In 2022, dr. Olga Batura, dr. Malgorzata Kozak and dr. Mira Scholten conducted an investigation into the legal and practical aspects of the independence of National Regulatory Authorities (NRAs) in the electronic communications sector commissioned by the Body of European Regulators of Electronic Communications (BEREC). The research combined elements of the ‘law in books’ and ‘law in action’ approaches and consisted of a literature review, comparative legal analysis, expert interviews, a survey of BEREC members, a workshop with NRA experts (including case studies) and focused interviews with selected NRAs. This blog post gives a short overview of the mentioned investigation.
The study argues that full independence should be understood as the unity of practices conducive to de jure and de facto independence, meaning that the NRA is properly established, empowered, resourced, effectively functioning and accountable. The NRA’s independence decreases with each bad practice, meaning that the presence of even one bad practice in any dimension of independence implies that the NRA lacks independence to some degree. A culture of independence needs to be nurtured within NRAs and the government as a whole to support the practice and proper application of EU independence standards.
On the concept of independence
Independence is a complex concept rooted in the capacity of NRAs to withstand external pressure and function autonomously, without interference from political entities or regulatees. It is a means to promote the effective functioning of the regulators in achieving key policy goals, such as market oversight, impartial decision-making, and promotion of fair competition. To get a comprehensive picture of NRA independence, it must be considered from the perspective of the legal framework that governs them de jure) and the actual practices of NRAs (de facto).
For analytical purposes, NRA independence can be understood through different dimensions, reflecting different areas of NRA’s activities: systemic, operational, financial and personnel-related. Accountability and monitoring are the other side of the coin of independence.
Comparison of electronic communications to other sectoral legislation
If one analyses the independence-related provisions in EU-level legislation for NRAs across various sectors (i.e. postal, energy, rail, data protection, audiovisual media services, and financial services) and for national competition authorities (NCAs), one notices that there is no unified terminology across EU-level legal frameworks, which makes comparisons difficult.
Compared to other sectors, the safeguards for the systemic independence of electronic communications NRAs are highly advanced. They guarantee that the NRA is legally distinct and functionally independent from any entity. They require a structural separation between regulatory functions and the provision of electronic communications services. These safeguards are on par with the energy and audio-visual media sectors, but less clear and precise than those for the rail sector.
Safeguards for financial independence are very high for electronic communications and energy NRAs. Besides the requirement to have necessary resources and a separate annual budget, these NRAs also have autonomy in budget implementation. Only NCAs have a more complete regulation of financial independence, which includes a recommendation to have other sources of funding, alternative to the state budget.
The European Electronic Communications Code (EECC) contains such important independence safeguards on the independence of personnel as an open appointment procedure for NRA leadership, requirements for leadership candidates, minimum mandate duration and some guarantees against arbitrary premature dismissal of the NRA leadership. However, the EECC does not require that NRAs can hire NRA staff independently and does not contain rules of conduct for the NRA personnel, like the legislation for NCAs, data protection authorities, energy and rail NRAs do. Also, the legislation on data protection and rail contains more elaborate safeguards for premature dismissal and states that such dismissal is only possible in the case of serious misconduct and not possible in relation to decision-making.
In terms of systemic independence, one of the major impeding factors is that not all competences under the EECC may have been correctly assigned to NRAs by national law.
Almost all NRAs seem operationally independent as they decide autonomously on their strategies and are free to engage in (international) cooperation with other authorities. However, contrary to the requirements of the EECC, few NRAs can decide autonomously on their internal organization and need governmental approval for that.
Most NRAs are involved in the preparation of their budgets and have discretion in how they implement them. However, sometimes, regular and/or lengthy delays of approval are used by governments when approving the budget or subsequent budget spending negatively impacting the functioning of NRAs. While most NRAs do not depend on a single source of funding and have a mix of public funding, fees paid by regulated entities and other sources, the aforesaid abuse of approval procedures by the government nonetheless results in reduced NRA independence. Insufficient financial resources undermine the independence of some NRAs.
Contrary to the requirements of the EECC, open competition for an NRA’s leadership positions is not mandated by national law or practiced everywhere. Sometimes appointments are made by the government in an internal procedure, which may be harmful to NRA independence due to the potential for political influence on the leadership. National approaches to defining the grounds for premature dismissal of NRA leadership are sometimes unsatisfactory, including vague provisions on premature dismissal, open to arbitrary interpretation by the dismissing authority which can be used to put political pressure on the NRA’s leadership.
A few NRAs have the autonomy to decide on the number of employees, recruitment and promotions. Salaries scales applicable to NRAs in many jurisdictions represent another constraint: it is difficult for NRAs to compete for highly-qualified staff if they cannot offer market-level salaries. Hiring and retaining experts is one of the biggest challenges for NRAs to sustain or increase their independence in the future.
Malgorzata Kozak is an Assistant Professor at Utrecht University, School of Law. She specializes in European Union law and competition law including private and public enforcement, compliance systems and vertical restraints.
