Chapter 2: Regulatory authorities and conflicts of interest
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Regulatory authorities are, more than other sectors of the government and for reasons of independence, particularly prone to conflicts of interest. Conflicts of interest are both the foundation and the main challenge of independent regulatory authorities (IRAs). In the first place, the independence of regulatory authorities in Europe was intended to be a response to the conflicts of interest that naturally arise from the way in which Member States intervene in the regulated markets. However, and this will be our main point, regulatory authorities are often accused of being captive to the market actors they are supposed to regulate. On the one hand, the close relationship between the regulatory authorities and the regulated markets can result in an assumption of conflicts of interest. On the other hand, the relationship that these authorities enjoy with public powers can also create certain suspicions towards conflicts of interest. To avoid this captive position and also for purely ethical reasons, several systems have been put in place to avoid conflicts of interest. The concept of Independent Regulatory Agencies was developed in the 19th century in the United States. It was the government's response to issues that had arisen in certain markets. These markets were prone to anti-competitive practices and tended to be highly concentrated. In order to fight such abusive behaviours and protect the public interest Congress decided to create Independent Regulatory Authorities.

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