Explaining institutional arrangements in telecommunications regulation: an empirical analysis

Applied Lunch Seminar. 10.III.2004

Ral Castro

...a context to motivate a research

Banking Aviation

Energy

Agribusiness

Pharmaceuticals

...a context to motivate a research

Telecoms: telecoms agencies (plus ministries) and antitrust agencies
In early 90s, among Canada, France, Germany, Japan, Mexico, New Zealand, Spain, UK and US, only the UK and the US did not have a Ministry office as telecom regulator. By 1998 it changed... US: (a) before 82, leading FCC; (b) after AT&T, leading Antitrust Division; after 96 Telecom Act, the FCC strikes back... New Zealand and Australia: leading antitrust agencies

Italy: agency with broad jurisdiction over telecom, internet and broadcasting
The UK : OFTEL becomes a (telecom) antitrust agency EU: (recent) movement towards the British model

Concluding remarks
Key drivers of institutional design (jurisdiction arrangements) from Castro (2001): Government perception of Antitrust Agencys (AA) transparency advantages vs. Industry-Specific Agencys (ISA) expertise advantages. Safeguards against capture and competence weakness Empirical analysis: Institutional arrangements in key issues are consistent with the competencetransparency interpretation More jurisdiction to the AA (reduced AAs competence weakness) when: (i) faster AA procedures, (ii) market complexity is competition-based, (iii) Government can enforced ad-hoc rules on incumbent and (iv) larger country corruption perception More jurisdiction to the ISA (reduced ISAs transparency weakness) when (i) legal and procedure safeguards against capture are in place, (ii) when the AA discretion is excessive.

ISA vs. AA: reasons to choose

Why allocating more regulatory jurisdiction to an Antitrust Agency (AA) in telecoms?:
Transparency! Revolving door phenomenon [Eckert (1981), Laffont and Martimort (1998), Heyes (1999)] Easier monitoring its decision due to: (i) more homogeneous set of tasks [Dewatripont, Jewitt, and Tirole (1999) Cook (2001)], (ii) larger jurisprudence, (iii) existing know-how is more available to newcomers (iv) easier-to-be "caught" instruments [Tiller (1998)] Policy Consistency [Laffot and Tirole (2000)] Why allocating more regulatory jurisdiction to an Industry-Specific Agency (ISA) in Competence / expertise! telecoms?: Ongoing specific and prescriptive powers to face: (i) technology complexity, (ii) network specificities, (iii) dominant position in network access [Cave (1997) and Bergman et al (1999)] Better equipped to face information asymmetries [Van den Bergh and Camesasca (2002)] Organizational balance

Alternative explanations in the literature

Importance of monopolistic (network) bottlenecks, interconnection and unbundling issues and asymmetric regulation: Knieps (1997) Shelanski (2002) Importance of Universal Service Obligations (USOs) Green and Teece (1997) Scott (1998), Laffont and Tirole (2000) Regulatory intensity Cave (1997) Bergman et al (1999)

...drive more jurisdiction to the ISA

Credibility: signal to market players of credible commitment with a ...drive more certain policy line jurisdiction to the AA Levy and Spiller (1996) Gilardi (2002) Stern and Trillas (2002)

Empirical Analysis. Basics

Data: 26 countries of the OECD area. Year: 1998 (97-99)*. Explained Variables: [New measures of] Institutional arrangements among the ISA, Ministry and AA in 5 regulatory issues
Pricing Licensing Interconnection Telecom-specific merger review Coordination: involvement of AA in ISAs decision making?

and their consolidation in a...

...composite index (factor analysis) *

Units Of Measure: Scale values of institutional arrangements increase with the ISA involvement. Medium value correspond to a leading Ministry.

