1. The impact of emerging technologies on economic regulators
This chapter highlight trends and findings on the impact of emerging technologies on economic regulators, based on detailed case studies prepared by members of the OECD Network of Economic Regulators. It describes how emerging technologies represent a sea change for regulators, how regulators are using emerging technologies and new tools such as data-driven regulation for better regulatory delivery. The chapter also highlights key dimensions to consider when assessing whether regulators’ governance frameworks are fit for the purpose in the context of the Fourth Industrial Revolution, including legal and regulatory frameworks, mandates and powers, resources and internal organisation, foresight capacity and national, regional or international co-ordination.
Emerging technologies have enabled the development of new products, services and business models that were hardly conceivable just a few years ago. Their pace and scope continue to have an astonishing impact on markets and societies (OECD, 2019[1]) (OECD, 2020[2]). At the same time, emerging technologies can bring with them adverse effects, for instance by significantly disrupting labour in traditional markets or by marginalising fragile populations. They also raise profound challenges in terms of data governance - for instance regarding data privacy, discrimination, or the ethical use of data.
Regulation is essential to mitigate the risks of emerging technologies, while promoting innovation and maximising benefits for all. In this context, it is clear that sweeping technological advancements create a sea change for regulators.
Governments and regulatory authorities face a series of interrelated challenges with regard to emerging technologies (OECD, 2019[3]):
First: keeping pace with change. Regulators are struggling to keep pace with disruptions brought by emerging technologies. Regulatory frameworks might not be agile enough to accommodate the expeditious technological development and, in many cases, current rules might be outdated and no longer relevant. Regulators may also lack knowledge of how emerging technologies affect market places and society more broadly;
Second: designing “fit-for-purpose” regulatory frameworks. Traditional regulatory frameworks, often based on market-specific rationales, may not be a good fit in the context of emerging technologies. They challenge regulators’ mandates and remits by blurring the traditional definition of markets as well as, in some instances, between consumers and producers. Tackling this new reality requires co-ordination, harmonisation, or integration of regulatory practices, often demanding a multidisciplinary perspective. For instance, digital platforms that are increasingly performing similar functions to media businesses challenge the traditional approaches to media regulation. In addition, the development of data-driven markets creates the risk of market failures (such as implicit transactions, incomplete markets, information asymmetries, hold-up and locked-in phenomena) that should be carefully addressed by governments;
Third: regulatory enforcement challenges. Emerging technologies such as artificial intelligence challenge regulatory enforcement by questioning the traditional notion of liability, due to difficulties in apportioning and attributing responsibility for damage caused to end users by the use of such technology. Another example of the enforcement challenge is provided by the difficulty to enforce copyright/property rights in digital markets: data-driven businesses have given rise to a fundamentally new way to distribute content, challenging traditional copyright frameworks. Copyright infringements are made possible by the intrinsic nature of digital information goods, which are easy to replicate;
Fourth: institutional and transboundary challenges. The market-specific rationale behind traditional institutional and regulatory frameworks shows its limits when dealing with the transversal dimension of emerging technologies, especially in digital markets. Most data-driven markets pay no regard to national boundaries, enabling companies to “forum shop” regarding their physical presence or their tax or data protection policies. The fragmentation of regulatory frameworks across jurisdictions can also generate barriers to the spread of beneficial digital innovations as it can be difficult for business to navigate jurisdictional complexities. Moreover, because of the transboundary nature of markets and business models, competition issues become increasingly international in scope and raise strong challenges as regards antitrust enforcement. These characteristics call for strong international regulatory co-operation, notably to prevent companies from taking undue advantage of the fragmentation of regulatory frameworks.
