A chart illustrating the differences in earnings between men and women of the same educational level (USA 2006)
A glass ceiling is a metaphor used to represent an invisible
barrier that prevents a given demographic (typically applied to women)
from rising beyond a certain level in a hierarchy.
The metaphor was first coined by feminists in reference to barriers in the careers of high-achieving women. In the US, the concept is sometimes extended to refer to obstacles hindering the advancement of minority women, as well as minority men.
Minority women in white-majority countries often find the most
difficulty in "breaking the glass ceiling" because they lie at the intersection of two historically marginalized groups: women and people of color. East Asian and East Asian American news outlets have coined the term "bamboo ceiling" to refer to the obstacles that all East Asian Americans face in advancing their careers.
Within the same concepts of the other terms surrounding the
workplace, there are similar terms for restrictions and barriers
concerning women and their roles within organizations and how they
coincide with their maternal duties. These "Invisible Barriers" function
as metaphors to describe the extra circumstances that women undergo,
usually when trying to advance within areas of their careers and often
while trying to advance within their lives outside their work spaces.
"A glass ceiling" represents a barrier that prohibits women from
advancing toward the top of a hierarchical corporation. Those women are
prevented from receiving promotion, especially to the executive
rankings, within their corporation. In the last twenty years, the women
who have become more involved and pertinent in industries and
organizations have rarely been in the executive ranks.
Definition
The
United States Federal Glass Ceiling Commission defines the glass
ceiling as "the unseen, yet unbreachable barrier that keeps minorities
and women from rising to the upper rungs of the corporate ladder,
regardless of their qualifications or achievements."
David Cotter and colleagues defined four distinctive characteristics that must be met to conclude that a glass ceiling exists. A glass ceiling inequality represents:
"A gender or racial difference that is not explained by other job-relevant characteristics of the employee."
"A gender or racial difference that is greater at higher levels of an outcome than at lower levels of an outcome."
"A gender or racial inequality in the chances of advancement into
higher levels, not merely the proportions of each gender or race
currently at those higher levels."
"A gender or racial inequality that increases over the course of a career."
Cotter and colleagues found that glass ceilings are correlated
strongly with gender, with both white and minority women facing a glass
ceiling in the course of their careers. In contrast, the researchers did
not find evidence of a glass ceiling for African-American men.
The glass ceiling metaphor has often been used to describe
invisible barriers ("glass") through which women can see elite positions
but cannot reach them ("ceiling").
These barriers prevent large numbers of women and ethnic minorities
from obtaining and securing the most powerful, prestigious and
highest-grossing jobs in the workforce.
Moreover, this effect prevents women from filling high-ranking
positions and puts them at a disadvantage as potential candidates for
advancement.
History
In 1839, French feminist and author George Sand used a similar phrase, une voûte de cristal impénétrable, in a passage of Gabriel, a never-performed play: "I was a woman; for suddenly my wings collapsed, ether closed in around my head like an impenetrable crystal vault,
and I fell...." [emphasis added]. The statement, a description of the
heroine's dream of soaring with wings, has been interpreted as a
feminine Icarus tale of a woman who attempts to ascend above her accepted role.
One person using the term Glass ceiling was Marilyn Loden during a 1978 speech.
According to the April 3, 2015, Wall Street Journal the term glass
ceiling was coined in the spring of 1978 by Marianne Schriber and
Katherine Lawrence at Hewlett-Packard. Lawrence outlined the concept at
the National Press Club at the national meeting of the Women's Institute
for the Freedom of the Press in Washington DC.
The ceiling was defined as discriminatory promotion patterns where the
written promotional policy is non-discriminatory, but in practice denies
promotion to qualified females.
The term was later used in March 1984 by Gay Bryant. She was the former editor of Working Woman magazine and was changing jobs to be the editor of Family Circle. In an Adweek
article written by Nora Frenkel, Bryant was reported as saying, "Women
have reached a certain point—I call it the glass ceiling. They're in the
top of middle management and they're stopping and getting stuck. There
isn't enough room for all those women at the top. Some are going into
business for themselves. Others are going out and raising families." Also in 1984, Bryant used the term in a chapter of the book The Working Woman Report: Succeeding in Business in the 1980s. In the same book, Basia Hellwig used the term in another chapter.
