Discretion and Accountability: The ESMA Judgment and the Meroni Doctrine. Bruges European Economic Research (BEER) Papers 30/2014

This paper assesses the effectiveness of the Meroni doctrine in the light of the recent judgment in the ESMA case. The first part explains in detail the problem of delegation of powers in the EU from the perspective of the principal-agent theory and complements it with the analysis of the trade-off between different levels of independence and accountability of agencies. A simple economic model is developed to illustrated the relationship between the independence and accountability of an agency. It shows that it is the accountability mechanism that induces the agent to act, rather than the extent of his independence. The paper also explains the inter-temporal interactions between the principal and the agent on the basis of the incentives in place for the different players. The second part is devoted to analysis of the functioning of ESMA in the context of its delegated powers. After the presentation of main aspects of the regulatory framework establishing ESMA, the paper continuous with an analysis and interpretation of the discretionary powers of ESMA. The rather rigid position of the Court of Justice in relation to the Meroni doctrine seems to be unsuitable to delegation of complex regulatory tasks. This is particularly evident in the case of financial markets. Finally, the judgment does not examine in any detail whether and how the principals - i.e. the EU and Member States - are best able to evaluate the quality of ESMA decisions and regulations and whether there are different but more effective accountability mechanisms.

Infospective on the European Elections and the European Parliament. EU Centre Singapore Background Brief No. 12, May 2014

With the 2014 European Elections just round the corner, the EU Centre has published an infospective (Background Brief 12) by Devi Shree Malarvanan and Dexter Lee (EU Centre in Singapore) entitled “Infospective on the European Elections and the European Parliament” This infospective covers the history of the European Parliament, highlighting the legislative powers that Parliament has since the 1960s. It also covers the issues and results of the previous 7 European elections, and will feature a sneak peak of the upcoming 2014 European Elections which will be held later in May.