of structural constraints, are similarly important.

Collaborative Partnering for Airport Construction Projects: State-of-Practice

Partnering has enabled state departments of transportation (DOTs) and aviation construction projects to significantly reduce claims and improve project schedules. Today there is a wide body of empirical evidence that demonstrates partnering benefits outweigh the resources devoted to its implementation. Despite such outstanding outcomes, collaborative partnering is still new, misunderstood, underutilized, and evolving for airport construction projects that entail greater complexity and increased risks due to a high number of stakeholders and additional sector-specific regulations. The objectives of this study are to describe the state-of-practice regarding partnering in the aviation construction industry and offer insights about its use. A comprehensive survey of industry professionals representing DOTs, airports, and others involved in construction aviation projects in the United States helps capture partnering trends across the industry. Findings show that participants with experience in partnered-aviation construction projects perceive higher improvement of safety and reduced claims offering greater rewards. However, these projects are operating as late adopters of partnering with many at the initial stages of implementation. The main contribution of the paper to the body of knowledge is that partnering is suitable for airport projects regardless of the project delivery method followed, budget size, or partnering intensity levels. Those with greater experience with partnering under design-bid-build project delivery methods are more likely to perceive higher improvements. Furthermore, it increases trust and strengthens the relationships between organizations. The findings are significant as they bring attention to team integration practices for improved outcomes via the underutilized partnering in an industry niche where stakeholder and risk management are key to project success.

Regulation of Abusive Debt Collection Practices in the EU Member States: An Empirical Account

The article seeks to establish, in a comprehensive manner, if and how abusive debt collection practices are regulated in the respondent EU Member States. Using empirical data gathered from consumer and supervisory agencies as well as debt collection associations in 26 EU Member States, it provides an insight into (a) the existence of a licencing regime for debt collectors; (b) the potential transboundary dimension of debt collection and its implications for the common market; (c) the types of abusive debt-collection practices encountered in the Member States; (d) the efficacy of self-regulation via Codes of Conduct; and (e) the potential traditional remedies available to consumer-debtors. The article concludes that the existence of different national models creates potential issues and discrepancies in the legal status and defences available to consumer-debtors across the EU, which ultimately affects the proper functioning of the single credit servicing market. The advocated solution is that of a harmonized sector-specific regulation of abusive debt collection practices at EU level.

The Regulatory Roots of Inequality in America

Author(s): Vogel, Steven K. | Abstract: Why has US income inequality surged to unprecedented heights since the 1970s? The rise in inequality was not simply the natural result of differential rates of return but was powerfully driven by politics and policy. This article explores the underlying mechanisms with a focus on market governance, including corporate governance, financial regulation, labor relations, antitrust, sector-specific regulation, and intellectual property rights. Firms and individuals actively shaped market governance in their own favor and then took advantage of that favorable governance in the marketplace. This “inequality snowball” was particularly pronounced in the United States because firms were more aggressive in their business and political strategies and because the political system delivered more winner-take-all policy outcomes than the more consensual political systems of continental Europe and Japan.

The European Digital Markets Act: A Revolution Grounded on Traditions

The last three years have seen a legislative acceleration in tech regulation in Europe and in December 2020, the European Commission tabled a very significant Digital Markets Act (DMA) proposal to increase market contestability and fairness in the digital economy. This paper aims to decipher those policy choices, and show that they are often in line with EU regulatory tradition. At the same time, we will propose improvements to better reap the benefits (or minimize the downsides) of those policy choices. The main points made in the paper are the following. First, the proposed DMA is a lost child of competition law and sits in a difficult epistemological position. On the one hand, it does not rest on a set of reasonably well articulated policy goals from which concrete implementation measures can be deducted, as is the case with most sector-specific regulation. On the other hand, it does not either benefit from experience and practice in individual cases, as is the case with most competition law instruments. Second, the proposed DMA aims to support sustaining innovation by the users of Core Platform Services, innovation by frontal competitors wanting to displace the existing gatekeepers with existing digital services and disruptive innovation by newcomers wanting to displace gatekeepers with new digital services. Given the deep uncertainty of innovation, it is a wise policy choice to keep all innovation paths open. Third, it is also appropriate to favour behavioural remedies over structural remedies in the proposed DMA. Yet the proposal could have looked beyond the traditional remedial catalogue of competition law and embraced two types of remedies more typical of regulation: interoperability and interconnection (to a greater extent than in the proposal) as well as governance remedies inspired by standardization policy. Four, the proposed DMA relies on rigid rules which are easier to administrate than flexible standards. This choice is understandable since the DMA will have to be enforced against the largest firms worldwide. However, the DMA will also be applied in sectors which are evolving very quickly. Hence rules alone will not suffice and will need to be complemented by standards in order to increase regulatory resilience. And finally, the proposal is pathbreaking in providing for centralised enforcement at EU level. Here as well, this is a sensible option, as the regulated gatekeepers are few and hold a global reach. However, the Commission could usefully involve national authorities (in charge of competition law or regulation) to support its actions, when those authorities have a comparative advantage such as complaint handling or compliance monitoring.