In a widely cited article in the Wall Street Journal
in March 1986 the term was used in the
article's title: "The Glass Ceiling: Why Women Can't Seem to Break The
Invisible Barrier That Blocks Them From the Top Jobs". The article was
written by Carol Hymowitz and Timothy D. Schellhardt. Hymowitz and
Schellhardt introduced glass ceiling was "not something that could be
found in any corporate manual or even discussed at a business meeting;
it was originally introduced as an invisible, covert, and unspoken
phenomenon that existed to keep executive level leadership positions in
the hands of Caucasian males."
As the term "Glass Ceiling" became more common, the public
responded with differing ideas and opinions. Some argued that the
concept is a myth because women choose to stay home and showed less
dedication to advance into executive positions. As a result of continuing public debate, the US Labor Department's chief, Lynn Morley Martin,
reported the results of a research project called "The Glass Ceiling
Initiative", formed to investigate the low numbers of women and
minorities in executive positions. This report defined the new term as
"those artificial barriers based on attitudinal or organizational bias
that prevent qualified individuals from advancing upward in their
organization into management-level positions."
In 1991, as a part of Title II of the Civil Right Act of 1991, The United States Congress created the Glass Ceiling Commission. This 21 member Presidential Commission was chaired by Secretary of Labor Robert Reich,
and was created to study the "barriers to the advancement of minorities
and women within corporate hierarchies[,] to issue a report on its
findings and conclusions, and to make recommendations on ways to dis-
mantle the glass ceiling."
The commission conducted extensive research including, surveys, public
hearings and interviews, and released their findings in a report in
1995.
The report, "Good for Business", offered "tangible guidelines and
solutions on how these barriers can be overcome and eliminated".
The goal of the commission was to provide recommendations on how to
"shatter" the glass ceiling, specifically in the world of business. The
report issued 12 recommendations on how to improve the workplace by
increasing diversity in organizations and reducing discrimination
through policy.
The number of women CEOs in the Fortune Lists has increased between 1998 and 2020, despite women's labor force participation rate decreasing globally from 52.4% to 49.6% between 1995 and 2015. Only 19.2% of S&P 500 Board Seats were held by women in 2014, 80.2% of whom were considered white.
Glass Ceiling Index
In 2017, the Economist
updated their glass-ceiling index, combining data on higher education,
labour-force participation, pay, child-care costs, maternity and
paternity rights, business-school applications and representation in
senior jobs. The countries where inequality was the lowest were Iceland, Sweden, Norway, Finland, and Poland.
Gender stereotypes
2001 Gallup Poll: Men are perceived as more Aggressive, Women are perceived as more Emotional
In a 1993 report released through the U.S. Army Research Institute
for the Behavioral and Social Sciences, researchers noted that although
women have the same educational opportunities as their male
counterparts, the Glass Ceiling persist due to systematic barriers, low
representation and mobility, and stereotypes.
The perpetuation of sexist stereotypes is one widely recognized reason
as to why female employees are systematically inhibited from receiving
advantageous opportunities in their chosen fields. A majority of Americans perceive women to be more emotional and men to be more aggressive than their opposite sex.
Gender stereotypes influence how leaders are chosen by employers and
how workers of different sex are treated. Another stereotypes towards
women in workplaces is the "gender status belief" which claims that men
are more competent and intelligent than women, which would explain why
they have higher positions in the career hierarchy. Ultimately, this
factor leads to perception of gender-based jobs on the labor market, so
men are expected to have more work-related qualifications and hired for
top positions. Perceived feminine stereotypes contribute to the glass ceiling faced by women in the workforce.
Hiring practices
When
women leave their current place of employment to start their own
businesses, they tend to hire other women. Men tend to hire other men.
These hiring practices eliminate "the glass ceiling" because there is no
more competition of capabilities and discrimination of gender. These
support the segregated identification of "men's work" and "women's
work."
Cross-cultural context
Few
women tend to reach positions in the upper echelon of society, and
organizations are largely still almost exclusively lead by men. Studies have shown that the glass ceiling still exists in varying levels in different nations and regions across the world.
The stereotypes of women as emotional and sensitive could be seen as
key characteristics as to why women struggle to break the glass ceiling.
It is clear that even though societies differ from one another by
culture, beliefs and norms, they hold similar expectations of women and
their role in the society. These female stereotypes are often reinforced
in societies that have traditional expectations of women.
The stereotypes and perceptions of women are changing slowly across the
world, which also reduces gender segregation in organizations.
