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Materiale didattico per il corso di Theories of Regulation della prof.ssa Laura Ammannati. Trattasi dell'articolo di David Coen e Mark Tatcher dal titolo "Network Governance and Multi-level Delegation: European Networks of Regulatory Agencies" all'interno del quale sono analizzate le reti di governance dei mercati... Vedi di più

Esame di Theories of Regulation docente Prof. L. Ammannati



David Coen and Mark Thatcher

 confirmed its support for the creation of a regulators’ body, but also


asked it to perform a role when particularly sensitive issues were

concerned (ECOFIN Council Annex A European Council

: , ).

Presidency communication of December also supported the crea-


tion of a regulators’ body as a part of the Lamfalussy process, although

it noted that harmonisation of national regulatory functions would be a

desirable prerequisite (Ibid: The European Parliament was con-


cerned about inadequate supervision of delegated legislation comitology

procedures (European Parliament but did not attempt to block the


establishment of CESR. CESR was then set up as ‘ an independent

advisory group on securities in the Community’ by a Commission

decision in (European Commission

 a).

Many parallels can be found between the creation of CESR and that

of the ERG. During the several proposals were made for a


European telecoms regulator, including one by the Commission. Firms

were divided: newer operators hoped for the creation of a single

regulator, but existing suppliers were concerned that centralisation of

regulation across the EU might damage their commercial prospects. But

ideas of a Euro-regulator were rejected by member states.

Instead, the Commission turned to the idea of a less prominent and

powerful body. The genesis of the ERG lay in the Commission’s 

Communications Review, which looked at updating and unifying the

various pieces of EU legislation in telecommunications that had accrued

over the previous fifteen years. A Commission communication (European

Commission of November mooted the idea of increased

a) 

co-ordination of NRAs’ decisions at European Union level. It claimed

that stronger EU-wide co-ordination was necessary since the NRAs

would be delegated more power by the new regulatory framework. The

communication also noted that existing procedures for co-operation with

the CEPT had not worked satisfactorily. The CEPT was an existing

organisation run through consensus and in an intergovernmental man-

ner: that is, without binding powers on its national members, and often

concerned with standard setting rather than liberalisation and regulation

of competition. Initially, a High-Level Communications Group involving

the Commission and NRAs was established under the telecommuni-

cations Framework Directive (European Parliament and Council to


help improve the consistent application of Community legislation and

maximise the uniform application of national measures. However, a short

Commission decision soon replaced it with a European regulators group

for electronic communications networks and services in July 

(European Commission : ).

The history of CESR and the ERG underlines the earlier general

points made about ERNs. Firstly, their establishment was closely linked

Network Governance and Multi-level Delegation 

to implementing EU regulation. They flowed from perceived difficulties

of introducing the single market at the national level and co-ordinating

a host of diverse NRAs. Secondly, ERNs followed the rejection of ideas

of Euro regulators. They represented a response to co-ordination

problems – i.e. delegation to increase efficiency – without creating a new

supranational body. Thirdly, they were proposed by the Commission or

Commission-created bodies, accepted by national governments and

IRAs, then set up formally by Commission decision. They are the fruit of

an agreement between several actors.

The institutional design of ERNs: composition, functions, powers, resources and


CESR and the ERG appear to provide a good example of a movement

towards network governance. However, analysis of the institutional

design reveals the weaknesses of the new ERNs and the strength of their

principals, namely the European Commission and national governments

and regulators. The membership of CESR and the ERG is wide and

ambiguous, making autonomous action difficult. The two ERNs are

given very broad functions but few powers. Their resources are limited

and they face rival venues both for co-ordination and for more traditional

governmental functions of deciding through hierarchy and hard law. A

detailed analysis of the institutional design thus reveals limited delega-

tion, many controls and an institutional context that allows policymakers

to work through alternative organisations.

Composition of ERNs

The membership of ERNs is composed of formal representatives from

member state NRAs. It differs considerably from informal networks such

as the Florence and Madrid fora, which involve private and public actors,

including experts and regulatees. The Commission has an important

position but its role is ambiguous, something between a full member and

an external ‘ overseer’. Here, we focus on the ERG and CESR.