The convergence of water, electricity and gas industries: Implications for PPP design and regulation

In several countries that have privatised their utilities, power and water are separate industries regulated by sector-specific regulators. In a parallel development, desalination has become an important source of water supply in countries where there is a shortage of cheap and clean freshwater. Where the energy source is gas, the use of gas-fired power plants to supply electricity for desalination links the water, electricity and gas industries. We use the case of the financial collapse of an integrated water and power project to illustrate the problems that can arise from such convergence, and to draw lessons for firms, Public-Private Partnerships (PPPs) and regulators. A water company had successfully tendered to build a desalination plant for a water agency that would deliver an agreed volume of water per day for a 25-year period. The technology proposed was an integrated on-site power plant to supply electricity to the desalination plant as well as to the electricity grid. The business model was for profits from electricity sales to cross-subsidise water desalination costs. However, a combination of take-or-pay LNG contracts and low spot prices in a competitive electricity market led to deep operating losses. The reasons for the collapse of the business were neither technological nor operational but arose from failure to adequately manage the market risks arising from infrastructure convergence, competition, long-term rigid contractual arrangements and missing markets. The case highlights the importance of risk assessment at bidding stage and, in particular, the risks that a cross-subsidy can create. Viewed in this context, our recommendations are for regulatory convergence for converging infrastructure sectors, multi-sector risk assessments for PPP contracts, crafting flexible PPP contracts in anticipation of future adjustments, development of more liquid hedging markets and promoting competition where feasible in infrastructure sectors.

Is the Unfair Commercial Practices Directive Fit to Effectively Tackle Abusive Debt Collection? A Critical Evaluation

The paper evaluates the adequacy of the existing EU legal framework – the Unfair Commercial Practices Directive - and the case law of the Court of Justice of the EU’s in tackling abusive non-judicial debt collection practices. For this purpose, it uses a matrix of analysis consisting of several building blocks required for an efficient regulation of non-judicial debt collection practices. The paper concludes that the current legal framework is insufficient and a harmonized sector-specific regulation is needed at EU level.

Kto strzeże konkurencji na rynku energetycznym? Między Prezesem URE a Prezesem UOKiK — wybrane zagadnienia

Artykuł jest omówieniem wybranych zagadnienień dotyczących wzajemnych relacji między Prezesem URE i Prezesem UOKiK w kontekście zapewniania konkurencji w sektorze energetycznym. W pracy przedstawiono zarys rozdzielenia uprawnień obu organów wynikający z orzecznictwa Sądu Najwyższego oraz poglądów doktryny. Na przykładzie zasady dostępu stron trzecich oraz postanowień rozporządzenia REMIT autor starał się dowieść tezy o komplementar-ności zakresu zadań obu organów oraz niezbędności ich współpracy. Wskazano, że mnogość po-tencjalnych działań stosowanych przez przedsiębiorstwa energetyczne wymaga współdziałania ze strony organów w ramach podzielonych kompetencji. W celu udowodnienia, że do zbliżonych sta-nów faktycznych zastosowanie mogą mieć zarówno przepisy regulacji sektorowych, jak i przepisy o ochronie konkurencji, autor przytoczył praktykę decyzyjną Komisji oraz organów w innych pań-stwach członkowskich UE. Podsumowując rozważania podjęte w niniejszym artykule, stwierdzono, że kluczem do realizacji celu polegającego na zapewnieniu skutecznych mechanizmów ochrony konkurencji jest współpraca i chęć wykonywania istniejących kompetencji przez oba organy strze-gące konkurencji w sektorze energetycznym.

Improving the Effectiveness of the Consumer Product Safety System: Australian Law Reform in Asia-Pacific Context.