Empirical Analysis. Basics

Explanatory Variables: Regression analysis on several proxies of 1. competence and transparency conditions associated to the AA and the ISA. 2. Control for alternative explanations: Credibility, importance of social goals and regulatory intensity. *

Econometric Tools: 1. Ordered logit was used to analyze the (ordinal/discrete) variables; 2. OLS was used to analyze the composite index. 3. Additional regressions with robust errors

*
Context variable AA-type variable ISA-type variable

Empirical Analysis. Results

Ordered logit

Pricing

Licensing
Ordered logit

Ordered logit

Intercon

Ordered logit

Telecom merger review

Ordered logit

Coord

Composite Composite index w/ control variables index

OLS OLS

Competition development:
95-97 mkt shr growth

(-) (-) (-)

(-)

(-)

(-)

Competence variables

Antitrust speed Enforc. Procedures: penalties

directly enforced?

(Per se) unfair competition prohibition

Golden share AA discretion to appove
(otherwise) illegal mergers

(-) (-)
(-) (-)

(-)

(-)

(-) (-)
(-)

(-) (-)
(-)

Transparency variables

Price info verifiability Interconnection transparency:

publishing requirement

(+) (+)
(+)

(+) (+)
(+)

(+) (+)
(-)

(+) (+)
(-) (+) (-)

(+) (+)
(-) (+) (+)*

Country corruption level Public access to future regulations

(+)

Control variables

Political Constraints: # Gov

branches with veto power

Importance of USOs: formally

structured USOs?

Regulatory intensity
(dropped) statistically not significant with robust errors

(+)*

* Statistically not significant *

Policy implications
Competition development drive regulatory reforms... ...in the jurisdiction allocation and not only in the instrument mix (European) institutional convergence in regulation among countries should assign enough national discretion... ...institutions should evolve according to their institutional endowment, market conditions. Institutional convergence (ISAs towards an AA-type), require Foreclosure (complete substitution) to be discussed... ...if CMT has to be a telecom-TDC(SDC), why separate institutions?

Empirical Analysis. Results

1
Pricing
(Ordered Logit)

2
Licensing
(Ordered Logit)

3
Competition
(Ordered Logit)

4
Interconnection
(Ordered Logit)

5
Coordination
(Ordered Logit)

6
Composite Index 1
OLS

7
Composite Index 2
OLS

8
Composite Index 3
OLS

9
Composite Index 4
OLS

Competence Variables incentin unfcomp aaprison goldnshr Transparency Variables mrgexbf infpreg interctr brib97 fpra Control Variables polcon02 usomech regburdn Pr (y < cut1) Pr (cut1 < y < cut2) Pr (cut2 < y)
Log Likelihood Pseudo R2 Adjusted R2
Note: p-values in parenthesis

-0.157
(0.092)

-0.355
(0,02)

-0.031
(0,001)

-0.034
(0,000)

-0.031
(0,002)

-0.030
(0,002)

-3.328
(0,025)

-3.147
(0.067)

-0.359
(0.037)

-0.463
(0,006)

-0.360
(0,045)

-0.336
(0,006)

-1.718
(0.046)

-1.357
(0,046)

-6.329
(0,044)

-0.499
(0.000)

-0.471
(0.000)

-0.507
(0.000)

-0.507
(0.000)

-3.172
(0,033)

-5.867
(0,01)

-2.284
(0,032)

-0.835
(0.002)

-0.980
(0,000)

-0.833
(0,003)

-0.853
(0,003)

2.701
(0,073)

1.898
(0,068)

9.737
(0,019)

0.569
(0,001)

0.427
(0,007)

0.574
(0,002)

0.537
(0,005)

1.135
(0,06)

1.373
(0,086)

0.778
(0,033)

0.214
(0.015)

0.208
(0,008)

0.212
(0,021)

0.197
(0,04)

3.095
(0,036)

2.217
(0,033)

-4.610
(0,055)

-0.347
(0.006)

-0.353
(0.002)

-0.349
(0.008)

-0.371
(0.008)

0.072
(0,025)

0.005
(0.082)

0.007
(0.013)

0.005
(0.106)

0.005
(0.085)

-1.639
(0.033)

0.027
(0.832)

0.234
(0.599)