Related concepts
"Glass escalator"
A parallel phenomenon called the "glass escalator"
has also been recognized. As more men join fields that were previously
dominated by women, such as nursing and teaching, the men are promoted
and given more opportunities compared to the women, as if the men were
taking escalators and the women were taking the stairs.
The chart from Carolyn K. Broner shows an example of the glass
escalator in favor of men for female-dominant occupations in schools.
While women have historically dominated the teaching profession, men
tend to take higher positions in school systems such as deans or
principals.
Men benefit financially from their gender status in historically
female fields, often "reaping the benefits of their token status to
reach higher levels in female-dominated work."
A 2008 study published in Social Problems
found that sex segregation in nursing did not follow the "glass
escalator" pattern of disproportional vertical distribution; rather, men
and women gravitated towards different areas within the field, with
male nurses tending to specialize in areas of work perceived as
"masculine".
The article noted that "men encounter powerful social pressures that
direct them away from entering female-dominated occupations (Jacobs
1989, 1993)". Since female-dominated occupations are usually
characterized with more feminine activities, men who enter these jobs
can be perceived socially as "effeminate, homosexual, or sexual
predators".
"Sticky floors"
In
the literature on gender discrimination, the concept of "sticky floors"
complements the concept of a glass ceiling. Sticky floors can be
described as the pattern that women are, compared to men, less likely to
start to climb the job ladder. Thereby, this phenomenon is related to
gender differentials at the bottom of the wage distribution. Building on
the seminal study by Booth and co-authors in European Economic Review,
during the last decade economists have attempted to identify sticky
floors in the labour market. They found empirical evidence for the
existence of sticky floors in countries such as Australia, Belgium,
Italy, Thailand and the United States.
"The frozen middle"
Similar
to the sticky floor, the frozen middle describes the phenomenon of
women's progress up the corporate ladder slowing, if not halting, in the
ranks of middle management.
Originally the term referred to the resistance corporate upper
management faced from middle management when issuing directives. Due to a
lack of ability or lack of drive in the ranks of middle management
these directives do not come into fruition and as a result the company's
bottom line suffers. The term was popularized by a Harvard Business Review article titled "Middle Management Excellence".
Due to the growing proportion of women to men in the workforce,
however, the term "frozen middle" has become more commonly ascribed to
the aforementioned slowing of the careers of women in middle management.
The 1996 study "A Study of the Career Development and Aspirations of
Women in Middle Management" posits that social structures and networks
within businesses that favor "good old boys" and norms of masculinity
exist based on the experiences of women surveyed.
According to the study, women who did not exhibit stereotypical
masculine traits, (e.g. aggressiveness, thick skin, lack of emotional
expression) and interpersonal communication tendencies were
disadvantaged compared to their male peers. As the ratio of men to women increases in the upper levels of management,
women's access to female mentors who could advise them on ways to
navigate office politics is limited, further inhibiting upward mobility
within a corporation or firm.
Furthermore, the frozen middle affects female professionals in western
and eastern countries such as the United States and Malaysia,
respectively, as well as women in a variety of fields ranging from the aforementioned corporations to STEM fields.
"Second shift"
The
second shift focuses on the idea that women theoretically work a second
shift in the manner of having a greater workload, not just doing a
greater share of domestic work. All of the tasks that are engaged in
outside the workplace are mainly tied to motherhood.
Depending on location, household income, educational attainment,
ethnicity and location. Data shows that women do work a second shift in
the sense of having a greater workload, not just doing a greater share
of domestic work, but this is not apparent if simultaneous activity is
overlooked. Alva Myrdal and Viola Klein
as early as 1956 focused on the potential of both men and women working
in settings that included paid and unpaid types of work environments.
Research indicated that men and women could have equal time for
activities outside the work environment for family and extra activities.
This "second shift" has also been found to have physical effects as
well. Women who engage in longer hours of work in pursuit of family
balance, often face increased mental health problems such as depression and anxiety.
Increased irritability, lower motivation and energy, and other
emotional issues were also found to occur as well. The overall happiness
of women can be improved if a balance of career and home
responsibilities is found.
"Mommy Track"
"Mommy
Track" refers to women who disregard their careers and professional
duties in order to satisfy the needs of their families. Women are often
subject to long work hours that creates an imbalance within the
work-family schedule.
There is research suggesting that women are able to function on a
part-time professional schedule compared to others who worked full-time
while still engaged in external family activities.
