The RINO in the room - Village Magazine

38 July-August 2024

The RINO

in the room

Ireland is useless at regulation

By Cillian Doyle

arlier this year Ed Honohan —

former Master of the High Court

— appeared before the Oireachtas

Finance Committee and used a

wonderful term I’d not heard

before. He described a situation where the

oversight of some industry, sector, or other,

is provided by a ‘RINO’ – regulator in name

only.

This term nicely captured something which

the Irish state has often excelled at. Let’s

think of it as a kind of regulatory window-

dressing. The process goes something like

this. A regulatory body is established. It’s

given a serious sounding name with a

snappy acronym to accompany it. A well-paid

position is established for the person who’s

to head it.

This person, of course, will have to meet a

key selection criterion - being a “safe pair of

hands”. Someone whose been around the

block. You know, gone to the functions,

attended the junkets, served on the usual

state boards, etc. This person is unlikely to

be the adversarial sort. They must be a

watchdog who sees the world through the

eyes of those they regulate, a sleepdog.

Then when something goes wrong, as it

invariably will, this person can be hauled

before the relevant Oireachtas Committee to

be berated by its members for a perceived

failure to act. For being all carrot and no

stick, so to speak. In response they will

explain how their body didn’t have sucient

powers to act, even though they probably

failed to exercise the powers they did have.

“Lessons learned” as they say. Then the

game starts over.

Now in ocial circles this is hardly how it’s

portrayed. No, nice sounding phrases like

“light touch” regulation are used. Sometimes

A regulatory body is established, given

a serious acronym; and a well-paid

non-adversarial head who is a “safe

pair of hands

it’s referred to as a principles-based (as

opposed to rules-based) approach to

regulation. Because you’ve got to have

principles. Or on occasion even a

“competitive” approach to regulation. I

mean who doesn’t love competition?

Business

“Business friendliness” is a core tenet of the

state’s industrial policy. And there’s no

doubt it’s resulted in Ireland consistently

ranking highly in global indexes like the Ease

of doing Business index and the World

Economic Freedom index.

Of course, we all know the risks that this

entails. Our banking crisis was one of the

worst in the world. We also had the mooncalf,

Patrick Neary, who led our now defunct

Financial Service Regulatory Authority, the

worst ﬁnancial regulator in the history of

ﬁnancial regulation.

Public servants

It’s not just in industry we see this hands-o

approach. The same goes for the regulation

of ethical behaviour and standards of probity

for our public servants. Our political ethics

watchdog (SIPO) is about as threatening as

a nice librarian, and is at best an afterthought

for most elected ocials.

Remarkably, in the year 2024, it’s still

seriously lacking in powers (not SIPO’s fault).

But it’s also often reluctant to use the powers

it does have. Or, as was recently observed in

a High Court case take by the Ditch Media,

failed to even understand its own powers

(deﬁnitely its fault).

Competition and Consumer Protection

But now we’ll focus in on another one of our

key regulators — the Competition and

Consumer Protection Commission (CCPC).

The CCPC is the statutory body responsible

for promoting compliance with, and

enforcing, competition and consumer

protection law. Certainly, not a small job. The

CCPC, and its previous incarnation the

Competition Authority, have not been

strangers to criticism.

Agriculture

In the past it’s been accused by groups

within the agriculture sector particularly

those working in the beef industry who’ve

long claimed that unfair trading practices

Ed Honohn

POLITICS

July-August 2024 39

Media

In April it was reported that the Irish

Independent group (Mediahuis) was trying buy

the Journal.ie to bolster its presence in online

news. After its torpid response to AIB and Bank

of Ireland’s adventures, I wondered if the CCPC

was going to act based on its rules on mergers/

acquisitions and the need to avoid market

concentration. It’s now been conﬁrmed that

the Journal.ie won’t be taking Mediahuis up on

their oer, which is good news for anyone who

believes a diverse media ecosystem is needed

for a democratic society and fears the growing

concentration of the media market.