The ERG consists of representatives of IRAs from the twenty-five EU

member States. However, eligibility soon posed difficulties with respect to

the degree of independence required for membership. The original 

decision stated that the ERG ‘ shall be composed of the heads of each

relevant national regulatory authority in each Member State or their

Representatives’ (European Commission Art. but also that it

: )

should be a ‘ group of independent national regulatory Authorities’ (Ibid:

Art. The preamble made reference to ensuring sufficient separation


David Coen and Mark Thatcher


from suppliers, especially if a member state had publicly owned suppli-

ers. This raised important issues of whether an IRA was sufficiently

independent from publicly owned suppliers. The ambiguity was ended, at

least in formal terms, by a new decision in (European Commission


that simply stated that eligible IRAs would be listed in an annex


and kept under review by the Commission. Nevertheless, this decision

allowed the Commission considerable scope for further intervention to

decide the ERG’s membership.

The ERG also has observers from EU accession/candidate states and

European Economic Area states. In the ERG granted observer


status to Turkey and Croatia as EU accession countries. In addition, the

Commission sits as an observer at the ERG. Its representatives are able

to remain in the ERG while confidential issues are discussed. Although

the Commission is represented on the ERG, it also works ‘ jointly’ with

the latter, as for example when they issued a joint paper on anti-

monopoly remedies. So the Commission appears to be both a partner

with the ERG and a quasi-member, as well as being one of its formal


CESR is composed of one senior member from each member state’s

competent authority in the securities field, with EEA representatives as

observers. The identification of ‘ competent authorities’ with the requisite

degree of independence was a problem for CESR as it was for the ERG.

In countries such as France, Finland and Ireland all lacked a single


NRA for the entire financial sector, with responsibilities being split

between different bodies (CESR The Commission is an

b: ).

observer at CESR, but ‘ it shall be present at meetings of the Committee

and shall designate a high-level representative to participate in all its

debates’, except when the Committee discusses confidential matters

relating to individuals and firms in the context of improving co-operation

among European Regulators (CESR Art.

a: .).

Functions and powers of ERNs

The functions given to ERNs are very broad and strongly linked to the

Commission, at least according to the EU decisions that create them.

Thus, for instance, the Commission decision establishing CESR defined

its role as ‘ to advise the Commission, either at the Commission’s request,

within a time limit which the Commission may lay down according to the

urgency of the matter, or on the Committee’s own initiative, in particular

for the preparation of draft implementing measures in the field of

securities’ (European Commission Art. More specifically,

a: ).

CESR was required to consult extensively with market participants,

consumers and end-users, and to present an annual report to the

Network Governance and Multi-level Delegation 

Commission, which would also be sent to the Parliament and Council.

This role was expanded in CESR’s Charter to cover other tasks such as

reviewing the implementation and application of Community legislation,

the issuing of guidelines, recommendations and standards for its mem-

bers to introduce in their regulatory practices on a voluntary basis, and

the development of effective operational network mechanisms to enhance

consistent day-to-day supervision and enforcement of the single market

for financial services.

CESR was given roles within EU legislation on financial services. The

Lamfalussy process sets out a four-level procedure which moves from the

definition of the overarching regulatory framework through to its

enforcement. The first level follows standard EU procedure, with the

Commission making legislative proposals, based on stakeholder consul-

tation, which are subsequently adopted through the co-decision process

by the Council and European Parliament. This stage also sets out

the implementation powers of the Commission. Level concerns the

adoption of implementing legislation laying down technical details for the

framework principles agreed at level Here, the comitology procedure


is used, with votes being taken by qualified majority at the European

Securities Committee (ESC). The European Parliament is also consulted

on the draft implementing measures and is given one month to pass a

resolution on the final legislation where it considers the Commission to

have exceeded its implementation powers. Level focuses on the

consistent implementation of Community legislation across the member

states. Here, comparisons of national regulatory practices are made and

recommendations for common standards are proposed. The final level

concerns the monitoring of compliance of member state laws with

Community legislation. Where necessary, the Commission can pursue

legal action through the European Court of Justice in cases where

compliance is lacking.

CESR’s involvement in this process relates specifically to the second

and third levels. But its roles are mainly to provide advice and help to

establish non-binding norms, a form of soft law. Moreover, its position is

heavily dependent on other actors in the policy process. Thus, although

CESR has been given a mandate by the Commission to prepare technical

advice in the form of implementing measures, which it does based on its

own formal consultation procedure, level legislation is adopted through

formal EU comitology procedures. These involve the ESC, consisting of

representatives from member states, acting through EU legal procedures.