The research also suggests flexible work arrangements allow for the
achievement of a healthy work and family balance. A difference has also
been discovered in the cost and amount of effort in childbearing amongst
women in higher skilled positions and roles, as opposed to women in
lower-skilled jobs. This difference leads to women delaying and
postponing goals and career aspirations over a number of years.
"Concrete floor"
The term concrete floor
has been used to refer to the minimum number or the proportion of women
necessary for a cabinet or board of directors to be perceived as
legitimate.
A chief executive officer (CEO), chief administrator, or just chief executive (CE), is one of a number of corporate executives in charge of managing an organization – especially an independent legal entity such as a company or nonprofit institution. CEOs find roles in a range of organizations, including public and private corporations, non-profit organizations and even some government organizations (notably Crown corporations). The CEO of a corporation or company typically reports to the board of directors and is charged with maximizing the value of the business,
which may include maximizing the share price, market share, revenues or
another element. In the non-profit and government sector, CEOs
typically aim at achieving outcomes related to the organization's
mission, such as reducing poverty, increasing literacy, etc.
In the 21st century, top executives typically have technical degrees in science, management, engineering or law.
Responsibilities
The responsibilities of an organization's CEO are set by the organization's board of directors
or other authority, depending on the organization's structure. They can
be far-reaching or quite limited and are typically enshrined in a
formal delegation of authority regarding business administration.
Typically, responsibilities include being a decision maker on business
strategy and other key policy issues, leader,
manager, and executor. The communicator role can involve speaking to
the press and the rest of the outside world, as well as to the
organization's management and employees; the decision-making role
involves high-level decisions about policy and strategy.
As an executive officer of the company, the CEO reports the
status of the business to the board of directors, motivates employees,
and drives change within the organization. As a manager, the CEO
presides over the organization's day-to-day operations.
The CEO is the person who is ultimately accountable for a company's
business decisions, including those in operations, marketing, business
development, finance, human resources, etc.
The CEO of a company is not necessarily the owner or the head of
the company. The CEO of a political party is often entrusted with
fundraising, particularly for election campaigns.
International use
In some countries, there is a dual board system with two separate boards, one executive board for the day-to-day business and one supervisory board for control purposes (selected by the shareholders). In these countries, the CEO presides over the executive board and the chairman
presides over the supervisory board, and these two roles will always be
held by different people. This ensures a distinction between management by the executive board and governance
by the supervisory board. This allows for clear lines of authority. The
aim is to prevent a conflict of interest and too much power being
concentrated in the hands of one person.
In the United States, the board of directors (elected by the shareholders) is often equivalent to the supervisory board, while the executive board may often be known as the executive committee (the division/subsidiary heads and C-level officers that report directly to the CEO).
In the United States, and in business, the executive officers are
usually the top officers of a corporation, the chief executive officer
(CEO) being the best-known type. The definition varies; for instance,
the California Corporate Disclosure Act defines "executive officers" as
the five most highly compensated officers not also sitting on the board
of directors. In the case of a sole proprietorship, an executive officer
is the sole proprietor. In the case of a partnership, an executive
officer is a managing partner, senior partner, or administrative
partner. In the case of a limited liability company, executive officer
is any member, manager, or officer.
Related positions
Depending on the organization, a CEO may have several subordinate
executives to help run the day-to-day administration of the company,
each of whom has specific functional responsibilities referred to as
senior executives,
executive officers or corporate officers. Subordinate executives are
given different titles in different organizations, but one common
category of subordinate executive, if the CEO is also the president, is
the vice-president (VP). An organization may have more than one vice-president, each tasked with a different area of responsibility (e.g., VP of finance, VP of human resources). Examples of subordinate executive officers who typically report to the CEO include the chief operating officer (COO), chief financial officer (CFO), chief strategy officer (CSO), and chief business officer (CBO). The public relations-focused position of chief reputation officer
is sometimes included as one such subordinate executive officer, but,
as suggested by Anthony Johndrow, CEO of Reputation Economy Advisors, it
can also be seen as "simply another way to add emphasis to the role of a
modern-day CEO – where they are both the external face of, and the
driving force behind, an organisation culture".
United States
In the US, the term chief executive officer is used primarily in business, whereas the term executive director
is used primarily in the not-for-profit sector. These terms are
generally mutually exclusive and refer to distinct legal duties and
responsibilities. Implicit in the use of these titles, is that the
public not be misled and the general standard regarding their use be
consistently applied.
