CoRe - European Competition and Regulatory Law Review

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Glenn Scheerlinck, Caroline Buts, Genserik Reniers, Marc Cools

European Competition and Regulatory Law Review, Volume 1 (2017), Issue 2, Page 96 - 114

This article studies the effect of different degrees of regulation on competition in the private security industry. An evolutionary law perspective, combined with economic theories of regulation provides a better understanding of the optimal balance between regulation and competition, and encourages policymakers to reflect on the consequences that sector specific rules might have on industry dynamics. In-depth insights result from a case study approach, consisting of the analysis of legal documents and industry data, in addition to interviewing key stakeholders. Based on three country cases (Belgium, the Netherlands and Germany) we report diverse effects of industry regulation. The results hint at a positive relationship between the degree of regulation and industry concentration, meaning that more intense regulation leads to a higher concentration ratio. Regulation clearly acts as an entry barrier and intense regulation weighs more heavily on small newcomers than on large incumbents. From the interviews, we learn that the preferred balance is indeed tilted towards regulation, rather than towards competition, as sector specific rules are the primary tool to ensure high quality private security services.

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