This piece is authored by Bruno Liebhaberg, Founder and Executive Chairman.
This year, we are celebrating the 15th anniversary of CERRE. Back in 2010, I aimed to set up a think tank that would contribute to robust regulation. ‘Robust’ implied at the time regulation that primarily served consumers’ interests while also enabling innovation and investment. The new think tank would inform and influence EU regulation through analyses and policy recommendations. It would benefit from the cross-disciplinary involvement of top-level academics such as economists, lawyers, engineers and political scientists.
A not-for-profit association incorporated under Belgian law, it would have a diverse membership of companies and regulators, who would interact with the academics and, as such, would ensure our outputs were directly relevant to both market players and policy makers. It would have a cross-sectoral focus because we were already then anticipating the convergence between energy, telecom, and transport (digital regulation had yet to emerge). And finally, it would be guided by strong values: academic excellence, scientific independence, transparency, and professional management.
15 years later, these objectives have largely been realised. However, we live in a dynamic world. What features of CERRE’s original environment in 2010 still hold today, and what has changed? And what impact do these changes have on the future role of our think tank?
In the UK and the US, where the concept of independent regulation was first implemented, it is now more contested than ever. It is reasonable to debate where to draw the line between policy decisions best made by democratically elected governments and implementation decisions that should be entrusted to independent regulators. However, there is no doubt that the demands for independence and predictability of regulation, which we have been advocating since our establishment, remain valid today. They are necessary for robust regulation growing in complexity.
But many other things have changed in the last fifteen years.
First, in 2010, technology, business models, and market structures in the regulated sectors were mostly expected to evolve slowly and predictably. Today, this is no longer true. Many ‘traditional’ regulated sectors have high innovative potential, countless new entrants, and companies willing to experiment with new models: let us just think of how advances in renewables are forcing energy companies and their regulators to adapt.
Furthermore, regulation has extended to sectors such as digital, despite those being extremely fast-moving and innovative, as we see with today’s advances in AI.
This will require the style and content of regulation to adapt: regulation can no longer be as prescriptive and specific as it has been in the past. We see this, for instance, in the telecom sector, where CERRE recently issued a series of important recommendations for the forthcoming Digital Networks Act.
Second, in 2010, the regulated sectors were expected to involve only a limited set of policy choices and competing interests, essentially turning about the dilemma between lowering prices and incentivising investment. Today, regulation is much more complex.
Energy regulators are thrown in the middle of some of society’s biggest challenges, from climate change to digitisation, not to mention the various categories of risk to the security of supply.
The remit of digital regulators is also much broader and extends to new issues such as privacy, freedom of speech, protection of minors, integrity of electoral processes, and many other topics.
Therefore, for CERRE, robust regulation implies today not only optimising the interests of users and consumers and incentivising investment and innovation, but also safeguarding the fundamental rights of citizens. This is crucial at the time when we see in a growing number of countries, abroad but also in Europe, democracy being threatened.
Third, while the EU has always put forward a different model of regulation than the US and China, the geopolitical rivalry between these blocs is more intense than ever. By threatening to retaliate against EU regulatory fines, the US is no longer playing the passive role that has previously allowed the so-called ‘Brussels Effect’ to flourish.
This raises new challenges for policymakers: how to find ways to constructively engage with the US and how to protect the EU’s ability to both regulate its own market and provide a model for others?
Finally, with the imperative of competitiveness reaching the top of EU and Member States’ agendas, we see pressures towards regulatory simplification.
We favour simplification if it means dropping provisions that are no longer in line with new technology and market realities.
We are also, without prejudice to the objectives of regulation, in favour of making the implementation of regulation the least complex possible, with minimal compliance costs. That’s one of the goals of CERRE’s Digital Markets Act, Digital Services Act, and Artificial Intelligence Act Implementation Fora.
But we will always be against ‘throwing the baby out with the bathwater’.
The idea of stripping back regulation is always politically attractive – but the reality is that it must be done with extreme care so that consumers remain protected and that progress towards a single European market in the regulated sectors is not unwound.
And radical changes to the regulatory environment risk undermining certainty, which puts at risk incentives to innovation and investment, which we want to encourage.
So, regulation will certainly have to evolve, but I am confident that the EU will seize the opportunity it has to do so in a careful and measured way.
I am convinced that CERRE will, in the years to come, continue to grow and actively contribute, as a recognised public good, to economic and social progress in Europe and beyond.
