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Returns to themes sounded in the previous two chapters, elaborating them in the context of regulatory federalism: Majone discusses how regulatory independence may be reconciled with accountability, in a context where important policy‐making powers are delegated to non‐majoritarian institutions, an issue the American polity has grappled with for more than a century. Joint regulatory action, or regulatory cooperation, is a crucial feature of multi‐level governance, where powers are not clearly allocated hierarchically, and in Europe, the emergence of transnational regulatory networks is the key development that will help Europe find coordinated rather than vertically distinct solutions to regulatory problems. However, this also entails important dilemmas of legitimacy: on the one hand, in the context of multi‐level governance, values of technical competence and political independence argue in favour of governments delegating these joint regulatory activities to bodies of regulators from the various jurisdictions; on the other hand, this poses a very serious challenge to democratic legitimacy since there is no comprehensive democratic body or polity that can apparently effectively control the exercise of these delegated powers. Here, Majone dismisses various philosophies that have been tried in the USA and found echoes in the EU—from the traditional ‘transmission belt’ approach leaving no discretion to regulatory agencies, to the expertise model of the New Deal period or the pluralist proposal to politicize the regulatory process. Instead, he argues that, if one looks imaginatively at some of the control mechanisms that exist in the USA system today with respect to delegated federal regulatory powers, the problem may not at all be insuperable. In the EU, these procedural safeguards, designed to strengthen democratic legitimacy in general rather than simply state rights, are all the more necessary since delegation to the Commission and to a lesser extent to outside bodies involves wide discretionary powers: in short, the EU should continue to strengthen its multi‐level networks as well as to adopt the equivalent of the Federal Administrative Procedure Act and emulate the far‐reaching judicialization of regulatory decision‐making that has occurred since then in the USA.

The question of what regulatory authority over securities markets should be assigned to exchanges, central counterparties, and central securities depositories has long been controversial. This chapter explores this issue in the broader context of examining how regulatory powers should be allocated between government regulators, self-regulatory organizations, and other types of regulatory institutions. The chapter is composed of three sections. In the first, the complexity of the decision as to how to allocate regulatory powers in a jurisdiction is discussed. The second section lists and analyzes crucial factors and constraints that affect the relative merits of allocating regulatory powers to different types of institutions. The last section encapsulates these discussions and presents in a simple and accessible manner key lessons about how best to allocate regulatory powers in the securities markets. In order to do so, nine general propositions are articulated.

This chapter seeks to compare how different jurisdictions allocate regulatory powers over their securities markets. Rather than seek to present detailed descriptions of how any specific jurisdictions allocate such regulatory responsibilities, three surveys on the topic, covering various jurisdictions and institutions, are described and evaluated. The chapter is composed of four sections. The first two summarize key results from two surveys that examine the regulation of securities markets, and how regulatory powers over such markets are allocated—one prepared by the World Federation of Exchanges in 2004, and the other by the International Council of Securities Associations in 2006. The third section presents the results of a survey undertaken in 2006 for this book on how regulatory authority is allocated in eight jurisdictions with large securities markets. Conclusions are presented in the last section.

Between 1986 and 2005, rapid and sweeping changes broke with long-standing sectoral institutions for securities trading in France, Germany, and Italy. Stock exchanges were privatised, legal monopolies ended, and regulatory powers transferred to independent regulatory authorities. Policy forms of internationalisation were crucial in these changes. Policymakers feared regulatory competition due to new institutional arrangements in Britain, while also looking to Britain as a successful example of reform. But a second, more important factor was detailed sectoral EU regulation which increased fears of securities trading moving elsewhere and provided occasions and arguments for change. The two forms of internationalisation aided the formation of strong reform coalitions between governments and the managements of incumbent suppliers, and provided arguments to legitimate changes. By 2005, the three countries had adopted similar institutional outcomes to Britain, but following a different route, showing that policy forms of internationalisation can lead to similar outcomes through nationally-specific routes.

This chapter analyses how and why two forms of internationalisation — transnational technological and economic developments and reforms in the US — were met with institutional inertia, or at most limited divergent reforms in France, West Germany, and Italy between the mid-1960s and 1985. It shows that the two forms of internationalisation placed major pressures on traditional sectoral institutions that were very long-standing and protective of suppliers, such as public ownership of stock exchanges, legal monopolies, and the allocation of regulatory powers to governments and associations of brokers and exchanges. They led to debates in all three countries on modest reform proposals. Yet even limited alterations were largely blocked, due to the failure of governments to form a strong alliance with the leaders of stock exchanges that could overcome opposition to change. Instead, either poorly-functioning institutions were continued or non-institutional responses to internationalisation pressures were found.

This introductory chapter provides a brief summary of the book's argument—the administrative, not constitutional character of supranational governance in the European Union (EU), and the convergence of European public law around the legitimating structures and normative principles of the postwar constitutional settlement. The chapter outlines several key distinctions and concepts on which the argument is based, including: representative government, democratic legitimacy, and their relationship to European integration; administrative governance and the distinction between control and legitimation of regulatory power; and the importance of national oversight, if not control, in the legitimation of Europeanized administrative governance. This chapter introduces the notion of ‘historically constituted bodies’ (legislative, executive, executive, or judicial) as the repositories of representative government and democratic and constitutional legitimacy in the European system. It then relates the process of European integration historiographically to the process of diffusion and fragmentation of regulatory power away from these bodies that has been the principle characteristic of modern administrative governance since the 19th century. The chapter argues that, even as regulatory power has diffused and fragmented (first nationally, then supranationally), it has remained dependent on historically constituted bodies of representative government on the national level for legitimation, if not control. This chapter also outlines the elements of the theory of institutional change that supports the entire analysis, operating along three interrelated dimensions—functional, political, and cultural. It argues that, for a durable constitutional settlement to occur, these various dimensions must be ‘reconciled.’ It further argues that the national legitimating mechanisms described in the remainder of the book have developed to do the work of reconciliation that this introductory chapter describes.