United Kingdom
In the UK, chief executive and chief executive officer are used in both business and the charitable sector. As of 2013, the use of the term director
for senior charity staff is deprecated to avoid confusion with the
legal duties and responsibilities associated with being a charity
director or trustee, which are normally non-executive (unpaid) roles. In
the United Kingdom, the term managing director is often used in lieu of chief executive officer.
Celebrity CEOs
Business publicists since the days of Edward Bernays and his client John D. Rockefeller and even more successfully the corporate publicists for Henry Ford, promoted the concept of the "celebrity
CEO". Business journalists have often adopted this approach, which
assumes that the corporate achievements, especially in the arena of
manufacturing, were produced by unique talented individuals, especially
the "heroic CEO". In effect, journalists celebrate a CEO who takes
distinctive strategic actions. The model is the celebrity in
entertainment, sports, and politics. Guthey et al. argue that "...these
individuals are not self-made, but rather are created by a process of
widespread media exposure to the point that their actions,
personalities, and even private lives function symbolically to represent
significant dynamics and tensions prevalent in the contemporary
business atmosphere."
Journalism thereby exaggerates the importance of the CEO and tends to
neglect the harder-to-describe broader corporate factors. There is
little attention to the intricately organized technical bureaucracy that
actually does the work. Hubris sets in when the CEO internalizes the
celebrity and becomes excessively self-confident in making complex
decisions. Indeed, there may be an emphasis on the sort of decisions
that attract the celebrity journalists.
Criticism
Executive compensation
Executive compensation has been a source of criticism following a dramatic rise in pay relative to the average worker's wage.
For example, the relative pay was 20-to-1 in 1965 in the US, but had
risen to 376-to-1 by 2000. The relative pay differs around the world,
and, in some smaller countries, is still around 20-to-1. Observers
differ as to whether the rise is due to competition for talent or due to
lack of control by compensation committees. In recent years, investors
have demanded more say over executive pay.
Diversity
Lack of diversity amongst chief executives has also been a source of criticism. In 2018, 5% of Fortune 500 CEOs were women.
The reasons for this are explained or justified in various ways, and
may include biological sex differences, male and female differences in Big Five personality traits and temperament, sex differences in psychology and interests, maternity and career breaks, hypergamy, phallogocentrism, the existence of old boy networks,
tradition, and the lack of female role models in that regard. Some
countries have passed laws mandating boardroom gender quotas.
In politics, regulatory capture (also client politics) is a corruption of authority that occurs when a political entity, policymaker, or regulatory agency
is co-opted to serve the commercial, ideological, or political
interests of a minor constituency, such as a particular geographic area,
industry, profession, or ideological group.
When regulatory capture occurs, a special interest is prioritized
over the general interests of the public, leading to a net loss for
society. Government agencies suffering regulatory capture are called "captured agencies." The theory of client politics is related to that of rent-seeking and political failure; client politics "occurs when most or all of the benefits of a program go to some single, reasonably small interest (e.g., industry, profession, or locality) but most or all of the costs will be borne by a large number of people (for example, all taxpayers)."
Theory
Interstate Commerce Commission (ICC) as Barrier-to-Competition: Applications-to-Operate vs In-Operation
For public choice theorists,
regulatory capture occurs because groups or individuals with a
high-stakes interest in the outcome of policy or regulatory decisions
can be expected to focus their resources and energies in attempting to
gain the policy outcomes they prefer, while members of the public, each
with only a tiny individual stake in the outcome, will ignore it
altogether. Regulatory capture refers to the actions by interest groups
when this imbalance of focused resources devoted to a particular policy
outcome is successful at "capturing" influence with the staff or
commission members of the regulatory agency, so that the preferred
policy outcomes of the special interest groups are implemented.
... as a rule,
regulation is acquired by the industry and is designed and operated
primarily for its benefit... We propose the general hypothesis: every
industry or occupation that has enough political power to utilize the
state will seek to control entry. In addition, the regulatory policy
will often be so fashioned as to retard the rate of growth of new firms. -- The Theory of Economic Regulation, George Stigler, 1971
Regulatory capture theory is a core focus of the branch of public choice referred to as the economics of regulation;
economists in this specialty are critical of conceptualizations of
governmental regulatory intervention as being motivated to protect public good. Often cited articles include Bernstein
(1955), Huntington (1952), Laffont & Tirole (1991), and Levine
& Forrence (1990). The theory of regulatory capture is associated
with Nobel laureate economist George Stigler, one of its major developers.