The Australian government is undertaking public consultations over possible improvements to the 2010 Australian Consumer Law (ACL) regime, including again the idea of adding a European-style general safety provision (GSP). To bolster the case for such reform, Part 2 of this paper analyses 2017–2019 data trends from the OECD Global Recalls Portal for Australia compared with several comparable economies, especially in the Asia-Pacific region where Australia now has most of its trade and investment links. The analysis finds a persistently high per capita recall rate for Australia, compared with several jurisdictions including Korea, Japan, and especially the USA. However, the analysis identifies various legal and other factors across the jurisdictions that impact on interpreting such data. Part 3 therefore begins by highlighting some more specific patterns uncovered from an ongoing joint research project comparing child product safety trends particularly in Australia and the USA. It highlights various concerns regarding recalls in Australia, as well as weaknesses in Australia’s ACL regime (in addition to the lack of a GSP), in coordinating with sector-specific regulation, and in private law mechanisms that could more indirectly promote consumer product safety. Some estimated economic costs from current levels of reported injuries, as well as of many recalls, further reinforce the case for adding a GSP. Part 4 concludes that this improvement to the ACL could be combined with some of the other reform options outlined by the Australian government’s Consultation Regulatory Impact Statement, as well as the introduction of a novel “product safety substantiation order” power. The conclusions and analysis should be helpful for other jurisdictions considering product safety law reforms in an increasingly globalized and digital economy, and draw already on comparisons with regulatory regimes and issues particularly in the Asia-Pacific region.

AI Regulation in Europe

With the regulation of Artificial Intelligence (AI), the European Commission is addressing one of the central issues of our time. However, a number of core legal questions are still unresolved. Against this background, the article in a first step lays regulatory foundations by examining the possible scope of a future AI regulation, and by discussing legal strategies for implementing a risk-based approach. In this respect, I suggest an adaptation of the Lamfalussy procedure, known from capital markets law, which would combine horizontal and vertical elements of regulation at several levels. This should include, at Level 1, principles for AI development and application, as well as sector-specific regulation, safe harbors and guidelines at Levels 2-4. In this way, legal flexibility for covering novel technological developments can be effectively combined with a sufficient amount of legal certainty for companies and AI developers. In a second step, the article implements this framework by addressing key specific issues of AI regulation at the EU level, such as: documentation and access requirements; a regulatory framework for training data; a revision of product liability and safety law; strengthened enforcement; and a right to a data-free option.

Effective Regulation, Legal Certainty and the Conundrum of Online Platform Self Preferencing

The article deals with the phenomenon of online platform - a situation when an online platform provides more favourable conditions for its own activities on the platform related to the offering of goods or services in comparison with its competitors present on the platform. This phenomenon is described from the viewpoint of competition law and the new regulation dealing with online intermediation services and internet search engines. The latter regulation specifically aiming at online platforms does not allow for many substantive conclusions on the topic. The recent competition law case law also does not give many clear hints how to treat self-preferencing activities of online platforms, which can be viewed as problematic at least. In absence of clear sector-specific regulation dealing with substance, it will remain the task of competition authorities to set more complicated remedies ordering concrete action of the undertaking instead of a simple prohibition. The author of this article believes that competition law does not necessarily have to be the best suited tool used to resolve some of the more general questions concerning online platform self-preferencing. Instead, a case for substantive sector-specific regulation is made.

Antitrust and Ex-Ante Sector Regulation

Using ex-ante regulation to replace inefficient and ineffective ex-post litigation based antitrust is a familiar refrain for those interested in regulating large technology firms. But the narrative that antitrust is either solely or predominantly based on ex-post litigation is a false narrative, as both the current antitrust laws and its institutions incorporate many of the features that reformers put forth as ex-ante regulation. As a matter of optimal regulatory design, this is not surprising, as a true ex-ante approach will incorporate both approaches. In the U.S., the Supreme Court has expanded its implied immunity and related common law limits on the use of the antitrust laws in response to the potential costs of inconsistent and overlapping regulation. This forces an ex-ante choice between antitrust and sector specific regulation when addressing specific problems associated with regulated industries. We suggest the ex-ante choice between antitrust and sector regulation be made based on the comparative institutional advantage of each approach, and that such an approach will result in the allocation of duties to deal and price setting to sector specific regulators. Because both approaches are imperfect vehicles for controlling competition, both the initial allocation between antitrust and regulation and the choice to regulate in the first place should be undertaken with caution, and expected to involve a long, slow, and costly evolution towards a more efficient system of antitrust and regulation.

