Research note by Eva Heims
Regulators in the EU need to manage cross-border risks and ‘level the playing field’ in an integrated market. This requires considerable coordination between national regulators. Over the past two decades an organisational solution to this coordination dilemma has emerged in the form of ‘EU agencies’. Tasks, powers and capacities of EU agencies vary widely across sectors, but they have in common that they do not possess the resources or the powers to enforce harmonised regulatory action. As a result, they are essentially hubs of networks of national regulators, which come together in EU agencies to coordinate their regulatory practices. The paper studies how coordination processes among national regulators in EU agencies function and explains why the nature of coordination processes differ widely across different policy sectors.
Prior scholarship has documented that coordination processes between regulators in EU agencies vary widely, from hierarchical intervention by EU bodies to mutual exchange between national regulators. However, this literature has not suggested a coherent explanation for this variation. The paper suggests that institutional theory which highlights the importance of formal and informal social organisation can explain why coordination works so differently in different policy sectors. Formal organisation refers to the formal constraints exercised on national regulators by EU agencies and the European Commission through inspections and enforcement, and informal organisation refers to the shared norms of the professional communities of EU and national regulatory officials. Existing literature has pointed out the importance of these factors but has treated them in isolation, while this institutional theory combines them into four types of coordination resulting from the pairing of high and low formal and informal social organisation.
To verify the soundness of these hypotheses the paper draws on the analysis of official documents of national regulators (e.g. annual reports and regulatory output), documentation of interactions of regulators in the forum of EU agencies (such as meeting minutes of boards bringing together national officials within EU agencies), and 29 semi-structured interviews. These include interviews with current and former officials from national regulators (14 interviews), EU agencies (11 interviews) and the European Commission (3 interviews), as well as an industry representative. On this basis, the paper analyses coordination between regulators in maritime safety, food safety and banking supervision. These three case studies were chosen because they exhibit significant variation in their formal and informal social organisation. If the theoretical propositions outlined above are sound, we should observe different types of coordination in these policy sectors as predicted by the theory.
The paper shows that the combination of formal and informal organisation that underpins regulation in these three sectors can explain why we observe such different forms of coordination: The European Banking Authority does not have inspection powers over national banking regulators and the European Commission is not a zealous enforcer of EU standards through infraction procedures in this field. As a result, coordination between banking regulators is shaped by the nature of the shared norms of their professional community. This community has some common understandings of good regulatory practice, but national regulators also continue to have different norms of what they think of as ‘good’ banking supervision. This explains why banking regulators compete over the best arguments for particular technical regulatory standards in the forum of the European Banking Authority. In food safety, top-down pressures from EU bodies are largely absent and coordination between food regulators is underpinned by the strong shared norms of their scientific community. This combination of formal and informal social organisation can explain that coordination processes between food safety authorities in the forum of the European Food Safety Authority happens through a group process of mutual exchange about scientific opinions through which shared risk assessments are established. In maritime safety, the European Maritime Safety Authority has the power to inspect the practices of national maritime safety authorities to verify whether these are in line with EU requirements. Moreover, the EU Commission frequently starts infraction proceedings against EU Member States on the basis of the inspection reports of the EU agency. This leads to resentment of EU intervention on part of national authorities due to the lack of a strong set of shared norms of what good maritime safety regulation is across national authorities and EU bodies. This explains why national maritime safety authorities are discontent with top-down coordination and question the role of the EU.
These findings are crucial because they highlight that coordination processes between national regulators are not just affected by formal coordination structures that are set up in EU legislative processes. Rather, they are also shaped by the degree of national and EU regulators’ shared norms of ‘good regulatory practice’. The presence of such shared norms can explain why coordination between national regulators can be effective in the absence of top-down interference in some cases (such as in food safety). The absence of such shared norms in policy sectors in which top-down interference exists (such as in maritime safety) helps us to understand why national regulators contest interventions from EU bodies. This implies that formal coordination structures for regulators are likely to breed resentment among national regulators -and may be counter-productive- if shared norms of ‘good regulation’ are missing.
- Heims, E. M. (2015), Explaining Coordination between National Regulators in EU Agencies: The Role of Formal And Informal Social Organization. Public Administration. doi: 10.1111/padm.12223
Eva Heims is Fellow in Public Policy and Administration, Department of Government, LSE