The challenges outlined above create a context where governments face growing public and political pressure to engage differently with innovation. Responding to these expectations requires a careful balancing act between enabling the development of useful technologies, and ensuring that any downside risks are effectively managed, both with regard to the development of new regulations and their enforcement. This is also true for economic regulators that are tasked with providing stability and predictability to markets and investors, protecting consumers and ensuring quality and access to services, as they are called to guarantee positive outcomes for the market and respond to citizen expectations. In addition, regulatory authorities can play a critical role in supporting policy makers navigate the challenges and opportunities brought by emerging technologies and choose the right regulatory (or non-regulatory) approach. On account of having their “finger on the pulse” of markets, economic regulators are ideally positioned to observe technology trends, understand their potential transformative impacts and underlying challenges.
To shed light on these issues, this report draws together case studies of practices by members of the OECD’s Network of Economic Regulators (NER) across network sectors (e-communications, energy, transport and water) from nine countries (Australia, Brazil, Canada, Finland, France, Ireland, Italy, Peru, Portugal). The 14 case studies provide insights as to how emerging technologies are shaping the future of regulators, and how regulators are responding to these changes.
The case studies show, on the one hand, how regulators are using emerging technologies to deliver regulations more effectively and efficiently. The examples highlight regulators’ efforts in harnessing the opportunities provided by digital transformation to strengthen their regulatory capacity. Technological progress can offer new innovative approaches to resource-constrained regulators and can support more agile and efficient regulation in response to innovation. Data-driven regulation provides in particular great opportunities to improve transparency, reduce information asymmetries in regulated industries and foster the incentives to steer the market in the right direction. On the other hand, the case studies illustrate some of the challenges that emerging technologies pose to the governance and performance of regulators; as well as how regulators are addressing these new dimensions by turning them into opportunities to update regulatory frameworks, review ways of working internally and with others, and to align their capacities with new expectations.
Emerging technologies grant new opportunities to resource-constrained regulators to strengthen their regulatory capacity. Regulators can capitalise on a wide of range of technologies to develop more agile, dynamic and efficient regulations that keep pace with the transformative changes generated by emerging technologies. Enforcement activities can also greatly benefit from the advantages offered by new technological tools.
Harnessing the power of data and digital tools to improve regulation
The digital transformation benefits also the regulators themselves: by employing new technologies, regulators can reduce information asymmetries with market players. These technologies can be leveraged to extend capacity to collect, access, share and use existing data on regulated markets (both upstream and downstream) and open the “black box” of monopolies. The augmented availability of data on issues that were previously imperfectly observable, or only observable at significant administrative cost, provides opportunities to improve monitoring and supervision (e.g. real time and continuous monitoring of compliance) and more effective enforcement of policies.
Governments and regulatory authorities are increasingly relying on data-driven approaches to improve regulation,1 as part of broader efforts to implement digital government approaches (OECD, 2019[4]).The so-called “data-driven regulation” developed by the French telecom regulator (ARCEP) and the French transport regulator (ART) offers a good illustration of this trend. Both regulators regard “data-driven regulation” as a powerful tool to complement existing regulatory mechanisms and to develop more dynamic, agile and technology-neutral regulations along three main avenues.
Firstly, “data-driven” regulation allows the collection and analysis of (big) data, which in turn enables regulators to monitor markets more closely and, as such, can lead to better and faster decisions based on a comprehensive knowledge of the regulated environment. ART France is for example running regular data collection campaigns to monitor the quality of regulated services and to inform benchmarking exercises in the transport sector.
Secondly, digital tools underpinning data-driven regulation can significantly improve supervision, inspections and enforcement activities through the collection and analysis of increasingly granular datasets. In conjunction with improving the monitoring of imperfectly observable outcomes, the tools enable better real-time data collection for compliance monitoring. Similarly to ART France, ARCEP is developing a digital tool to monitor national fixed network coverage at a level of granularity that was not previously possible (the objective is to provide detailed information at the individual address level).
Lastly, regulators can use data-driven regulation to provide personalised and tailor-made information (e.g. on service quality) to increase transparency, and to allow stakeholders (consumers, businesses, policymakers, local authorities, etc.) to make more informed choices. This, in turn, is expected to create incentives that steer the market in the right direction.
