The project entitled The Influence of Economic Evidence on Administrative Discretion: Empirical Evidence from the UK utilities regulation is funded with a British Academy/Leverhulme small research grant.
Motivation: Regulatory agencies in the UK are hybrid communities of lawyers and economists. In the last two decades, the role that economists play in advancing the agencies’ statutory objectives (i.e. protecting consumers and promoting competition) has increased. Yet, despite the enormous societal impact of economic regulation, existing scholarship in the realm of public law and competition law focuses mainly on the powers and institutional structure of regulatory agencies, or human rights aspects and the scope of judicial review, and ignores the essence of the regulators’ work. This research is the first to empirically examine the way regulators use economic evidence when exercising their statutory discretionary powers. conferred on them by statute, using utilities regulation as the focus (i.e. energy-Ofgem, telecoms-Ofcom, water-Ofwat).
Objectives: The research will explore the influence economic evidence has on the enforcement process, from case selection to the design of remedies and on the way regulators perceive their interaction with other actors in the regulatory process, such as the courts. The specific research question addressed is whether and to what extent legal, institutional and organisational factors affect the way regulators employ economic evidence when exercising discretion. The empirical results may highlight the need for procedural and/or institutional reforms of the regulatory and/or adjudicative process. On a broader level, unveiling how economists understand legal concepts such as ‘reasonableness’ and ‘proportionality’, when assessing the limits of their discretion, could open up a dialogue between the disciplinary communities of lawyers and economists, who have tended to talk past each other despite facing common interpretive challenges.
Methodology: The research adopts a qualitative approach, based on case studies and semistructured interviews with relevant regulators. Two case studies (closed episodes) will be selected from the enforcement activity of each of the three UK utility regulators (Ofgem-energy, Ofcom-electronic communications and Ofwat-water) representing recent decisions informed by economic evidence. A qualitative analysis of all official documents relating to each case study will be made to reveal the different manifestations of economic evidence used to support the discretionary assessments. The data will be systematised and coded using the NVivo, a powerful software for qualitative data. I will conduct face-to-face interviews with relevant individuals at locations convenient to the participants and recorded with the interviewee’s permission. The interview questions will be piloted first with a couple of interviewees, then adjusted where necessary. All information provided will be anonymous and interviewees will be asked to sign a consent form emphasising their rights as voluntary participants. The interviews will be transcribed and analysed in the context of existing public law and political science literature on organisational theories and delegation theory. Ethical issues may arise during discussions with the advisory group and the interviewees. Hence, discussants and interviewees will not be named (unless their permission has been explicitly sought) and all discussions will be confidential. A digital recorder will be used to audio-record the discussions, with the written permission of the participants, which will then be transcribed verbatim.The material will be transferred immediately from the recording device to a computer and deleted from the device. Ethics approval for the project will be obtained through the University of Reading’s ethics approval procedure.