This chapter looks at the diversity of both the industry and its clients and the resulting variety of potential costs in the case of misconduct. Drawing on insights from principal-agent theory in economics and political science, it examines the relations between PMCs and their clients and regulators, arguing that states use a variety of methods to try to make PMCs their ‘agents’, including employment, national regulation, and the promotion of soft norms. It suggests PMCs in turn respond by trying to maximize their own power through a variety of strategies, including playing off different principals against each other — for example by encouraging national executives to use PMCs to escape parliamentary, judicial, and electoral accountability — and in extreme cases asserting their own principality. These contending strategies intersect with industry consolidation, market incentives, and the shadow of litigation to produce a transnational hybrid state-market regulatory model, raising difficult questions about private regulatory power and its role in determining and providing public goods.

This chapter offers a brief overview of the historical legal framework for regulation prior to the Communications Act 2003 before going on to identify the key reforms and to consider their impact on power and accountability in the regulatory regime and some significant developments since. The emphasis is on regulatory design, the location of regulatory power, and accountability in its exercise. The overall objective is to consider whether the Communications Act 2003 in general represents any significant advance on what went before.

Chapter 7 links the discussion back to the broader conceptual notions of hard and soft power, policy tools, and policy “targets” in the context of the EU as a foreign policy actor. It discusses how the EU as a regulatory state has come to use power in the energy sector, and suggests that the EU can be best characterized as a “Regulatory Power Europe” in the IPE of energy. The reach of this Regulatory Power Europe is stronger in regional markets than at the global level, but it extends well beyond the borders of the EU, and is more effective when it addresses firms than governments.

This chapter provides an introduction to enforcement structures in the emerging antitrust regimes outside Europe and the United states. It focuses on new jurisdictions, especially in China, India, Brazil, South Africa, Canada, Australia, Japan, and Korea, which are significant economic players. The chapter introduces some agency models used in emerging antitrust regimes, particularly in the areas of regulatory, investigatory, and adjudicatory powers. Also, it considers the relationship between administrative agencies and the judiciary, as well as the growth of specialized antitrust courts. The chapter briefly considers the development of private litigation in the emerging antitrust world.

Chapter 1 discusses the European Union’s (EU’s) emergence as a global regulatory power. It introduces key EU institutions and describes their role in the regulatory process. It then explains how regulation has become a key tool to advance European integration, giving these institutions a powerful motivation to pursue an ambitious regulatory agenda. It also argues how the creation of the single market was always the primary concern for the EU institutions. For a long time, the Brussels Effect was an ancillary and largely unintended by-product of a regulatory agenda that was driven by internal motivations. Only more recently, a conscious external agenda has emerged alongside this internal agenda.

This chapter discusses debates, questions and committee work in the House of Lords. It summarises the procedures for each, and considers their policy impact, drawing attention to similarities and differences from the House of Commons. It shows that questions and debates are less regulated than in the Commons, and can put ministers under expert scrutiny. Likewise, Lords committees (which are 'crosscutting’ rather than shadowing departments) produce expert reports which are often highly regarded. The chapter shows that committees with a constitutional remit - the Constitution Committee, Delegated Powers and Regulatory Reform Committee and Joint Committee on Human Rights (JCHR) have become particularly important to the House of Lords’ policy contribution. These committees operate in part through recommendations but also - like debates and questions - through the power of 'anticipated reactions'.

Chapter 4 explores oil from the viewpoint of global markets and market failure, and examines the EU’s attempt to build international market institutions for creating a global level playing field, and improving market information, mitigating supply shocks, and supporting infrastructure. It is hypothesized that the EU’s actions abroad follow the same liberal market paradigm as at home. The EU’s external policy tools are similar to those that are used within the EU’s jurisdiction. The fact that energy-related sanctions have been used in the context of political and military crises, but not to achieve energy-related goals, suggests that it is preferences, and not just power, that shape the EU’s approach to international relations. The EU’s focus on regulatory policies is more than merely a second-best choice of tools; regulatory power is its preferred approach to international political economy.

This chapter explores the various means by which specialist select committees in both the House of Commons and House of Lords interact with and influence government legislation. The development of select committees is widely seen as important at Westminster, having encouraged greater expertise and specialization among members, and cross-party work. Yet the select committees have only a limited formal role in the legislative process, because the ‘committee stage’ occurs elsewhere. Nonetheless, this chapter shows extensive select committee influence on the 12 case study bills. The committees can be important to setting the policy agenda, informing members, influencing debate, encouraging amendments, and—potentially—supporting the government. This particularly applies to the constitutional committees in the House of Lords, and select committees conducting pre-legislative scrutiny of draft bills. However, other committees can also be important, as demonstrated by the Commons Health Committee’s intervention over the smoking ban in the Health Bill (2005–06).

Foreign investment is perceived as one of the most significant factors for development and it is no accident that a key criterion for determining that an activity qualifies as an investment under the ICSID Convention is whether it contributes to the economic or other development of the host state. Investment tribunals have in recent years examined the ambit of regulatory powers of the host state in taking measures in response to an existing debt crisis, but investment tribunals have not conclusively, or unanimously, linked socio-economic rights with investment protection. This chapter will examine the sovereign debt-related awards of investment tribunals and how foreign investment may contribute to the accumulation of sovereign debt as well as how it may be used as a tool to decrease such debt.