Likelihood of regulatory capture is a risk to which an agency is exposed by its very nature.
This suggests that a regulatory agency should be protected from outside
influence as much as possible. Alternatively, it may be better to not
create a given agency at all lest the agency become victim, in which
case it may serve its regulated subjects rather than those whom the
agency was designed to protect. A captured regulatory agency is often
worse than no regulation, because it wields the authority of government.
However, increased transparency of the agency may mitigate the effects
of capture. Recent evidence suggests that, even in mature democracies
with high levels of transparency and media freedom, more extensive and
complex regulatory environments are associated with higher levels of
corruption (including regulatory capture).
Relationship with federalism
There
is substantial academic literature suggesting that smaller government
units are easier for small, concentrated industries to capture than
large ones. For example, a group of states or provinces with a large
timber industry might have their legislature and/or their delegation to
the national legislature captured by lumber companies. These states or
provinces then becomes the voice of the industry, even to the point of
blocking national policies that would be preferred by the majority
across the whole federation. Moore and Giovinazzo (2012) call this "distortion gap".
The opposite scenario is possible with very large industries,
however. Very large and powerful industries (e.g. energy, banking, weapon system construction)
can capture national governments, and then use that power to block
policies at the federal, state or provincial level that the voters may
want, although even local interests can thwart national priorities.
Economic rationale
The
idea of regulatory capture has an economic basis: vested interests in
an industry have the greatest financial stake in regulatory activity of
any social agent and are thus more likely to be moved to influence the
regulatory body than relatively dispersed individual consumers,
each of whom has little particular incentive to try to influence
regulators. When regulators form expert bodies to examine policy, these
invariably feature current or former industry members, or at the very
least, individuals with lives and contacts in the industry to be
reviewed. Capture is also facilitated in situations where consumers or
taxpayers have a poor understanding of underlying issues and businesses
enjoy a knowledge advantage.
Some economists, such as Jon Hanson and his co-authors, argue
that the phenomenon extends beyond just political agencies and
organizations. Businesses have an incentive to control anything that has
power over them, including institutions from the media, academia and
popular culture, thus they will try to capture them as well. This
phenomenon is called "deep capture".
Regulatory public interest is based on market failure and welfare
economics. It holds that regulation is the response of the government
to public needs. Its purpose is to make up for market failures, improve
the efficiency of resource allocation, and maximize social welfare.
Posner pointed out that the public interest theory
contains the assumption that the market is fragile, and that if left
unchecked, it will tend to be unfair and inefficient, and government
regulation is a costless and effective way to meet the needs of social
justice and efficiency. Mimik believes that government regulation is a
public administration policy that focuses on private behavior. It is a
rule drawn from the public interest. Irving and Brouhingan saw
regulation as a way of obeying public needs and weakening the risk of
market operations. It also expressed the view that regulation reflects
the public interest.
Development
The review of the United States' history of regulation at the end of the 19th century, especially the regulation of railway tariffs by the Interstate Commerce
Commission (ICC) in 1887, revealed that regulations and market failures
are not co-relevant. At least until the 1960s, in terms of regulatory
experience, regulation was developed in the direction of favoring
producers, and regulation increased the profits of manufacturers within
the industry. In potentially competitive industries such as the trucking
industry and the taxi industry, regulations allow pricing to be higher
than cost and prevent entrants. In the natural monopoly industries such
as the electric power industry, there are facts that regulation has
little effect on prices, so the industry can earn profits above normal
profits. Empirical evidence proves that regulation is beneficial to
producers.
These empirical observations have led to the emergence and
development of regulatory capture theory. Contrary to regulatory public
interest theory, regulation capture theory holds that the provision of
regulation is adapting to the industry's need for regulation, that is,
the legislator is controlled and captured by the industry in regulation,
and the regulation institution is gradually controlled by the industry.
That is, the regulator is captured by the industry. The basic view of
the regulatory capture theory is that no matter how the regulatory
scheme is designed, the regulation of an industry by a regulatory agency
is actually "captured" by the industry. The implication is that
regulation increases the profits of the industry rather than social
welfare.
