Collaborative Regulatory Governance; Balancing Private-Public Regulation and Enforcement

European Consortium for Political Research (ECPR) - 6thStanding Group on Regulatory Governance Biennial Conference, Tilburg University, the Netherlands - 6-8 July 2016

PANEL

Collaborative regulatory governance; balancing private-public regulation and enforcement in the EU-context

Organised by: prof. L.A.J. Senden and prof. M. de Cock Buning, Utrecht University, RENFORCE, the Netherlands

Private actors can bring fast and effective solutions to certain problems and can make important contributions to the realization of social-economic goals by engaging in private regulation and enforcement. Industry and civil society organizations can thus engage in pure self-regulation or in some form of hybrid private-public regulation, also involving public bodiesthat have influence on how the private rules are developed, implemented, monitored and/or enforced. In the specific context of the EU, private regulation occurs bothas a self-standing European regulatory instrument and as a possible national implementing tool for obligations ensuing from European legislation, the latter being advocated in for instance the Audiovisual Media Directive.

There are both general and EU-specific reasons that mandate further research into the phenomenon of private governance in the EU context, capturing both regulation and enforcement aspects and thus covering the various stages of the policy cycle. A general issue concerns the fact that private regulation bears risks from the perspective of its (democratic) legitimacy and accountability, because of its possibly binding effects for third parties, the lack of an electoral mandate and of self-interests prevailing over public interests. The banking crises in recent years underscore the negative consequences that private regulation can have when public interests are not sufficiently taken into account, especially in opaque markets. Combined with the lack of checks and balances, this has had real and lasting effects on individuals and entire economies. At Union level, one can identify the following strong drivers for an increasing use of and reliance on private governance: (i) the Member States call for more subsidiarity and less EU legislation, leaving potentially more to market actors; (ii) co- and self-regulation are propagated as part of the Union’s Better Regulation policy; and (iii) in areas of high technological innovation, such as the internal digital market, (inter)national public regulation often falls short. Yet, at the same time, there is also a strong call for protection of core Union values, and the Treaty of Lisbon and the EU Charter of Fundamental Rights emphasize the realization of a European social market economy, the protection of a number of public interests and good governance. Furthermore, several EU bodies specifically underscore the need of principles for better co- and self-regulation.

The fundamental challenge arising from this is how the governance potential of private actors in the context of European-wide policy issues can be put to its best possible, optimal use. In essence, private regulation in the EU-context will need to reflect both effective and responsible governance, because only then will it be capable of building credibility, trust and acceptance among those affected by it. The latter may be captured under the general label of ‘citizens’, while acknowledging the different capacities in which these may be affected; be it as consumers, employees, taxpayers, etc. In this panel, this challenge will be addressed from different perspectives, including conceptual, constitutional and behavioral regulation ones, and in relation to different policy areas and shed more light in particular on the role that private actors play along the policy cycle in the regulation and enforcement of EU-wide problems and how, from a citizen’s perspective, the protection of public interests and core values can be best ensured while preserving the benefits of private governance.What relevant principles, procedures and (best) practices can be identified in this regard and what balancing act takes place or may be called for?

The revised New Approach to European standardization; exemplifying the conceptual and constitutional challenges of collaborative governance in the EU

Prof. Linda Senden and mr. Mariette Hiemstra, Utrecht University, RENFORCE

The Commission’s Better Regulation Package that was presented in May 2015 provides not only an incentive for the use of co- and self-regulation, but also puts emphasis on the necessity of ensuring their appropriate design. Alternative policy instruments, including non-regulatory alternatives; self- or co-regulation; market-based solutions, regulatory alternatives; international standards, and their mix have to be considered, while at the same time the attention is drawn to taking account of the Principles of Better Self- and Co-Regulation drawn up the Commission’s Community of Practice on Better Self- and Co-Regulation (see Tool #15). Yet, the Better Regulation package is not recognizant of the broad spectrum of co-regulatory and/or enforcementarrangements (or collaborative governance arrangements) that may occur in practice. These can be captured in a three-dimensional typology that allows for further systemization and analysis thereof, by positioning thesearrangements on the basis of:

i)the stage of public involvement in private regulation/enforcement;

ii)the nature of public involvement and;

iii)the intensity of public involvement.

It is submitted that, depending on thisactual positioning of a specific self- or co-regulatory instrument or arrangement, there may be a greater or lesser need to ensure certain constitutional safeguards. This will be exemplified by considering the Commission’s revised New Approach to European standardization in the internal market, and in particular the way in which the new Regulation on European standardization which took effect as from 1 January 2013, aims to enhance the “inclusiveness, speed, responsiveness, transparency, flexibility and scope” of the standardisation system.