Two main actions have been undertaken by ARCEP in that perspective:
The publication of maps designed through digital simulations (“Monreseaumobile.fr” and “Cartefibre.arcep.fr”) which provide detailed data and information on the French operators’ coverage and service quality across the country;
A reporting platform (“J’alerte l’Arcep”) to allow any stakeholder (individual, businesses or local authority) to report a malfunction which they experienced with a service provider - either telephone operator (fixed or mobile), internet service or postal operator.
The initiative launched by Brazil’s National Land Transportation Agency (ANTT) also demonstrates that digital technologies can provide greater efficiencies in carrying out regulatory functions (such as monitoring and inspections activities). A technology-enabled project implemented by ANTT is the “Green Channel Brazil” (Canal Verde Brasil), an intelligent national network for the monitoring and mapping of transport flows in logistics corridors. The objective is to produce data and analysis to inform market regulation, and to improve the enforcement of freight transportation regulations.
The Peruvian Energy and Mining Regulator (OSINERGMIN) has also developed a series of initiatives directed at improving its supervision activities, such as: the collection and analysis of big data to review the information declared in the Energy Information Remission Portal (PRIE), the introduction of mobile applications for real-time monitoring, as well as the use of drones to support risk-based inspections. These initiatives have significantly improved supervision capacities and contributed to a reduction in average supervision costs, freeing up resources to enhance other activities.
Likewise, the Irish Environmental Protection Agency (EPA) has developed a series of initiatives to improve its monitoring of urban wastewater treatment plants in Ireland. The EPA invested in different digital tools to build a data management system delivering timely and precise information on water treatment plants’ efficiency.
It emerges from the case studies that, by becoming “active users” of new technologies, regulators can ensure that the compliance process is streamlined, and thus the associated regulatory burden for operators can be reduced. Not only can this lead to better compliance, and greater consumer protection, but the financial benefits of operators which stem from regulatory-related cost savings are passed on to consumers and the wider economy.
How to look ahead?
The case studies illustrate that the use of digital technologies with the aim of improving regulation also raises some challenges that should be carefully addressed, including (but not limited to):
The scope, volume and quality of data provided by the market to regulators need to increase to allow for a comprehensive approach and analysis. This should be supported by an enhanced access to, sharing and use of data. This entails a review and reinforcement of data governance arrangements at the strategic, tactical and delivery levels (see (OECD, 2019[4])), including the:
1. adaptation of regulatory frameworks in order to make sure that market players produce the relevant data in an appropriate fashion (whilst at the same time ensuring that no disproportionate administrative burden is placed on market operators, especially on smaller market players); and the
2. development of new analytical skills, together with the deployment of necessary digital infrastructure to support data generation, collection, storage, management, sharing and dissemination;
Regulatory structures, allocation of resources, methods and practices are likely to change with the development of data-driven regulation. Nonetheless, the repositioning of stakeholders such as end-users in the regulation equation holds the potential to challenge the traditional paradigms governing the institutional organisation of regulation;
Co-operation between regulators is key to share expertise, build capacity and identify good practices. In that perspective, eight French regulators (Competition Authority (ADLC), Financial Market Authority (AMF), Telecommunications Regulatory Body (ARCEP), Data Protection Authority (CNIL), Energy Regulatory Body (CRE), Broadcasting Authority (CSA), Gaming Authority (ARJEL) and Transport Regulatory Authority (ART) issued a dedicated memorandum which outlines existing practices, and discusses some of the challenges raised by data-driven regulation. Similarly, ANTT is also relying on co-operation with other government agencies to develop its intelligent national transport network. Yet, such co-ordination could be particularly challenging notably in terms of interoperability and data-sharing policies2.
New technologies offer significant opportunities for regulators to enhance the efficiency of their activities. However, the disruptive changes induced by emerging technologies also present challenges to regulators. These are reflected in the pacing problem and whether governments and regulators can keep abreast of changes in markets and of the needs of the economy and society, but also in other dimensions of a regulator’s governance. For example, not only may the legal and regulatory framework be misaligned with new market characteristics and business practices, but regulators’ own mandates and functions may not be adequate to discharge their duties in the new context. The evolution of markets and sectors may also inspire regulators to rethink their own internal organisation, or pose challenges with regard to their own capacity or resourcing, as specialised skills are required to carry out new functions. Further, emerging technologies demand more collaborative regulation, both at international and national level.