At level CESR is responsible for leading the co-ordination activities.


It can issue non-binding common guidelines and standards aimed at

facilitating the interpretation and facilitation of Community legislation.

It addition, it can conduct benchmarking exercises aimed at gauging

David Coen and Mark Thatcher


member state compliance with such standards. This is, in many ways, an

activity that is complementary to the Commission’s compliance tests at

level though it is ‘ softer’. It underlines that CESR can have influence


through the creation of norms or soft law. But, overall, while CESR has

been given a clear mandate within the Lamfalussy legislative process, it

can shape directives at level only in so far as it can influence the

Commission, and it risks being constrained by the European Securities

Committee. Thus, CESR’s major roles are advisory and involve co-

ordination of implementation of Community regulation.

Similarly, the role of the ERG is to ‘ advise and assist the Commission

in consolidating the internal market for electronic communications

networks and services’, and to ‘ provide an interface between national

regulatory authorities and the Commission’ (European Commission

Art. It too was asked to ‘ consult extensively and at an early stage

: ).

with market participants, consumers and end-users in an open and

transparent manner’ (Ibid: Art. However, its mandate is even less wide


than CESR’s in relation to the definition of implementing measures,

as there is no well-specified equivalent to the Lamfalussy process for

telecommunications legislation.

The powers of ERNs are often limited. Thus, for instance, ERG

decisions are not binding on its members. Even deciding its own rules of

procedure require considerable agreement among member states and it

is dependent on the Commission: these are to be adopted by consensus

or, in the absence of consensus, by a two-thirds’ majority vote, one vote

per member state, subject to the approval of the Commission (Ibid: Art.

CESR enjoys marginally greater powers over its own internal


functioning in that the decision creating it allowed to adopt its own rules

of procedure and organise its own operational arrangements. Neverthe-

less, the Committee has advocated that CESR use a voting procedure

modelled on qualified majority voting where it was not possible to reach

consensus, and this has been adopted in CESR’s operations.

Thus, ERNs face ambitious aims and are asked to consult widely and

cover broad fields. Yet they lack formal powers to impose decisions on

their members and indeed even to organise their own internal


Resources of ERNs

The material resources of ERNs are decided by their members and the

European Commission. ERNs are small organisations in terms of staffing

and spending. Thus, for instance, the CESR secretariat, based in Paris,

started with seven members of staff plus a secretary general, although this

had grown to fifteen by It also has a small budget, which led to


Network Governance and Multi-level Delegation 

comments from Baron Lamfalussy that CESR lacked sufficient staff to

make sure that the new regulatory framework worked properly (Financial

Times, March In the budget for CESR was increased by

 ). –,

a third, apparently due to a willingness by members to contribute more;

by it spent euros (CESR The ERG has even fewer

 .m : ).

resources of its own: the Commission provided its staff, which appeared

to number three persons in while from the ERG secretariat

, 

functions are integrated into the services of the Directorate General for

Information Society and Media (ERG Hence ERNs are

, ).

small even relative to the Commission, let alone in comparison to

national IRAs and especially regulated firms.

Alternative decision-making venues

ERNs face several rivals for the functions of decisionmaking, even at the

EU level. The most important are the formally established EU commit-

tees. Thus, for instance, in securities, the ESC has significant powers over

EU legislation. Like CESR, it was set up by a Commission Decision

(European Commission after lengthy discussions involving


national governments and the European Parliament. It is composed

of representative of EU member states, thereby integrating national

governments. It acts as an advisory committee to the Commission on

both policy issues and draft legislation; this mandate is considerably more

precise than CESR’s broad and undefined advisory function. In addition,

in level of the Lamfalussy procedures, when broad directives are being

proposed by the Commission, it acts as a normal EU committee, that is,

one that operates under the comitology procedure and whose approval is

needed for Commission proposals to be passed without going to the full

council of ministers (see Varone et al. Thus, the ESC’s procedures


form part of well-established EU comitology, and it has legal powers over


A similar situation exists in telecommunications, with the existence of

the Communications Committee (Cocom), also set up by Commission

decision (European Parliament and Council It is composed of


representatives of member states and acts both as an advisory committee

and a regulatory committee in accordance with general comitology

procedures. In addition, it provides a platform for the exchange of

information on market developments and regulatory activities.