European co-regulation and the protection of fundamental rights

Dr. Jessy Emaus, Utrecht University, RENFORCE

The use of European co-regulation should not merely comply with Union law, but also contribute to the realization of the Union’s goals and show respect for the EU’s core values. Since the entry into force of the Lisbon Treaty, the realization of a European social market economy is among its main goals. This presupposes the protection of certain public interests and human rights, as an expression of the core values upon which the EU is founded. These values concern not only the unity of the internal market and the principle of free competition, but in particular also consumer and environmental protection, employee and social protection, data protection, health and safety, equality and the protection of children. While these need to be balanced with the freedom of entrepreneurship, private regulatory behaviour affecting the functioning of the European internal market should not endanger the realization of these goals, public interests and human rights but contribute to their achievement and protection. Human rights can thus not only be an important driver for engaging in private regulation, but also impose constraints or limits thereon. Yet, the horizontal effect of human rights, creating not only rights for individuals but also imposing certain duties upon them, is still being contested. To speak in terms of the Inter-Institutional Agreement on Better Law-making, what “added value” must European co-regulation then represent not just for the private parties involved, but also for realizing the social market economy goal and other Union interests and human rights? This also evokes the more fundamental issue of to what extent matters can be left to private actors at all, when important political choices are at stake and where uniformity is needed to realize the Union's objectives. According to the Inter-Institutional Agreement, in such cases the use of co- and self-regulation is ruled out, but how to define this and how are these limits to be understood?

European co-regulation and its assessment in the light of the ‘trias of competences’

Kilian Klinger (LL.M), … Vienna

As part of the EU’s ‘better regulation” initiative, co-regulatory instruments are promoted as an important alternative regulatory strategy within the framework of EU governance. With its origins reaching back to the early 1980s and the introduction of the so-called “new approach” to technical harmonization in the field of the Single Market, co-regulation can now be considered as a well-established regulatory approach in the current legislative policy of the EU. However, despite its prominent role within the EU’s “better regulation” toolkit, co-regulation still constitutes a constitutionally widely unsettled phenomenon. It is therefore the aim of this explorative paper to analyse the phenomenon of co-regulation at Union level from the specific angle of EU constitutional law, a matter that has thus far not attracted much attention within the academic debate. With that said, the intention of this thesis is to shed light on the hitherto unexplored question of how co-regulation could be evaluated on the basis of and embedded into the broader constitutional framework of the EU’s competence order, specifically in the light of the principles of the so-called “trias of competences” as enshrined in Art. 5 TEU, i.e. the principles of conferral, subsidiarity and proportion-ality. Based on teleological considerations and the exploration of the legal scope of these three foundational principles of EU constitutional law, this paper establishes analytical frameworks that allow to investigate how co-regulation might fit in with the broader constitutional picture of the EU’s vertical order of competences, including inter alia the delegation of powers doctrine established by the Court in its case law.

[titel invoegen]

Prof. Madeleine de Cock-Buning and mr. Roeland de Bruin, Utrecht University, RENFORCE

The European Union aims to promote innovation as a key driver of economic welfare and growth. While the EU market is the largest in the world, it is however not innovation-friendly enough. Investing in the development of autonomous intelligent technology, such as robotics, in Europe lists high on the Digital Agenda. Autonomous intelligent technology (‘AIT’), as incorporated in autonomous intelligent vehicles (‘AIV’) presents serious challenges for current regulatory frameworks in the EU. It is observed that regulatory frameworks on – amongst many other fields – privacy and liability form an impediment for both the development and the societal deployment of AIT in general, and AIV in particular. In order toensurethat

a)the regulatory framework is adjusted to be flexible enough to cope with the ongoing technological developments, whilst EU core values such as fundamental rights are protected;

b)the adjustment process takes place ‘just in time’ to facilitate development deployment of AIT in society; and

c)all relevant stakeholders are involved in the process, resulting in a regulatory framework that is widely supported, and can therefore be effectively enforced,

it is identified that the process of optimisation should take place on both public and private levels, thus creating an optimal mix of regulatory instruments. The main question that will be addressed in this paper, is: which role can private actors in the European Union play in optimizing the regulatory frameworks on liability and privacy to facilitate, rather than hinder, the development and accepted deployment of AIV in society.

Not fudging nudges: What Internet law can teach regulatory scholarship

Prof. Chris Marsden, University of Sussex Law School

Behavioural or ‘nudge’ regulation has become the flavour of the decade since Thaler and Sunstein’s eponymous monograph. The use of behavioural psychology insights to observe changes in regulated outcomes from the ‘bounded rational’ choices of consumers has been commonplace in Internet regulation since 1998, driven by co-regulatory interactions between governments, companies and users (or ‘prosumers’ as the European Commission terms us). Nudging was so familiar to Internet regulatory scholars in the late 1990s that it came to be termed the leading example of the ‘new Chicago School’ by Lessig (1998), recognising imperfect information, bounded rationality and thus less than optimum user responses to competition remedies, driven by insights from the Internet’s architecture and Microsoft’s dominance of computer platform architecture. Thus recent ‘nudge’ concerns by regulatory scholars and competition lawyers echo 1990s concerns by Internet regulation specialists. It is a mark of Internet regulation’s specialisation in Europe, and mainstream regulation and competition law’s failure to fully absorb the insights of that scholarship, that in 2016 the debate surrounding nudges and privacy affecting competition outcomes has yet to reinvent the 1990s wheel of nudge limitations. Learning their Internet regulatory history can help competition and regulation scholars not repeat the lessons of the 1990s Microsoft case. The competition and regulatory aspect of attempts to direct user and market behaviour are a key empirical perspective for regulatory scholars. The Internet is a network and a real-time laboratory for the distribution and manipulation of information, which is why it is unsurprising that the adaption of that information to affect user behaviour has been a commonplace online throughout the history of the Internet.