0.077 0.423 0.500 23.11 12.046 0.489

0.077 0.500 0.420 27.69 -9.758 0.587

0.500 0.270 0.230 11.8 -21.1 0.2186

0.190 0.270 0.540 15.81 -18.187 0.303

0.333 0.333 0.333 30.61 -7.77 0.663 0.816 0.86 0.79 0.804

Empirical Analysis. Results with robust errors

1
Pricing

2
Licensing

6
Composite Index 1
OLS

7
Composite Index 1
OLS

8
Composite Index 1
OLS

9
Composite Index 1
OLS

Competition Interconnection Coordination

(Ordered Logit) (Ordered Logit)

(Ordered Logit) (Ordered Logit) (Ordered Logit)

Competence Variables incentin unfcomp aaprison goldnshr Transparency Variables mrgexbf infpreg interctr brib97 fpra Control Variables polcon02 usomech regburdn
Log Likelihood Pseudo R2 Adjusted R2
Note: p-values in parenthesis

-0.157
(0.140)

-0.355
(0,006)

-0.031
(0,003)

-0.033
(0,000)

-0.030
(0,004)

-0.030
(0,006)

-3.327
(0,01)

-3.147
(0.093)

-0.359
(0.013)

-0.463
(0.020)

-0.360
(0.016)

-0.330
(0.022)

-1.718
(0.036)

-1.357
(0,13)

-6.329
(0,041)

-0.499
(0.000)

-0.471
(0.000)

-0.506
(0.000)

-0.506
(0.000)

-3.172
(0,014)

-5.867
(0,039)

-2.284
(0,043)

-0.835
(0.000)

-0.980
(0.000)

-0.833
(0.000)

-0.833
(0.000)

2.701
(0,11)

1.898
(0,103)

9.737
(0,003)

0.569
(0,003)

0.427
(0,0021)

0.574
(0,004)

0.537
(0,027)

1.135
(0,003)

1.373
(0,026)

0.778
(0,004)

0.214
(0.021)

0.208
(0.006)

0.212
(0.023)

0.196
(0.064)

3.095
(0,053)

2.217
(0,025)

-4.610
(0,009)

-0.347
(0.006)

-0.353
(0.001)

-0.349
(0.010)

-0.371
(0.007)

0.072
(0,02)

0.005
(0.037)

0.007
(0.008)

0.005
(0.052)

0.005
(0.052)

-1.639
(0.019)

-0.274
(0.819)

-0.234
(0.630)

12.17 12.046 0.489

12.22 -9.758 0.587

8.94 -21.1 0.2186

10.56 -18.187 0.303

9.21 -7.77 0.663 0.88 0.92 0.89 0.89

Endogeneity
Reverse causation: Do institutional arrangements determine these variables? Per se prohibition of unfair competition (Discretionary) exceptions in merger review AAs discretion to enforce penalties ...no, they dont seem to

overall antitrust framework

forward planning of regulatory activities Country corruption perception

95-97 market entry speed of telecom newcomers transparency conditions for final and interconnection prices

overall institutional issues

It is previous to the analysis date (1998) telecommunications legislation

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Basics of the Model

AA enforcement effectiveness ISA (or AA) relative advantage on E. effectiveness ISA enforcement effectiveness

AA enforcement transparency AA (or ISA) relative advantage on E. transparency

+/Institutional preference: Assigment of institutional power and decision involvement

ISA enforcement transparency

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Composite Indexes of institutional arrangements

Composite index of institutional arrangements (weighted index) Australia New Zealand Denmark Finland Belgium Turkey Italy Switzerland Japan Korea Hungary Netherlands Mexico Portugal France United Kingdom Greece Norway Austria Czech republic Germany Ireland Spain Sweden United States Canada 1.000 1.217 1.593 1.598 1.610 1.763 1.775 1.799 1.847 2.000 2.032 2.033 2.185 2.188 2.205 2.270 2.338 2.338 2.373 2.578 2.695 2.763 2.763 2.847 3.000 3.000 Composite index of institutional arrangements (factor scores) Australia New Zealand Finland Belgium Denmark Japan Turkey Italy Switzerland Hungary Korea Netherlands France United Kingdom Portugal Mexico Greece Norway Austria Czech republic Germany Sweden Ireland Spain United States Canada -1.610 -1.286 -0.788 -0.708 -0.619 -0.500 -0.460 -0.381 -0.375 -0.289 -0.252 -0.140 -0.008 0.068 0.081 0.108 0.355 0.355 0.441 0.536 0.610 0.857 0.897 0.897 1.105 1.105