DATA SHARING IN IOT ECOSYSTEMS AND COMPETITION LAW: THE EXAMPLE OF CONNECTED CARS

ABSTRACTThis paper analyzes whether competition law can help to solve problems of access to data and interoperability in Internet of Things (IoT) ecosystems, where often one firm has exclusive control of the data produced by a smart device (and of the technical access to this device). Such a gatekeeper position can lead to the elimination of competition for aftermarket and other complementary services in such IoT ecosystems. This problem is analyzed both from an economic and a legal perspective and also generally for IoT ecosystems as well as for the much discussed problems of “access to in-vehicle data and resources” in connected cars, where the “extended vehicle” concept of the car manufacturers leads to such positions of exclusive control. The paper analyzes, in particular, the competition rules about abusive behavior of dominant firms (Art. 102 TFEU) and of firms with “relative market power” (§ 20 (1) GWB) in German competition law. These provisions might offer (if appropriately applied and amended) at least some solutions for these data access problems. Competition law, however, might not be sufficient for dealing with all or most of these problems, that is, that also additional solutions might be needed (data portability, direct data (access) rights, or sector-specific regulation).

Collective working conditions for everyone?! – Collective provisions with erga omnes effect and statutory extension of collective agreements from a German law perspective

Not only in Germany but in many European states the level of coverage by collective agreements is declining. Since collective bargaining autonomy is based on the principle of voluntary membership, one of its weaknesses lies in the declining degree of organisation on both the employers’ and the employees’ side. In the long term, weak unions cannot ensure fair working conditions. As a result, collective bargaining agreements lose their inherent warranty of correctness. In the legal policy discussion, this has led to calls for the legislator. In response, in 2014 the German legislature passed the ‘Act to Strengthen the Autonomy of Collective Bargaining’ ( Tarifautonomiestärkungsgesetz) to lower the requirements for the extension of collective agreements and to introduce a national minimum wage. As this has not led to significant improvements, there are further-reaching proposals for the statutory extension of collective agreements. The extension of collective bargaining agreements to non-members does not strengthen the social partnership on the employee side. However, it is a legitimate means to avoid a race to the bottom in competing for the lowest social standard; extensions help in creating common labour standards as long as a sufficient margin is maintained for the social partners to negotiate sector-specific regulations and to shape working conditions. A legal system, which is based on rights of freedom and does not consider the freedom of association to be a solely goal-orientated right, offers limited options to strengthen the social partners through legislation. Extensions become increasingly difficult to justify, the higher the existing level of legal protection. Especially in countries with minimum wage legislation and a large amount of employee protection legislation the justification requirements increase. However, at least in Germany, to date the judiciary has not sufficiently considered these aspects. Even though international laws leave substantial freedoms to the states, all legal systems that are based on a strong and vital social partnership should be interested in obtaining and protecting the plurality of collective bargaining agreements. They should only lay down limits, where there are tendencies of eroding solidarity among workforces due to the parallel existence of several collective bargaining agreements. The associations themselves possess limited resources for extending their member base. Still, the more the individual can gain from association membership, the more likely employees and employers are to join their respective associations. Therefore, the state should demonstrate restraint regarding the regulation of labour conditions. However, such restraint will prove difficult for welfare states. Their governments will most likely opt to eliminate deficiencies through legislation, even at the price of further weakening collective bargaining autonomy. Compared to extensions, legal provisions have the disadvantage of being too general and less flexible because of the much slower adaptation process. Therefore, the main argument in favour of extensions is that they facilitate the differentiation of mandatory working conditions. To ensure their legitimation, a number of design options can be considered. Regarding this, neither European nor international law impose high requirements but existing differences between national legal systems demand custom-fit solutions.

Data-Sharing in IoT Ecosystems From a Competition Law Perspective: The Example of Connected Cars

This paper analyses whether competition law can help to solve problems of access to data and interoperability in IoT ecosystems, where often one firm has exclusive control of the data produced by a smart device (and of the technical access to this device). Such a gatekeeper position can lead to the elimination of competition for aftermarket and other complementary services in such IoT ecosystems. This problem is analysed both from an economic and a legal perspective, and also generally for IoT ecosystems as well as for the much discussed problems of “access to in-vehicle data and re-sources” in connected cars, where the “extended vehicle” concept of the car manufacturers leads to such positions of exclusive control. The paper analyses, in particular, the competition rules about abusive behavior of dominant firms (Art. 102 TFEU) and of firms with “relative market power” (§ 20(1) GWB) in German competition law. These provisions might offer (if appropriately applied and amended) at least some solutions for these data access problems. Competition law, however, might not be sufficient for dealing with all or most of these problems, i.e. that also additional solutions might be needed (data portability, direct data (access) rights, or sector-specific regulation).