Nevertheless, we can look at what the market

would have looked like had it gone ahead. This

merger would have been more than three times

the CCPC’s threshold for concern.

Would the CCPC have acted if the Journal had

accepted the oer? We’ll never know, but if the

mergers in the banking sector are anything to

go by, it probably would have taken the case-

by-case approach and thought…well the Irish

Times already has the Examiner.ie and

Breaking News.ie, so why not?

Cillian Doyle is a political economist and

policy advisor to Sinn Féin. The views

expressed are his own.

were rife, of lacking “sufficient

independence”. In 2019 a request from the

Irish Farmers Association to investigate the

alleged collusion that was claimed to be

occurring in the beef-processing sector,

which led to protests outside its Dublin HQ.

The CCPC would eventually investigate

allegations of anti-competitive behaviour

following complaints by the IFA, the Beef

Plan Movement and Independent Farmers of

Ireland. In 2020 it concluded that there was

“insucient evidence” to support these

claims.

Insurance

There’s long been criticism of its hands-o

approach to the insurance industry. In 2016

it launched an investigation but after two

years no ﬁnal report or enforcement actions

had emerged, leading to strong criticism

from the Consumers Association of Ireland.

When it ﬁnally published its report in 2019

it yielded no results.

This spurred the European Commission

into action as it launched its own

investigation. The Commission appeared to

take a rather dim view of the CCPC’s work,

having previously noted in a 2017 report

that, over a ten-year period (2004-13), it

issued only one penalty decision. With a

rather withering remark, the report stated

that this meant “there is virtually no

enforcement of the EU competition rules”.

Banking

The Director of the CCPC Colm Kincaid said

in June that the “clock is ticking” for the Irish

banking and payments sector to “raise their

game on basic customer service” and he

has questioned why the Central Bank has to

get involved before senior management

even engage with complaints. The problem

is that this is a question he should himself

be well equipped to answer.

The CCPC seemed to ignore its rules on the

need to avoid market concentration last

year when it approved Bank of Ireland and

AIB’s purchase of the respective mortgage

books of KBC Bank and Ulster Bank in 2023.

Market concentration, according to the

CPCC rules, is measured using the

Herﬁndahl-Hirschman Index (“HHI”). The

HHI is calculated by squaring the market

share of each ﬁrm competing in a market

and then adding up the resulting numbers.

A score of 2,000 or above is considered a

highly concentrated market.

From a mergers and acquisitions (M&A)

perspective, in a highly concentrated

market, a post-merger “increase of less

than 150 is unlikely to cause concern”.

However, as we can see from Table 1, the

core ﬁve ﬁrms that were involved in the

mortgage market have reduced to just

three, meaning the HHI index jumped from

2,160 to 3,859.

The CCPC gave approval to both of these

M&As. Considering that former head of the

ECB, Mario Draghi, called the Irish banking

sector a “quasi monopoly” back in 2018,

what would he call it in 2024, when two

ﬁrms control 85% of the mortgage market?

To be fair to the CCPC it does state that

while “quantitative measures” are used

when analysing the potential eect on

competition, “Each proposed merger needs

to be assessed on its merits and in its own

particular circumstances”. Indeed.

Bank Market share

(Pre M&A)

Market share

(Post M&A)

AIB 31% 45%

Bank of Ireland 25% 40%

PTSB 15% 15%

Ulster 14% N/A

KBC 12% N/A

Others 3% 3%

HHI 2,160 3,859

Table 1: Irish mortgage market (HHI) pre/post M&A

Online media provider Market share Hypothetical

M&A

RTE News Online 24% 24%

Irish Times.ie/Examiner.ie/

Breaking News.ie

26% 26%

Journal.ie 16% N/A

Independent.ie 15% 31%

Mirror.ie 5% 5%

Others 14% 14%

HHI 1,954 2,434

Table 2. Irish online media market (HHI)

In business, standards

in public ofﬁce,

consumer protection

(agriculture, insurance,

banking, media),

among others, the

regulators are typically

hands-off insiders

SIPO nd he Finncil Regulor: hnds-off