The Commission’s internal conditions for social re-regulation: Market efficiency and wider social goals in setting the rules of financial services in Europe

Abstract

With its scarce budgetary resources and institutional logics favouring market-based problemsolving, the European Union (EU) has been considered a prime example of the regulatory state. When and how can we expect the Commission to pursue aims beyond the mere increase of efficiency in private market transactions? Can we expect Brussels to intervene where societal interests demand re-regulation? We draw up two ideal-type perspectives on market regulation and trace them empirically along two regulatory processes concerning financial services: consumer credit regulation and equal treatment in financial services, selected as recent instruments focussing explicitly on presumably weaker parts in market transactions. Regulatory decisions are reconstructed along semi-structured interviews with Commission officials from different DGs and hierarchical levels conducted 2006-2009. In both cases the Commission went beyond mere market-efficiency and changed the quality of the financial market by favouring disadvantaged societal groups in its regulatory proposals. Our process analyses suggest that there is a scope for a regulatory equality enhancing policy which depends on pro-active agents within the Commission, the possibility to frame regulatory beneficiaries as market participants, and the re-distribution of rights instead of resources.