Are legal and regulatory frameworks fit for purpose?
Across sectors of the economy, new technologies have changed industries and created new markets, altered the way in which consumers interact with operators, and increased the expectations that consumers have from the market actors and the regulators. In the electricity sector, for example, the rise of prosumers (actors who are both consumers and producers of electrical power) have revolutionised how market actors are defined and how grids are required to function. In the transport sector, for instance, a new market was created by app-based ride-sharing, which required regulators from different sectors to closely collaborate (transport, financial, health and safety) and changed the status and nature of the various users (for instance, the driver is the customer of the ride-sharing app, but also the provider of a service for the ultimate user of the taxi service). As outlined by the AGCOM case study, digitalisation has given rise to a new convergence in telecommunications, media markets and digital platforms, in which many components of the digital ecosystem are closely interrelated. This convergence questions whether the existing regulatory mandates and remits are still fit for purpose.
An example of how to tackle the critical challenge of assessing the relevance of a regulatory framework developed over the years for today’s economy is provided by the “Regulatory Modernisation Initiative” (RMI) undertaken by Canadian Transportation Agency (CTA). The RMI was an ambitious and over-arching project intended to review and update every regulation the CTA administers, with the goal of ensuring that the regulations keep pace with changes in business models, user expectations, disruptive technologies and best practices in the regulatory field. As such, the initiative looked at the substance, form and delivery of regulation. For this purpose, the CTA designed a multi-step process, building in four consultation phases: one each on accessible transportation, air transportation, air passenger protection, and rail transportation. Between 2016 and 2020, a number of reforms were designed and implemented, consolidating and updating existing regulations in order to alleviate burden on industry and provide benefits to consumers.
Similarly, in response to significant transformations in the telecommunications sector, the Australian Competition and Consumer Commission (ACCC) launched a study in 2018 to assess whether the current regulatory arrangements remained adequate, looking forward over a five year period. The study found that the ACCC has a comprehensive and flexible set of tools at its disposal and that the regulatory framework remains broadly “fit-for-purpose”.
In addition to questioning the relevance of regulatory frameworks and approaches, new technologies also disrupt traditional definitions of markets. For example, as identified by ART France, this is apparent in the transport sector: as digitalisation is more widespread, there is less delimitation between the services offered within the sector. Consequently, regulators are required to analyse whether the current service delineations within the same sector are still adequate, or whether a more holistic approach is to be considered. These definitions may also have important implications in terms of competition policy: redefining the market boundaries can lead to changes in the definition of relevant markets and thus can reshape the structure of an industry, either nationally or regionally.
Overall, the case studies highlight that regulators need to take into account a number of factors: new products and services in the markets they regulate, the pace of the disruptive developments, the societal and consumer behaviour changes as a reaction to the emerging technologies, as well as evolving stakeholder preferences. In this fast-changing environment, regulators must remain alert to market developments. In some jurisdictions, in-built flexible design has allowed for regulatory frameworks to retain their relevance; such cases may provide useful lessons for the development of adaptive, responsive regulatory approaches. Furthermore, whilst it is clear that the regulators are at the forefront of experiencing the changes brought by emerging technologies, they will need to collaborate with national governments and parliaments to ensure that the legal framework which defines the remit and powers of the regulators remains relevant to the realities of the market in which they operate. Comprehensive reviews of legal frameworks and institutional arrangements may also be initiated by governments.
Are regulator mandates and powers aligned with data-driven businesses?
The volume of personal and non-personal data gathered through the use of new technologies grows continuously at an unprecedented pace, raising a number of challenges for regulators and policy makers (OECD, 2019[5]). Data comes in many forms, and its value is derived from its owners’ and users’ ability to classify and analyse it – this, in turn, provides unique insights into the consumers’ movements, interests, or preferences (OECD, 2013[6]).