CESR and the ERG also contend with well-established European and

international organisations that operate through intergovernmental

processes, notably consensus and the absence of powers to impose

decisions on members. In telecommunications, there is the CEPT,

created in extending beyond the EU to all European states. It has


David Coen and Mark Thatcher


played an important role in standard setting as well as bringing together

representatives from national administrations and, traditionally, opera-

tors. Then there is the International Telecommunications Union (ITU),

which has members across the world. In securities trading, there is also

the International Organization for Securities Commissions (IOSCO),

founded in which is composed of securities regulators from around


the world and seeks to set international standards, notably via MOUs

(memoranda of understanding). Its members cover more than per cent


of the world’s securities markets and include the United States.

Finally, there are rival informal networks of regulators whose existence

may result in institutional competition and venue shopping by those

regulatees that can operate in a multilevel policy process. In particular,

in telecommunications, the Independent Regulators’ Group, established

in as a group of European national telecommunications regulatory


authorities, continues to exist alongside the ERG. It has the advantage

(for IRAs) that the Commission is not a member and that it is run by

IRAs themselves. Its mere presence raises questions over the level of

confidence in the independence of the ERG with which it competes.

Similarly, CESR’s power (specifically at level is constrained by the


ESC, which is legally responsible for passing delegated legislation that

details broad level directives. In electricity and gas, the Florence and

Madrid Fora include private sector participants, although the Commis-

sion is also closely involved. Moreover, the role of the CEER may

potentially be eclipsed by the European Regulators Group for Energy

and Gas (ERGEG).

Thus, national governments, IRAs and the European Commission all

have venues for co-ordination that are alternatives to CESR and the

ERG. The two networks are in competition for resources, attention and

power with other networks or committees that have their own distinct

institutional advantages, such as greater formal powers or the ability to

work without the Commission.


ERNs have been established in economically and politically strategic

domains, notably network sectors. Using a principal-agent framework,

the reasons both for the decision to double delegate and for the institutional

design of the delegation have been analysed. Delegation was undertaken

by the Commission and IRAs, but after extensive discussions with the

member states and European Parliament. It was justified by the need for

greater co-ordination in implementing EU regulation: i.e. by greater

efficiency. However, the creation of ERNs took place only after another

solution, the creation of Euro-regulators, had been rejected. Whether

Network Governance and Multi-level Delegation 

ERNs can indeed be seen as a ‘ second best’ method of dealing with

implementation of EU regulation or as a stable point in institutional

regulatory design is a still a moot point (see Thatcher and Coen ).

They certainly appear to be a compromise between actors pressing for

greater European integration and those fearing it, especially national


The institutional design of ERNs reflects their genesis. They have been

given lofty tasks, but few powers and resources. The European Commis-

sion and national actors (governments and IRAs) maintain many powers

over ERNs. In addition, the existence of several other regulatory

networks and organisations creates rivals to ERNs. This limited mandate

and competitive institutional relationship have created conflict between

the aims and the capacities of ERNs.

What are the implications of these findings for wider claims of the

development of network governance in Europe? The introduction set out

three features of network governance: it offers, firstly, a form of sectoral

governance; secondly, a shift of power from previously well-established

levels to organisations or individuals whose main role is linking actors;

and, thirdly, changes in the mode of governance, away from hierarchy

towards more ‘ horizontal’ and co-operative forms of decisionmaking.

Our empirical findings can be set against these three key features. In

the first instance, the analysis suggests that, in formal institutional terms,

ERNs bring together national IRAs and the European Commission. But

they do not bind together sectoral actors from private and public sectors:

although ERNs are required to consult private actors, those actors are

not full members. Moreover, the ERNs’ lack of powers to impose

decisions on national IRAs and their small size and reliance on the

European Commission (going so far as providing the secretariat for the

ERG) suggest that ERNs are far from offering ‘ sectoral governance’.

With respect to the second feature, few powers have been delegated to

ERNs. Even worse (for claims of the spread of network governance),

existing organisations – notably the European Commission, traditional

EU committees, national governments and IRAs – retain strong formal

powers. There is little sign of a major shift in the allocation of formal

powers in regulation.

This links to the third feature of network governance, which is still

lacking: in terms of the formal structure of decisionmaking, hierarchy

remains strong. In particular, EU committees continue to exist and to

operate through voting and legislation. For their part, the ERNs have

many aspects of a traditional intergovernmental organisation, including

the importance of working by consensus. Indeed, their main formal

powers are linked to that most hierarchical method of operating –

passing legislation – on which they advise.