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Institutional arrangements in telecom regulation

Pricing
(mean = 2.42 / = 0.64)
United States Japan Germany France Italy

Licensing
(mean = 2.35 / = 0.63)
ISA with full responsibility1, 2 Ministry decides (ISA advises)1, 2 ISA with full responsibility1, 2, 3 Ministry issues + ISA oversees1, 2, 3 Ministry issues + ISA oversees
1, 2, 3, 21

Competion Policy
(mean = 1.73 / = 0.83)
ISA with leading responsibility1, 5, 6, 11 Ministry with large responsibility1, 2 ISA with leading responsibility1, 5, 7 Under concurrence, ISA has leading role for some issues as a specific enforcer 1, 2, 7 AA with full responsibility
1, 2, 7

Interconnection
(mean = 2.35 / = 0.78)
ISA with exclusive powers1, 2, 5, 6, 11 Ministry with exclusive powers1, 2 ,35 ISA with exclusive powers1, 2, 7 ISA with exclusive powers1, 2, 7 Concurrence ISA/AA
6, 20, 21

Institutional Coordination
(mean = 1.89 / = 0.82)
Unclear or weak coordination2, 5, 6, 11, 32, 33 Formal advocacy role + guidelines6 Formal advocacy role + guidelines2, 6, 37 Formal but non binding advocacy role2, 6 Formal but non binding advocacy role2, 6, 20, 21 Formal and binding advocacy role2, 6, 32, 33,34 informal advocacy role2, 6 Formal and binding advocacy role2, 6, 23,32 Formal but non binding advocacy role Formal and binding advocacy role Formal and binding advocacy role2, 6 Formal and binding advocacy role Unclear or weak coordination Unclear or weak coordination26, 38 Formal but non binding advocacy role2, 27 Formal and binding advocacy role2, 6 Formal and binding advocacy role2, 6 Unclear or weak coordination6 Formal and binding advocacy role2, 6 Informal advocacy role2 Formal but non binding advocacy role2, 6
1, 2, 15, 22

ISA with full responsibility1 ,2 Ministry decides + ISA advices1, 35 ISA with full responsibility1 ,2, 37 Ministry decides + ISA advices1, 2 ISA with full responsibility
1 ,2, 21

United Kingdom ISA with full responsibility1 ,2 Canada Australia Austria Belgium Denmark Finland Greece Ireland Mexico Netherlands New Zealand Norway Portugal Spain Sweden Switzerland Turkey

Ministry issues it. ISA+Ministry oversees it1, 2, 33, 34 ISA with full responsibility1, 2, 4 Ministry issues + AA oversees1, 2 ISA with full responsibility1, 2, 9 Ministry issues + ISA oversees1, 2 ISA with full responsibility1, 2 Ministry issues + ISA oversees1, 2 Ministry issues + ISA oversees1, 2 ISA with full responsibility
1, 2

ISA with full responsibility1 ,2 AA with full responsibility1,2 ISA with full responsibility1 ,2, 9 Ministry decides + ISA advices1, 2 Concurrence of ISA/AA1, 2 AA with full responsibility1,2 ISA with full responsibility1 ,2 ISA with full responsibility
1 ,2

Under concurrence, ISA has leading role for some issues as a specific enforcer 1, 2, 7 Under concurrence, ISA has leading role for some issues as a specific enforcer 1, 2, 8 AA with full responsibility1, 2, 6 AA with full responsibility9, 10 AA with full responsibility1, 6 AA with full responsibility1, 2, 6 AA with full responsibility1, 2 AA with full responsibility1, 2 Under concurrence, ISA has leading role for some issues as a specific enforcer 1, 2 AA with full responsibility1, 2 AA with full responsibility1, 2 AA with full responsibility1, 2 AA has the leading role under institutional concurrence 1, 2 Ministry with large responsibility1, 2 Under concurrence, ISA has leading role for some issues as a specific enforcer 1, 2 ISA with leading responsibility6 AA with full responsibility
1, 2, 15