The above-mentioned regulatory capture theory is essentially a
purely capture theory in the early days, that is, the regulators and
legislators were captured and controlled by the industry. The later
regulatory models, such as those by Stigler, Pelzmann, or Becker, belong
to the regulatory capture theory in the eyes of Posner (1974) and
others. Because these models all reflect that regulators and legislators
are not pursuing the maximization of public interests, but the
maximization of private interests, that is, using "private interest"
theory to explain the origin and purpose of regulation. Aton (1986)
argues that Stigler's theoretical logic is clear and more central than
the previous "capture theory" hypothesis, but it is difficult to
distinguish between the two.
Regulatory capture theory has a specific meaning, that is, an
experience statement that regulations are beneficial for producers in
real life. In fact, it is essentially not a true regulatory theory.
Although the analysis results are similar to the Stigler model provide
interpretation and support for the regulatory capture theory is
beneficial for producers, however the analysis methods of the latter are
completely different. Stigler used standard economic analysis methods
to analyze the regulation behavior, then created a new regulatory
theory—regulatory economic theory. Of course, different divisions depend
on the criteria for division, and they essentially depend on the
researchers' different understanding of specific concepts.
Justice Douglas’ dissent in Sierra Club v. Morton (1972) describes concern that regulatory agencies become too favorable with their regulated industries.
Types
There are two basic types of regulatory capture:
Materialist capture, also called financial capture, in which the captured regulator's motive is based on its material self-interest. This can result from bribery, revolving doors, political donations, or the regulator's desire to maintain its government funding. These forms of capture often amount to political corruption.
Non-materialist capture, also called cognitive capture or cultural capture,
in which the regulator begins to think like the regulated industry.
This can result from interest-groups lobbying by the industry. Highly
specialized technical industries can be at risk of cultural capture,
because the regulating agency typically needs to employ experts in the
regulated area, and the pool of such experts typically consists largely
of existing or former employees from the regulated industry.
Another distinction can be made between capture retained by big firms and by small firms. While Stigler mainly referred, in his work,
to large firms capturing regulators by bartering their vast resources
(materialist capture) – small firms are more prone to retain
non-materialist capture via a special underdog rhetoric.
Examples
European examples
Personal protective equipment for motorcyclists
The
European Union introduced much lower standards for the personal
protective equipment of motorcyclists in 2018. The new standard for
motorcycle clothing was called EN 17092, and a similarly lower standard for motorcycle gloves was also
introduced. Lower standards were brought in under pressure from some
manufacturers, who claimed it was too expensive to create garments to
the original higher standards.
The new standards for clothing are - in increasing order of protection -
A, AA, and AAA. The A standard sets the protection bar very low. The original standard for motorcycle gloves was replaced by Level 1 and
Level 2, with Level 1 gloves offering only the most basic protection.
Level 2 gloves offer significantly better protection, but most
manufacturers do not make Level 2 gloves because it is not a legal
requirement.
The original CE mark was based on a standard devised at the University
of Cambridge. Thus, it is sometimes referred to as the "Cambridge
Standard" for motorcycle clothing. Paul Varnsverry, one of the world's
leading experts in protective clothing for motorcyclists, publicly
stated that sufficiently abrasion-resistant materials are barely more
expensive than the less protective materials in current use, and the
cost difference is negligible compared to advertising budgets.
Under the new EU legislation, the lowest standard is an A-rating. Chris Hurren from Australia's Deakin University tested garments with CE Class A
certification. He found that regular denim jeans can pass the impact
abrasion test for an A-rating. Thus, casual clothing could be certified
as motorcycle protective equipment under the new EN 17092 standard.
United States examples
Bureau of Ocean Energy Management, Regulation and Enforcement
The three-stage reorganization, including the name change to BOEMRE, was part of a re-organization by Ken Salazar, who was sworn into office as the new Secretary of the Interior on the same day the name change was announced. Salazar's appointment was controversial because of his ties to the energy industry. As a senator, Salazar voted against an amendment to repeal tax breaks for ExxonMobil and other major petroleum companies and in 2006, he voted to end protections that limit offshore oil drilling in Florida's Gulf Coast. One of Salazar's immediate tasks was to "[end] the department's coziness with the industries it regulates" but Daniel R. Patterson, a member of the Arizona House of Representatives,
said "Salazar has a disturbingly weak conservation record, particularly
on energy development, global warming, endangered wildlife and
protecting scientific integrity. It's no surprise oil and gas, mining,
agribusiness and other polluting industries that have dominated Interior
are supporting rancher Salazar – he's their friend." Indeed, a spokesman for the National Mining Association, which lobbies for the mining industry, praised Salazar, saying that he was not doctrinaire about the use of public lands.
