Troubled Times: What Role for Competition and Regulatory Policy?

Hard times, occasioned by a prolonged recession resulting in a series of austerity budgetary measures, generate much economic insecurity. How should the State respond? One clear choice is between robustly enforcing competition and regulatory policy and relaxing these policies. What does the international as well as Irish evidence suggest is the result of such relaxation? Could relaxation of competition and regulatory policy provide greater economic security than robust enforcing? If so, at what price? Are there any conditions under which groups or sectors should be sheltered from market forces to provide greater economic security without losing the overall benefits associated with good principles of competition and regulatory policy? Drawing on international evidence this paper addresses these questions. It finds that choosing to relax competition and regulatory policy may deliver transitory benefits but that it is ultimately likely to be an economically costly policy. Even without relaxation, competition and regulatory policy contain provisions that permit otherwise restrictive agreements and regulations to be allowed, but only when the benefits exceed the costs. These well established precedents are contained in Irish competition law. However, the regulatory process in Ireland has, as yet, to fully reflect international best practice in judging ex ante regulation. The OECD (2010) report for Ireland contains recommendations to rectify the situation.