One of the many manifestations of the advent of big data is the ability of market players to use data to personalise and target products and services to consumers (“data profiling”). These practices may lead to online information distortions, whether through online advertising or through the use of search engines and social networks. The Italian e-communications regulator, AGCOM, identified big data and disinformation strategies as a priority issue to be solved. Following a market review, AGCOM launched “technical committee (“tavolo tecnico”) on pluralism and fair information on digital platforms”, in close co-operation with large market players such as Google, Facebook and national audio-visual providers. An outcome of AGCOM’s initiative was the first issue of "Guidelines for equal access to online platforms during the election campaign for the political elections”. AGCOM did not go into the remit of deciding on the authenticity of information on digital platforms - but rather, the technical committee focused its work on issuing guidelines for media operators, on matters such as methodologies for classifying and detecting online disinformation, tools and techniques used for fact-checking, or monitoring systems for economic advertising aimed at financing mis-informative content. The work also served to highlight that the regulator’s mandate and scope of action had to adapt to these guidelines, and to take more steps on public education in relation to the distribution of “fake news” and misinformation through the online channels. Actions such as this exemplify changes in the mandate of regulators, and show how a more inclusive way of devising regulation, through the direct implication of market players, can promote compliance, and raise awareness about the impact of digital and data economy.
The regulation of digital markets, given their complexity, requires an appropriate toolbox, including but not limited to: inspection and data collection powers (so that regulators can request and receive sufficient information in real time and in relevant shape), data analytics capabilities (so that they can interpret the data), and enforcement powers (so that they can take action when breaches have been identified). Moreover, as identified by AGCOM in the “Internet services and on-line advertising” inquiry (AGCOM, n.d.[7]), a horizontal regulatory perspective which puts the consumer at the centre is needed. Having the appropriate “toolbox” and consumer-centric approach may require a reform or an update or the regulator’s mandate and legal powers.
Moreover, data-driven markets present specific and important challenges which may question the rationale for regulatory intervention. On the one hand, network externalities, the capacity to scale without mass and the economies of scope characterising online platforms can give rise to natural monopoly conditions and create barriers to entry for potential competitors monopolies (Jens Prüfer, 2017[8]). This in turn, can bring substantial risks that excessive prices and lack of innovation will follow. Such phenomena might call for new regulation of digital markets, as advocated by the ACCC’s Digital Platforms Enquiry (ACCC, 2019[9]). Nonetheless, the same economic properties might shift in favour of innovative entrants and stimulate competition. Digital goods offer avenues for new entrants to grow rapidly and gain market shares over incumbents once they bring a new product to market, often with few employees, few tangible assets and limited geographic footprint. These counteracting effects might confuse the rationale for regulatory action as any initiative will influence the nature of competition between the incumbent and (potential) new entrants.
Are regulators adequately organised and resourced?
Beyond the regulatory framework and legal attributes of the regulator, emerging technologies and linked market evolutions can prompt changes in the internal governance, resourcing and structure of regulators. In some cases, operational change is driven by measures such as the introduction of an innovation-specific department. In other cases, the shift in regulatory approach or shift in market practices are reflected in a holistic organisational overhaul. Across the board, there is pressure to update skills in the workforce of the authority.
For instance, in Finland, a number of institutional reforms were carried out to support the adoption of the concept of “mobility as a service” (MAAS), which puts the consumer at the centre of the transport system, as a key pillar of the country’s transport policy. To accompany this new paradigm efficiently, Finland not only merged all transport regulators so that one single entity has an overview of the transport sector as a whole, but also reorganised the regulator so that the agency follows a process-based matrix organigram. The new organisational structure at Traficom allows for sharing of know-how and best practices from different fields, ultimately benefiting the sector as a whole. In practice, immediate effects of the internal reform were the streamlining of regulation practices and processes for transport registers, licenses, consumer rights, and data disclosure obligations. Such restructurings may need to be accompanied by changes in legislation.