ISA with exclusive powers1, 2 ISA with exclusive powers1, 2 AA with exclusive powers1, 2, 6, 21, 23 ISA with exclusive powers1, 2, 9 Concurrent jurisdiction of Ministry/ISA1, 2, 24 Concurrent jurisdiction: ISA and AA, with significant role of the AA6, 25 ISA with exclusive powers1, 2 ISA with exclusive powers1, 2 ISA with exclusive powers
1, 2

ISA with full responsibility1 ,2, 27 ISA with full responsibility1 ,2 Concurrence of ISA/AA1, 2 ISA with full responsibility1 ,2 Concurrence of ISA/AA1, 2 ISA with full responsibility1 ,2, 12 ISA with full responsibility1 ,2 Ministry decides + ISA advices Ministry decides + ISA advices
1, 2

Ministry issues + ISA oversees1, 2 Ministry issues + ISA oversees1, 2 ISA issues it / AA oversees it1, 2, 36 Ministry issues + ISA oversees1, 2 ISA issues it / ISA oversees it1, 2 Ministry issues + ISA oversees1, 2, 3 ISA with full responsibility1, 2 ISA with full responsibility
1, 2

ISA with exclusive powers1, 2, 27 ISA with exclusive powers1, 2, 28 AA with exclusive powers1, 2 ISA with exclusive powers1, 2, 29 Concurrent jurisdiction: Ministry/ISA/AA1, 2 ISA with exclusive powers1, 2, 7 ISA with exclusive powers1, 2 Concurrent jurisdiction: Ministry and ISA
22

Formal and binding advocacy role2, 6, 15, 37 Formal but non binding advocacy role2, 6 informal advocacy role16 Formal but non binding advocacy role2, 6,16

1, 2

Ministry issues + ISA oversees Ministry issues + ISA oversees

1, 2, 19

AA with full responsibility

1, 2, 18

Concurrent jurisdiction: Ministry, ISA and AA1, 2,

1, 2, 16

Czech Republic Ministry decides + ISA advices Hungary Korea

1, 2

1, 2

ISA with leading responsibility

Concurrent jurisdiction: Ministry and ISA Concurrence Ministry/ISA/AA30

1, 2, 22

Ministry decides + ISA advices1, 2, 16 Ministry decides + ISA advices1, 2

Ministry issues + ISA oversees1, 2, 16 Ministry issues + ISA oversees1, 2

ISA with leading responsibility1, 2, 16, 17 Ministry with large responsibility1, 2

20 21

Concurrent jurisdiction of Ministry and ISA1, 2, 31 Formal but non binding advocacy role2, 6

1 2 3

OECD International Regulation Database OECD (2000): ''Telecommunications regulations: Institutional structures and responsibilities''. Mimeo

Italian Government (1997): Presidential Decree no. 318/97 Bianchi and Richeri (1999): "Pecularities and fist steps of the Communications Authority in Italy". Communications & Strategies, 34, p. 231 OECD (1999): OECD Communciations Outlook 1999 OECD King, S. and Maddock, R. (1999): "Light-handed regulation of access in Australia: negotiation with arbitration" Information Economics and Policy 11(1999), p 1-22 Belgian Institute for Postal Services and Telecommunication (1999): Annual Report 1999 Danish Parliament (1998): Act on Competitive Conditions and Interconnection in the Telecommunications Sector. No. 860 of 4 December 1998 Massey, Patrick and Shortall, Tony (1999): "Competition and Regulation in Public Utility Industries". Competition Authority Discussion Paper. 7 Tovar, Ramiro (1997): "Policy reform in netowrks infrastructure. The case of Mexico". Telecommunications Policy. 21(8). Pp. 721-732

Prosperett i and Cimatoribus (1998): Andante ma non troppo: Telecommunications liberalisation Trends in Continental Europe" Communications & Strategies. 31
4 5

