Mike Vickers' Blog

May 17, 2013

What if Scotland becomes Independent – Competition & Regulation

Filed under: DHI SPIF, Politics, Scotland, Scottish Independence — derryvickers @ 3:54 pm

The David Hume Institute has been running a series of four ‘conversations’ around the subject of Scotland’s referendum on whether to become a State separate from the UK .  The last one was on Competition Policy and Regulation.

I wrote a few notes following the meeting – they are below.  The papers supporting all conversations are available on the David Hume Institute web.

I didn’t know much about either Competition Policy or Regulation before this evening’s conversation.  I know a little more now. My points should be taken in this context.

  1. Competition Policy and Regulation are both subservient to Government Policy.  The trouble is that Government policy can change significantly on change of Government
  2. However most speakers spoke of the need for stability particularly of Regulation, not only to protect capital investment but also stability is liked by consumers / customers.
  3. Consumers in general are not familiar with the role of the Regulator and therefore blame them when prices go up.  I suspect consumers are even less familiar of the role of the Competition Commission.  This point was focussed on by questions from the floor
  4. There was discussion but little unison on whether Scotland should share the current UK regulators or Competition Commission if independent.  If their briefs are heavily dependent on Government Policy and if as expected Scotland moves further form rUK policy following a Yes vote then there was some support for similar functions to be set up by the Scottish Government.
  5. There was also some support for the view that small countries do well as they tend to focus on the things that matter to them; it was viewed that this was particularly so within a EU umbrella
  6. For Scotland WICS got much praise as an example of a small country not only going its own way but also leading.
  7. There was much discussion on whether Competition Policy and Regulation should be combined as in the Netherlands or kept separate – lumpers and splitters.  The issue for not lumping was that the organisations to be regulated vary quite markedly.  Dirk Janssen said one reason for their lumping was to save cash – 10%; another was to make the organisation more consumer facing.  Jeremy made the comment of poachers and gamekeepers
  8. One questioner from the floor was particularly critical of regulation in practice instancing the failure of the FSA and the apparent cartel on Oil Pricing.  Luis Correia da Silva responded that the FSA had been too fond of ticking the rule boxes rather than looking at the fundamentals.  He felt that CEOs need to be more conscious of the business they run.

Just a couple of personal comments

  1. Lumpers and splitters were seen at the national level; it would be quite possible to take an orthogonal view – lumping regulation by utility, for instance, across the EU – this was touched on by one speaker citing Energy (against) and Telecoms (for).  To me such lumps would give for instance the EU the power to regulate transnationals.  I understand that the EU was quite successful in bringing Microsoft to heel.  Banking could be another example.
  2. Everyone spoke of the need for long term stability and establishment of balance between investors and consumers, but as I see it consumers look at prices tomorrow and companies are increasingly being driven by investors looking for a quick buck (particularly in the UK).  On top of that Governments are thinking of the next election.  Not much room for stability here.   I am reminded of the critical life of Football team managers, witness Manchester City; what we want in regulation is more Alex Fergusons.
  3. And to consumers more generally Trisha McAuley was strong last week at getting them into the supply chain, how many current regulators come from the consumer side of the business.

ESRC Conversation 4

“Competition Policy and Regulation:

in the Context of Constitutional Change in Scotland”

Main Speaker: Professor Martin Cave, Visiting Professor at the Imperial College Business School and

Vice Chair of the Competition Commission

Chair: Jeremy Peat, Director David Hume institute

Authors of papers and contributors to discussion: Professor David Simpson (former DHI Trustee and

former board member of the Water Industry Commission for Scotland); Iain Osborne (Group Director of

Regulatory Policy, the Civil Aviation Authority); Luis Correia da Silva (Managing Director OXERA); Dirk

Janssen (the Netherlands Authority for Consumers and Markets); Jon Stern (City University and coauthor

with Martin Cave); and David Saunders (Chief Executive of the UK Competition Commission).

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