In addition, as market actors are requested to share increasing amounts of data with regulators, there is a need for regulators to streamline and optimise their supervision, inspections and enforcement activities. On data collection specifically, this will include elimination of duplicated data requests, creation of central databases, or formalisation of responsibilities among departments that interact with the same regulated entity. For instance, one of the aims of the internal reform process designed and implemented by Portugal’s Water and Waste Services Regulation Entity ERSAR, aimed among its objectives to consolidate interactions with each regulated entity in one department – rather than spread out across the agency. This change led to a higher satisfaction of regulated entities with regard to the follow up capacity of the regulator, but the example also highlights the need for an explicit change management strategy in the case of such internal reform, to anticipate and manage status quo bias and resistance to change. Agility as well as openness to the use of new technologies in the process of regulation may require explicit focus by agency leadership on creating a forward looking and flexible working culture.
Finally, emerging technologies have undoubtedly introduced new functions and types of activities to be carried out by regulators. This may place pressure both on the overall resources of the regulator and its capacity to bring necessary skills to the workforce. Moreover, regulators may already operate within administrative constraints with regard to headcount or competitiveness of salaries due to general public administration rules and frameworks. The example of the Australian Energy Regulator (AER) is an encouraging one with regard to adequate resourcing of a regulatory authority in line with increasing functions and the complexity of markets. Following the findings of a government-commissioned study, the staffing of the regulator rose by about 75% between 2017 and 2019. This increase was managed through the AER’s Strategic Transformation Programme that translated the report’s recommendations into a detailed action plan.
How to look ahead?
Keeping up with market developments and having the capacity to analyse latest evolutions are not easy tasks given the pace of change and technical specialisation of government bodies. This gap becomes even more pronounced when attempting to stay ahead of - instead of catching up with – the wave. To bridge these gaps, regulators across jurisdictions have started to set up units or committees with a focus on innovation and emerging technologies. Such dedicated teams can enhance capacity to oversee ever-changing markets and to deliver effectively against regulators’ objectives in these contexts; they can also help articulate a forward-looking perspective, and can be tasked with channelling this into the regulator’s strategy, priorities, objectives and every day activities. These teams can also support regulators formulate inputs to government policy, for example when important trends or forthcoming issues can be anticipated.
Nonetheless, in order to remain in sync with the sectors, regulators need to embrace an internal culture whereby innovation and new ways of approaching problems are considered business as usual - rather than employing a siloed function separate from the organisation in which they sit. The role of leadership in mainstreaming such a vision and culture across the agency is key. Similarly, the experience of regulators rapidly adjusting their ways of working and formulating new goals in the context of the COVID-19 pandemic are proof that such agility and outcome-focus are within reach of regulatory institutions (OECD, 2020[10]).
The Foresight Committee (Comité de prospective) created by the French Commission for Regulation of Energy (CRE) is an example of regulator-led body which aims to identify long-term issues and forward-looking solutions, in this case in the energy sector. The two-fold objectives of the Committee are to: i) provide expertise to CRE and energy stakeholders; ii) implement a successful energy transition and to put the digital revolution at the service of all electricity and gas consumers, in a multidisciplinary and collective prospective action. It is tasked with fulfilling these functions with both a medium- and long-term vision (2030 and 2050).
The CRE Foresight Committee is also an example of wide stakeholder engagement, as it brings together a multidisciplinary team, including the industry, the academia, consumer groups, consulting firms and representatives from local and national authorities. In this way, it not only ensures a well-rounded perspective of the sector, but also builds consensus on solutions and proposals from an early stage.
Other declinations of such initiatives include, at internal level within regulatory agencies, the creation of the “Innovation and pilot projects” team at Portugal’s ERSE, that will be tasked with monitoring market evolutions, carrying our pilot activities and upscaling them. Another example is brought by the United Kingdom Regulatory Horizons Council (RHC) that is established as an independent expert committee that identifies the implications of technological innovation, and provides government with impartial, expert advice on the regulatory reform required to support its rapid and safe introduction. The RHC was created by the Department for Business, Energy and Industrial Strategy (BEIS) rather than a sector regulator, and accordingly its scope is not sectorial (Regulatory Horizons Council, 2020[11]).