22

CRTC (1998): Telecom Decision CRTC 98-17, 1 October 1998

23

Shelanski (2002): "From sector-specific regulation to antitrust law for US telecommunications: the prospects for transition". Telecommunications Policy. 26(2002) 335-355 6 OECD (1999): ''Relationship Between Regulators and Competition Authorities''. Best Practice Roundtables. DAFFE/CLP(99)8
7

24

25

Prosperetti and Cimatoribus (1998): "Andante ma non troppo: Telecommunications liberalisation Trends in Continental Europe" Communications & Strategies. 31
8

26 27 28

CRTC (1998): Telecom Decision CRTC 98-17, 1 October 1998 International Telecommunications Union: Regulators Profile - Austria OECD(1999): Antitrust Report of Austria 1997-1998

Commision of OPTA (1999): Determination of the preliminary tariffs for interconnection and special access that are to be applied by KPN Telecom B.V. from 1 July 1999 until 1July 2000. OPTA/IBT/99/8000
29 30

10 11

Norwegian Parliament: The Telecommunications Act of 23 June 1995. Amended latest on 25 March 1999, in force as of 30 April1999.

Klein, Joseph (1996): "Antitrust Law as a Regulator of the Rapidly Transforming Telecommunications Market". Communications & Strategies. 23, p. 209
12

Office of Economic Competition (1999): The Competition Policy Position of the Office of Economic Competition on the Key Issues of Telecommunications Market Liberalisation
31 32

Ley de Liberalizacin de las Telecomunicaciones, 12/1997.

Korea Fair Trade Commission: Exemptions and Exceptions to Competition Policy and Law in Korea

13

CMT (1999): Informe Anual

Chaves, Bruno (1999): "Incentive Structures and Dispute Resolution Devices in the Telecommunications Industry". Centre d'Analyse Thorique des Organisations et des Marchs Working Paper. 99-03
33

14 15

Ley General de Telecomunicaciones, 11/1998.

Bickenbach, Frank, Kumkar, Lars and Soltwedel, Rdiger (1999): "The New Institutional Economics of Antitrust and Regulation". Keil Working Paper. N 961

Bler, Stefan (1998): Regulatory reform of telecommunications in Switzerland. Telecommunications Policy. 22(8). Pp. 671- 34Spiller, Pablo and Vogelsang, Ingo (1999): "The Institutional Foundations of Regulatory Commitment in the UK: The Case of Telecommunications". Journal of Institutional and 680 Theoretical Economics. 153(4): 607-629
16

Borucki, W., Hruby, Z. Schmideg, I., Pogorel, G. (1999): "EU Telecom Regulation in Accession Countries". Communications & Strategies. 34, p. 253 17 Hungarian Communication Authority (2000): "Hungarian Telecommunications Regulatory Environment and Authority". Blue Paper
18

35

Omura, Tatsuya (19997): "Japan's stumbling policy for competition in the telecommunications industry". Telecommunications Policy. 21(2), p. 127-141. Crandall, Robert (1998): "New Zealand spectrum policy: a model for the United States?". Journal of Law and Economics. 41, p. 821-840 Knieps, Gnter (1997): "Phasing out Sector-Specific Regulation in Competitive Telecommunications". KYKLOS. 50(3), p. 325-339

36 37 38

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Turkish Competition Authority: "About the Turkish Competition Authority". In http://www.rekabet.gov.tr/ Ersoy, E. (2000): New Turk telecoms board seeks UMTS licensing power". Total Telecom . 17 August 2000

19

Such lack of coordination changed dramatically in 2002 with the signature of the Co-Operation Agreement betwee the Competition Authority and the Commission for Communications Regulation December 2002

competition incentin: % of change in int. 1 market share 97-95 aaprison: AA procedure for 1 imprisonment. speed proxy goldnshr: golden share to 1 influence the incumbent

