Network or Agency? The Choice for Flexibility vs Effectiveness in EU Regulatory Governance

If much has already been written on EU regulatory governance through networks or agencies, we are still lacking explanations regarding institutional variation across sectors. Why do some sectors rely on EU regulatory networks and others on EU agencies? What drives policymakers’ preferences between flexibility and effectiveness? In the late 2000s, the Commission proposed the transformation of loose regulatory networks into powerful EU agencies in two sectors: energy and telecommunications. Surprisingly, while the proposal succeeded in energy, it failed in telecommunications. Given that the energy sector has always been closer to national sovereign considerations than telecommunications, one would rather have expected an opposite outcome. This puzzle, I argue, can only be solved by taking into account the variation in the level of functional pressure felt in both sectors. Anticipating higher benefits from increased cooperation in energy than in telecommunications, the member states favoured a powerful agency in the former case and opted for a limited institutional upgrade in latter. Besides improving our understanding of cross-sectoral variations in EU regulatory governance, the paper also contributions to the study of institutions by showing how the variation of functional pressure intervenes in the process of institutional design.