The creation of such departments/hubs enables regulators to create specialist teams focused on the inclusion of data-driven means into the fabric of the organisation, both at regulatory and organisational levels. In addition, the level of senior management involvement in data-driven industry developments (for instance designating a director general for data or innovation) gives confidence to the markets and to consumers that the regulator is anchored in the day-today realities of the sector.
Are co-operation and co-ordination revamped in the new context?
Digitalisation enables businesses to have a global reach, just as new business models disregard traditional boundaries between sectors. The case studies include a number of examples of co-operation at national and international level. For instance, ARCEP and ART France, alongside six other national regulators have developed a common national strategy for data-driven regulation in a public memorandum (ARCEP, 2019[12]). The document lays out the regulators’ common views and good practices on the use of data, and updates stakeholders on the progress made on data-driven regulation. This approach has several impacts: it provides transparency to market players on regulatory paradigms, and it enhances consumer awareness and participation, which in turn has a positive impact on the consumers’ ability to make more informed choices.
A similar approach on national cross-sectoral co-operation was employed by ANTT in Brazil through technical co-operation agreements. ANTT’s experience shows that an integrated approach among transport regulators (land, rail and ports) and employment data sharing platforms brings efficiencies not only in relation to the pace of regulation, but has direct impact on the cost of transport of goods.
On an international level, regulatory co-operation comes in many forms and types (OECD, 2013[13]). These range from prescriptive and formal arrangements such as regulatory harmonisation governed by international treaties, to information exchanges among regulators through informal working-level arrangements or the participation in trans-governmental networks of regulators. In addition, platforms such as the OECD’s Network of Economic Regulators (NER) or the Regulatory Policy Committee (RPC) offer the opportunity for continuous dialogue and for comparing and debating developments in regulatory practices, ultimately aimed at developing “a common regulatory language”.
Furthermore, the fragmentation of regulatory practices across jurisdictions could mean, in simple terms, a reduction of regulatory capacity. For example, there is a risk that uneven regulatory playing fields create misalignment of incentives which can create market failures, leading to inadequate consumer protection, or create unnecessary burdens on industry. In addition to operational and effective market supervision concerns, jurisdictional discrepancies also mean that it may be difficult for regulators to bring legal proceedings or issue enforcement action. The EU stands out as having developed regulatory harmonisation and as working towards ensuring a level playing field across the jurisdictions of its members stated, so that the “four fundamental freedoms”3 of the single market are protected (OECD, 2019[14]).
Despite these challenges, the case studies bring us examples of effective co-operation among different jurisdictions – either in a project-by-project basis, or on a sector-wide initiative. For instance, in creating the regulations behind the Regulatory Modernization Initiative, CTA collaborated with counterparts from the USA and the EU. Also, ARCEP collaborates with the network of French-speaking telecommunications regulators (Fratel) and published a joint document on mobile service and coverage. The breadth and depth of collaborative initiatives among regulators suggest that there is appetite at national and international level for the development of creative solutions that would lead to regulatory alignment, and for broad engagement with players across the ecosystem. OECD forums such as the Network of Economic Regulators can continue to be a catalyst for such engagement.
The case studies highlight that regulatory authorities are in a unique position, at the forefront of interaction with consumers, business, and government, and with direct oversight of markets that deliver essential services to citizens and the economy. They are characterised by technical expertise and organisational agility, making them essential players of the regulatory and policy ecosystems. The case studies provide an in-depth look at the efforts employed by regulators to harness and encompass emerging technologies into their activities at national and international level. A key conclusion that surfaces is that as emerging technologies evolve, regulators rethink their approaches and adapt their internal governance, towards becoming more agile, iterative and collaborative, so that they are equipped to face the challenges brought about by the Fourth Industrial Revolution.
