Regulierung und Wettbewerbsrecht in liberalisierten Netzindustrien aus institutionenökonomischer Perspektive / Regulation and Competition Law in Liberalised Network Industries as Seen from a New Institutional Economics Perspective

Justus Haucap and Uhde André

ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, 2008, vol. 59, issue 1, 237-262

Abstract: The most crucial task for the liberalisation of network industries is the control of the incumbent’s and former monopolist’s market power. In theory, this can be effected either through ex ante regulation by a special agency, which focuses on a limited number of industries, such as the Federal Network Agency in Germany, or through ex-post control by general competition authorities such as Germany’s Federal Cartel Office. For the German electricity market, the Federal Cartel Office was in charge of controlling market power until 2005, when the Federal Network Agency as established as the regulator in charge of controlling network prices. For telecommunications and airports the debate over “ex-ante regulation vs. ex-post control” is not over yet, however. This paper shows that such a simple dichotomisation neither captures the complexity of the problem nor the diversity of possible institutional arrangements. Any recommendation on the institutional design of the regulatory framework should depend on how competition has developed in the past what can be expected for the future. We develop elements for a further differentiation of regulatory measures, based on the so-called 3- criteria-test applied in European telecommunications markets.The German Telecommunications Act (TKG) also contains reasonable approaches. Sector-specific ex post control of market power and ex post regulation, as envisaged by the TKG, have the advantage of countervailing well-known tendencies of overregulation. However, the consistency of competition law across sectors may suffer, and the regulator may be more prone to regulatory capture than a competition authority. Therefore, we argue that any sector-specific ex post control should be accompanied by a sunset clause to guarantee the transition into general competition law. Ex post regulation can, however, facilitate a faster exit from sector-specific regulation by climbing down the so-called ladder of remedies.

Date: 2008
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DOI: 10.1515/ordo-2008-0113

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