26 26 25 26

0 0 0 0

1.00 31.60

0.54 6.96 0.60 0.31

0.51 8.98 0.87 0.47

Composite Indexes of institutional arrangements

2.00 1.00

Minimum Maximum

Mean

Standard Deviation

Transparency Variables
mrgexbf: merger exception based 1 on business failure 24 26 26 21 26 0 1 0 3 0 1.00 5.00 1.00 6.62 100.00 0.46 2.73 0.73 5.51 40.50 0.51 1.12 0.45 1.06 31.34

Competence Variables
unfcomp: prohibition of unfair 1 competition 26 0 1.00 0.54 0.51

Expected effect on ISA incentin: % of changeHypothesis in int. Variable involvement (inst. arrangement) 1 market share 97-95 26 0 31.60 6.96 8.98 Enfocement transparency (TISA and TAA in the model in Chapter 1) aaprison: AA procedure for 1 Verifiability of information for regulation imprisonment. speed proxy 25 0 2.00 0.60 0.87 The more verifiable information for final price regulation the larger the involvement of thegolden ISA goldnshr: share to Publishing requirement of interconnection prices increases the involvement 1 influence the incumbent 26 0 of the ISA The larger public access to future regulation the larger the involvement of the ISA

infpreg: sources of information for 1 price regulation Obtained effect

from regressions interctr:

mandatory requirement to 1 publish interconnection prices brib97: Corruption measures wb-

INFPREC

2 + wef

1.00

+ 0.31 + +

0.47 INTERCTR
FPRA

of + fpra: Forward planning 3 Regulatory activities

+
1 2

Transparency Enforcement opacity

1

Variables
MRGEXBF

AA's discretion to apply merger review exceptions based on bankruptcy mrgexbf: merger of exception increases the involvement the ISA based

+ -

business 24 0 The on larger businessfailure perception that irregular "side-contracts" are common
the larger the involvement of the AA

1.00

BRIB97 infpreg: sources of information for 1 price regulation 26 1 5.00 2.73 1.12 Enfocement Competence (RISA and RAA in the model in Chapter 1) interctr: mandatory requirement to Speed of antitrust enforcement 1 AAPRISON, publish interconnection prices 26 0 1.00 0.45 - 0.73 The faster antitrust procedures the the involvement of the AA UNFCOMP

0.46

0.51

OECD International Regulation Database Johnson, S., Kaufmann, D. and Zoido-Lobatn (1998) Regulatory Discretion and the Unofficial Economy. American Economic Review, 88(2). pp. 387-392. 3 OECD (1998): Indicators Of Regulatory Capacities In Oecd Countries: Preliminary Analysis. Mimeo

Hypothesis

Expected effect on ISA involvement (inst. arrangement)

Variable

Obta from r

Enfocement transparency (TISA and TAA in the model in Chapter 1)

brib97: Corruption measures wbSpecial mechanism of business intervention 2 Golden the wefshares to influence the incumbent operation reduces 21 involvement of the ISA

6.62 100.00

- 5.51 40.50

1.06
GOLDSHR

fpra: Forward planning of Competitive environment 3 The Regulatory larger the market share gained by newcommers 26 from the incumbent activities 0

31.34

the larger the involvement of the AA INCENTIN 1 OECD International Regulation Database 2 Johnson, S., Kaufmann, D. and Zoido-Lobatn (1998) Regulatory Discretion and the Unofficial Economy. American Economic Review, 88(2). pp. 387-392. 3 OECD (1998): Indicators Of Regulatory Capacities In Oecd Countries: Preliminary Analysis. Mimeo

Verifiability of information for regulation The more verifiable information for final price regulation the larger the involvement of the ISA Publishing requirement of interconnection prices increases the involvement of the ISA The larger public access to future regulation the larger the involvement of the ISA Enforcement opacity AA's discretion to apply merger review exceptions based on bankruptcy increases the involvement of the ISA The larger business perception that irregular "side-contracts" are common the larger the involvement of the AA

+ + + + -

INFPREC INTERCTR FPRA

MRGEXBF BRIB97

Enfocement Competence (RISA and RAA in the model in Chapter 1)

Speed of antitrust enforcement The faster antitrust procedures the the involvement of the AA Special mechanism of business intervention Golden shares to influence the incumbent operation reduces the

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AAPRISON, UNFCOMP