Independent Economic Regulation for Efficient and Fair Business: Case Study of Utilities Sector in Slovakia

Independent economic regulation is one of the key preconditions to establish rules of the game enabling and encouraging efficient and fair business. Problematic independence, leading to unfair, unpredictable and politically influenced regulatory decisions, increases costs of compliance with such institutional framework, which negatively influences the overall efficiency of economic activities. The aim of this paper is to discuss the problematic independence of economic regulation, illustrated on a case study on a regulatory office in Slovakia, and to provide concrete suggestions how the independence of economic regulation can be improved in its de jure as well as de facto dimensions. The case study deals with the recent case of Slovakia’s Regulatory Office for Network Industries that in late 2016 and early 2017 served as a good example of problematic independence of economic regulation both from politicians and the business sector. The case highlights the main system deficiencies in all relevant contexts, from legislation through its implementation and enforcement, to political, business and overall culture. Therefore, the case serves as a valuable learning basis, on which we build recommendations for improvements of independence of economic regulation, that are so much needed not only in the national context, but also in the context of most CEE economies.