Questionable regulatory agency

The government has at last approved the merger of all the existing major regulatory and supervisory agencies. The National Commission for Markets and Competition (CNMC), which will begin its activities next month, subsumes the National Competition Commission (CNC), the National Commission for the Telecommunications Market (CMT), the National Energy Commission (CNE), the National Postal Sector Commission, the Railway Regulation Commission, the Airport Economic Regulation Commission, and the State Audiovisual Media Council. This decision has been questioned on the grounds of its doubtful efficiency; of the real threat it poses to the independence of the new regulator in this format; and of the lack of comparable international references to demonstrate that all-purpose agencies of this nature function well.

The only clear reason for this disorderly merger is related to cost savings, owing to a reduction in the number of members of the bodies that will now disappear, which the government estimates at between 28 and 30 million euros. But the complexity and diversity of the markets and activities that the new organization is to address suggests possible shortcomings in effectiveness that may generate costs that are much greater than the relatively token savings now being touted, which can hardly offset the threat to quality of functioning, diverse regulatory risks, and the possible doubts as to regulatory independence, on the part of investors both domestic and foreign.

Due monitoring of all these markets, and transparency and free competition in their manner of functioning, is essential for the competitiveness of the whole of our economy. The greater the regulatory agency’s particular knowledge and, in short, its specialization, the more effective its supervisory functions will be. Independence and proper performance are only doubtfully ensured by the new regulator, which looks more like an autonomous administrative organization. Its attachment to the Economy Ministry justifies the criticism voiced by the major opposition Socialist Party, and the distrust expressed by more than a few experts from the European Commission.

This is apparent in the case of the Independent Fiscal Authority, an entity devised to monitor public spending, which the economic authorities now propose to transform into a branch of the Finance Ministry. This move shows the same leaning to direct control of agencies that ought to be completely independent, and should enjoy an arbitrational prestige deriving from inter-party political backing and specialized technical knowledge.