David Coen and Mark Thatcher


Of course, the limits of the analysis should be acknowledged. They

largely flow from the principal-agent framework, which focuses on formal

institutional structures and the relationship between principals and

agents. ERNs suffer from severe weaknesses in their formal position, but

may be able to develop informal resources and linkages. These could

include information, expertise, reputation and trust (Sabel and Zeitlin

Coen If ERNs are able to obtain these resources, they may

; ).

wield power that is out of proportion with their formal position.

Moreover, as the regulatory space literature suggests (see Hancher and

Moran Scott other actors may be more important to an

; ),

organisation than its formal principal. For ERNs, linkages with the

industry may supply a vital source of power. Thus, ERNs may be able to

alter governance by going beyond the formal institutional framework.

Nevertheless, analysis of that framework provides good evidence for

why ERNs are subject to criticism as inadequate: on the one hand, they

have been given sweeping goals of co-ordinating diverse national IRAs

and ensuring consistent implementation of EU law across the European

Union that relate to the heart of the single market; on the other hand,

they lack the powers and resources to do so. The EU’s double delegation

to IRAs and the European Commission has failed to resolve the EU’s

problems of co-ordination and implementation. As a result, the issue of

delegation and co-ordination remains a topic of lively political debate in

Brussels and national capitals, with discussion of Euro-regulators in

telecommunications and energy returning to the policy table in –.

But the analysis presented here certainly suggests that network govern-

ance is far from the institutional position of regulation in Europe today.


The project ‘ After Delegation: The Evolution of European Regulatory Networks’ was funded by the

. EU Framework Project as part of the EUI NewGov consortium. The authors would like to thank


all the European Commission officials, national regulators and European network regulators who

participated in the research. A number of people have commented on this paper at conferences at

ECPR, EUSA, Connex meetings at ARENA, Birkbeck and Madison, NewGov conferences in

Florence, ERSC Centre for Competition Norwich and the Centre for Network Industries Lausanne,

but we would especially like to thank Jonathan Zeitlin, Keith Armstrong and Andrew Tarrant for

detailed comments and Adrienne Héritier and Dirk Lehmkuhl for editing the special issue. Finally,

and perhaps most importantly, we would like to give special mention to Julian Knott and Annelie

Dodds for their research assistance on this project.

However, for an alternative view of delegation based on institutional isomorphism which results in

. non-functional delegation, see McNamara .

There is the important but limited exception of some aspects of competition policy, although this

. itself was ‘ re-delegated’ to national regulatory authorities from May (Wilks

 ).

The major exception is FESCO, whose work was taken over by CESR in

. .


See, for example, in telecommunications the report on the Implementation of the Telecommunications

. ,

Regulatory Package – March

 ,


Interviews with Commission official, NRAs and ERG

. .

Network Governance and Multi-level Delegation 

See the recent debates in telecommunications (the Commissioner Reding letter and ERG response

. ( and energy (see Thatcher and Coen ).

European Commission Preamble §: ‘ In accordance with the Framework Directive, Member

. :

States must guarantee the independence of national regulatory authorities by ensuring that they are

legally distinct from and functionally independent of all organisations providing electronic

communications networks, equipment or services. Member States that retain ownership or control

of undertakings providing electronic communications networks and/or services must also ensure

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Materiale didattico per il corso di Theories of Regulation della prof.ssa Laura Ammannati. Trattasi dell'articolo di David Coen e Mark Tatcher dal titolo "Network Governance and Multi-level Delegation: European Networks of Regulatory Agencies" all'interno del quale sono analizzate le reti di governance dei mercati in Europa.

Corso di laurea: Corso di laurea magistrale in economics and political science
Università: Milano - Unimi
A.A.: 2011-2012

I contenuti di questa pagina costituiscono rielaborazioni personali del Publisher Atreyu di informazioni apprese con la frequenza delle lezioni di Theories of Regulation e studio autonomo di eventuali libri di riferimento in preparazione dell'esame finale o della tesi. Non devono intendersi come materiale ufficiale dell'università Milano - Unimi o del prof Ammannati Laura.

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Altri appunti di Theories of regulation

Self - regulation
Modes of regulation in the governance of the European Union
Legitimacy and the Competition for Regulatory Share - J. Black
Regulatory Agencies - Christensen