The Impact of Independence on Regulatory Outcomes: the Case of EU Competition Policy

Independent regulatory agencies are created in order to enhance the stability and credibility of economic regulation, and to improve policy implementation. So far, most research in political science has focused on explaining the reasons for independence, while less attention has been paid to analysing the consequences of independence. Aiming to start filling this gap, this article seeks to test if (and to what extent) independence makes a difference in competition policy enforcement. Original data on formal independence of national competition agencies in EU Member States from 1993 to 2009 are employed to test if different degrees of independence (and changes in independence over time) affect foreign direct investment and consumer prices. The results indicate that the formal independence of a competition agency does not have any significant impact on either indicator, thus questioning the assumption that independence yields better regulatory performance.