Looking ahead, the case studies bring to the fore the strategic importance of on the one hand developing more agile and co-ordinated approaches to increase responsiveness and resilience in fast changing environments and, on the other, capitalising further on the opportunities provided by emerging technologies. As the COVID-19 pandemic has exacerbated this challenge, regulators now face a pressing and urgent need to adapt their approaches and to further stimulate innovation.
References
[9] ACCC (2019), Digital Platforms Inquiry - Final Report, https://www.accc.gov.au/publications/digital-platforms-inquiry-final-report.
[7] AGCOM (n.d.), Indagine conoscitiva sul settore dei servizi internet e sulla pubblicità online, https://www.agcom.it/documents/10179/540203/Allegato+21-01-2014+2/9376a211-ebb2-4df6-83ea-282f731faaf2?version=1.1.
[12] ARCEP (2019), ARCEP Press release - Data-driven regulation, Cooperation between Regulators, Eight regulators publish the fruit of their common approach to data-driven regulation, https://en.arcep.fr/news/press-releases/p/n/cooperation-between-regulators.html.
[8] Jens Prüfer, C. (2017), Competing with Big Data, https://research.tilburguniversity.edu/en/publications/competing-with-big-data.
[15] OECD (2020), OECD Global Conference on Governance Innovation: Summary Records, http://www.oecd.org/gov/regulatory-policy/global-conference-on-governance-innovation-summary-record-2020.pdf.
[2] OECD (2020), OECD work on emerging technologies and regulation, OECD, http://www.oecd.org/gov/regulatory-policy/regulation-and-emerging-technologies.htm.
[10] OECD (2020), When the going gets tough, the tough get going: How economic regulators bolster the resilience of network industries in response to the COVID-19 crisis, OECD, Paris, http://www.oecd.org/coronavirus/policy-responses/when-the-going-gets-tough-the-tough-get-going-how-economic-regulators-bolster-the-resilience-of-network-industries-in-response-to-the-covid-19-crisis-cd8915b1/#biblio-d1e1202.
[5] OECD (2019), “Data in the digital age”, OECD Going Digital Policy Note, OECD, Paris, https://www.oecd.org/going-digital/data-in-the-digital-age.pdf.
[14] OECD (2019), Better Regulation Practices across the European Union, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264311732-en.
[1] OECD (2019), Going Digital: Shaping Policies, Improving Lives, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264312012-en.
[3] OECD (2019), Regulatory effectiveness in the era of digitalisation, https://www.oecd.org/gov/regulatory-policy/Regulatory-effectiveness-in-the-era-of-digitalisation.pdf.
[4] OECD (2019), The Path to Becoming a Data-Driven Public Sector, OECD Digital Government Studies, OECD Publishing, Paris, https://dx.doi.org/10.1787/059814a7-en.
[13] OECD (2013), International Regulatory Co-operation: Addressing Global Challenges, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264200463-en.
[6] OECD (2013), The OECD Privacy Network, OECD, Paris, https://www.oecd.org/sti/ieconomy/oecd_privacy_framework.pdf.
[11] Regulatory Horizons Council (2020), Charter, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/881237/RHC_Charter.pdf.
Notes
← 1. This trend was highlighted, in particular, during the OECD Global Conference on Governance Innovation (http://www.oecd.org/fr/gov/politique-reglementaire/oecd-global-conference-on-governance-innovation.htm) held in January 2020 (OECD, 2020[15]).
← 2. OECD has his conducted work on the role of data in creating conditions that improve public services, increase the effectiveness of public spending and inform ethical and privacy considerations. The Report on The Path to Becoming a Data-Driven Public Sector presents a data-driven public sector framework that can help countries or organisations assess the elements needed for using data to make better-informed decisions across public sectors (OECD, 2019[4]).
← 3. The “four freedoms” of the single market are: i) free movement of goods; ii) free movement of capital; iii) freedom to establish and provide services; and iv) free movement of persons.