Reinventing the Market? Competition and Regulatory Change in Broadcasting
| Published date | 01 September 1999 |
| DOI | http://doi.org/10.1111/1467-6478.00128 |
| Date | 01 September 1999 |
The reforms instituted by the Broadcasting Act 1990 led to a period of
turbulence and upheaval within broadcasting with results that were at
best unintended and, at worst, seriously undermined the ideal of public
service broadcasting. A Hayekian economic perspective would suggest
that the reforms failed because they did not go far enough in the direc-
tion of full ‘marketization’. The paper develops an alternative perspective,
based on an adaptation of systems theory within the context of law and
economics. This approach offers a broader methodological foundation for
the understanding of ‘economic law’ and a different normative perspective
on the broadcasting reforms. It is suggested that the difficulty with these
reforms was not their failure to go further in the direction of the market,
but rather their lack of clarity in articulating a clear alternative to the
market as the basis for the organization of television production.
INTRODUCTION
Since the mid-1980s in Britain, numerous economic reforms have been
instituted with the general aim of stimulating competition in the provision
of goods and services which were once the preserve of state-run monopo-
lies or near-monopolies. This process of ‘marketization’ began as a conse-
quence of the privatization of certain industries, in particular in transport
© Blackwell Publishers Ltd 1999, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA
* ESRC Centre for Business Research, University of Cambridge, Austin
Robinson Building, Sidgwick Avenue, Cambridge CB3 9DE, England
** Management Centre, King’s College London, Campden Hill Road,
London W8 7AH, England
We are grateful to the Economic and Social Research Council for its support. The research
was funded by a grant under the ESRC’s Media Economics and Media Culture Research
Programme (Project L126251042, ‘Structural Change, Competitive Advantage and Media
Regulation’). We would also like to thank participants in the Contract stream at the 1999
Annual Conference of the Socio-Legal Studies Association at the University of Loughborough
for comments on a version of the paper which was presented there.
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JOURNAL OF LAW AND SOCIETY
VOLUME 26, NUMBER 3, SEPTEMBER 1999
ISSN: 0263–323X, pp. 323–50
Reinventing the Market? Competition and Regulatory Change
in Broadcasting
SIMON DEAKIN* AND STEPHEN PRATTEN**
and the utilities,1but has since spread to activities which remain within the
public sector, such as health and education.2In local government services
and broadcasting, complex arrangements have emerged as part of which
public sector providers compete both ‘internally’ amongst themselves and
also ‘externally’ with private-sector rivals.3
These reforms all rest upon the apparent paradox that regulation can be
used to institute a market order in place of a bureaucratic system of gov-
ernance. In the utilities, the sources of regulation include legislation pro-
viding for vertical and horizontal separation between entities within the
chain of supply, a pricing formula (RPI-X) contained in the licenses of
certain providers which is intended to incorporate incentives for organiza-
tions to make efficiency gains, and statutory controls over the quality of
services. The delegation of considerable discretion to individual regulators
has not, in itself, negated the public-regulatory character of this form of
intervention. In the public sector, legislation requires that certain services
and products be subjected to competitive tendering and lays down condi-
tions for the granting of licences and franchises to private-sector providers.
Internal contracting within the public sector is regulated by rules governing
the separation of purchasers and providers and the conditions under which
internal transactions are conducted; these rules derive from a combination
of statutory regulation and managerial decision-making.
Much of the legal debate over the growth of these forms of economic
regulation has focused on their implications for public-law concepts of
accountability and transparency.4While these issues are undeniably impor-
tant, much less attention has been paid to the emergence of a new type of
competition policy or economic law which attempts to regulate economic
activity in such a way as to meet a number of often potentially disparate
policy objectives. Thus, the promotion of competition has been advanced
both as a means of enhancing efficiency in the allocation and organization
of economic resources, and, at the same time, as a means of achieving more
traditional, ‘social’ goals of regulation, in particular the maintenance of
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© Blackwell Publishers Ltd 1999
1For recent contributions to what is now a very extensive literature, see M. Bishop, J. Kay,
and C. Mayer (eds.), The Regulatory Challenge (1995); D. Helm (ed.), British Utilities
Regulation: Principles, Experience and Reform (1995); M. Beesley, Privatisation, Regulation
and Deregulation (2nd edn., 1997).
2See, for a recent collection covering the whole field of quasi-market reforms, W. Bartlett,
J. Roberts, and J. Le Grand (eds.), A Revolution in Social Policy. Quasi-market Reforms in
the 1980s (1998).
3This theme has been a particular focus of the work of Peter Vincent-Jones on compulsory
competitive tendering. See P. Vincent-Jones, ‘The Limits of Contractual Order in Public
Sector Transacting’ (1994) 14 Legal Studies 364–92, and ‘Responsive Law and Governance
in Public Services Supervision: A Future for the Local Contracting State’ (1998) 61 Modern
Law Rev. 362–81; P. Vincent-Jones and A. Harries, ‘CCT, Conflict and Cooperation in
Local Authority Quasi-markets’ in Bartlett, id.
4See, in particular, J. Black, P. Muchlinski, and P. Walker (eds.), Commercial Regulation and
Judicial Review (1998).
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