Slovak Telekom/Deutsche Telekom AG: The Interplay Between EU Competition Law and Sector Specific Rules in the Electronic Communications Sector

Abstract Case T-827/14, Deutsche Telekom AG v Commission, and Case T-851/14 Slovak Telekom a.s. v Commission, Judgments of 13 December 2018. Granting access to a product or service, which is required under sector specific regulation, on unfair, unreasonably complicated or delayed terms amounts to constructive refusal to supply, without the need to demonstrate that the regulated access product or service is an indispensable input. In addition, a margin squeeze test, to assess whether the difference between wholesale and retail prices is negative, should be carried out on a year-by-year basis, and not on a multi-period basis. Finally, when a parent is jointly and severally liable for anti-competitive conduct of its subsidiary, the liability of the parent can exceed that of the subsidiary only if it reflects the parent’s individual conduct in the infringement at issue.

Path dependencies versus efficiencies in regulation: Evidence from “old” and “new” broadband markets in the EU

This paper examines the determinants of sector-specific regulation imposed on broadband markets related both to efficiency objectives of regulators and to those of narrowly defined interest groups. We test hypotheses derived from the normative and positive theoretical literature employing recent panel data on 27 European Union member states taking into account endogeneity of the underlying regulation and market structure variables. Our empirical specification employs three different estimators based on instrumental variables in order to identify causal effects. We find evidence supporting both regulators pursuing normative objectives and inefficiencies related to regulatory path dependence, bureaucracy goals and an inadequate consideration of competition from mobile broadband networks. Our results call for adjustments in the institutional design of the decision-making process under the current European Union regulatory framework.

International cooperation by (European) security and intelligence services: reviewing the creation of a joint database in light of data protection guarantees

Key Points Increasing multinational cooperation between intelligence and security services, including the establishment of a joint database on (alleged) jihadists, raises legal concerns over the protection of personal data, in particular with respect to the allocation of responsibility among participating states, the geographic scope of fundamental data protection norms, and the applicable law. It is argued that states participating in multinational cooperative efforts may share responsibility, eg in relation to a shared database. However, for reasons of proximity, the host state of the server has heightened duties of care. It is also argued that where a participating state, in particular the host state, exercises virtual control (jurisdiction) over an individual person’s data, such a state has data protection obligations towards that person, regardless of the latter’s location. Participating states, and again in particular the host state, are under an obligation to put in place adequate control systems, including with a view to preventing the transfer of data that have been gathered by states in breach of data protection guarantees. If systemic failures in the multilateral system are identified, states are barred from transferring data to the system, unless they can obtain credible guarantees that data will be adequately protected. General principles of data protection law, derived from case law as well as general or sector-specific regulations, govern the processing and transfer of data in the context of multinational intelligence cooperation, including the management of a joint database. There is no reason not to apply them in the context of national security.

Path Dependencies versus Efficiencies in Regulation: Evidence from 'Old' and 'New' Broadband Markets in the EU

This paper examines the determinants of sector-specific regulation imposed on broadband markets related both to efficiency objectives of regulators and to those of narrowly defined interest groups. We test hypotheses derived from the normative and positive theoretical literature employing recent panel data on 27 European Union member states taking into account endogeneity of the underlying regulation and market structure variables. Our empirical specification employs three different estimators based on instrumental variables in order to identify causal effects. We find evidence supporting both regulators pursuing normative objectives and inefficiencies related to regulatory path dependence, bureaucracy goals and an inadequate consideration of competition from mobile broadband networks. Our results call for adjustments in the institutional design of the decision making process under the current European Union regulatory framework.

ICLE Comments, The Current Landscape of Competition and Consumer Protection Law and Policy

These comments were submitted to the FTC as part of its hearings on “Competition and Consumer Protection in the 21st Century.” As part of our comments, we note the timeliness of the hearings, given that, despite the vast social benefits generated by companies operating in the digital economy, the ongoing economic transformation has stoked fears amongst members of the general public, the press, and policymakers. This transformation has led to calls for interventionist policies such as heightened antitrust enforcement, sector-specific regulation, and direct intervention against industry concentration. We further note that there is insufficient evidence and, at best, ambivalent theory to support any of these proposed policies—and in the absence of a strong basis for adopting them, the proposed policies would do more harm than good. Among other things, economies of scale, economies of scope, net- work effects, and the like may bring about larger firms and more concentrated markets along with considerable consumer benefits. And new markets necessarily imply the consolidation of some firms and the exit of others, as competitors vie to come up with the winning paradigm. Against the backdrop of this evolutionary process, it is critical that authorities avoid knee-jerk reactions that may impair the long-term welfare of consumers and firms alike. Our comment reviews some of the important findings which law and economics scholarship can bring to bear on competition and consumer protection enforcement in this space.