MMS had allowed BP and dozens of other companies to drill in the Gulf of Mexico without first attaining permits to assess threats to endangered species, as required by law. BP and other companies were also given a blanket exemption (categorical exclusion) from having to provide environmental impact statements. The National Oceanic and Atmospheric Administration
(NOAA) issued strong warnings about the risks posed by such drilling
and in a 2009 letter, accused MMS of understating the likelihood and
potential consequences of a major spill in the Gulf of Mexico. The letter further accused MMS of highlighting the safety of offshore drilling while understating the risks and impact of spills and playing down the fact that spills had been increasing.
Both current and former MMS staff scientists said their reports were
overruled and altered if they found high risk of accident or
environmental impact. Kieran Suckling, director of the Center for Biological Diversity,
said, "MMS has given up any pretense of regulating the offshore oil
industry. The agency seems to think its mission is to help the oil
industry evade environmental laws."
After the Deepwater accident occurred, Salazar said he would
delay granting any further drilling permits. Three weeks later, at least
five more permits had been issued by the minerals agency. In March 2011, BOEMRE began issuing more offshore drilling permits in the Gulf of Mexico. Michael Bromwich,
head of BOEMRE, said he was disturbed by the speed at which some oil
and gas companies were shrugging off Deepwater Horizon as "a complete
aberration, a perfect storm, one in a million," but would nonetheless
soon be granting more permits to drill for oil and gas in the gulf.
Commodity Futures Trading Commission
In October 2010, George H. Painter, one of the two Commodity Futures Trading Commission (CFTC) administrative law judges, retired, and in the process requested that his cases not be assigned to the other judge, Bruce C. Levine.
Painter wrote, "On Judge Levine's first week on the job, nearly twenty
years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor," Painter wrote.
"A review of his rulings will confirm that he fulfilled his vow." In
further explaining his request, he wrote, "Judge Levine, in the cynical
guise of enforcing the rules, forces pro se complainants to run a
hostile procedural gauntlet until they lose hope, and either withdraw
their complaint or settle for a pittance, regardless of the merits of
the case." Gramm, wife of former Senator Phil Gramm, was accused of helping Goldman Sachs, Enron and other large firms gain influence over the commodity markets. After leaving the CFTC, Wendy Gramm joined the board of Enron.
Environmental Protection Agency
Natural gas drilling increased in the United States after the Environmental Protection Agency (EPA) said in 2004 that hydraulic fracturing "posed little or no threat" to drinking water. Also known as "fracking", the process was invented by Halliburton in the 1940s. In 2011, whistleblower
Weston Wilson said that the EPA's conclusions were "unsupportable" and
that five of the seven-member review panel that made the decision had conflicts of interest. A New York Times editorial said the 2004 study "whitewashed the industry and was dismissed by experts as superficial and politically motivated."
The EPA is currently prohibited by law from regulating fracking, the
result of the "Halliburton loophole", a clause added to the 2005 energy
bill at the request of vice presidentDick Cheney, who was CEO of Halliburton before becoming vice president.
Legislation to close the loophole and restore the EPA's authority to
regulate hydraulic fracturing was introduced in 2009, but did not pass
in the 111th Congress.
Federal Aviation Administration
Since the Federal Aviation Administration (FAA) charter was amended in 1996, its sole focus has been the regulation of safety. A report by the Department of Transportation found that FAA managers had allowed Southwest Airlines
to fly 46 airplanes in 2006 and 2007 that were overdue for safety
inspections, ignoring concerns raised by inspectors. Audits of other
airlines resulted in two airlines grounding hundreds of planes, causing
thousands of flight cancellations. The House Transportation and Infrastructure Committee investigated the matter after two FAA whistleblowers,
inspectors Charalambe "Bobby" Boutris and Douglas E. Peters, contacted
them. Boutris said he attempted to ground Southwest after finding cracks
in the fuselage, but was prevented by supervisors he said were friendly with the airline. The committee subsequently held hearings in April 2008. James Oberstar,
former chairman of the committee said its investigation uncovered a
pattern of regulatory abuse and widespread regulatory lapses, allowing
117 aircraft to be operated commercially although not in compliance with
FAA safety rules.
Oberstar said there was a "culture of coziness" between senior FAA
officials and the airlines and "a systematic breakdown" in the FAA's
culture that resulted in "malfeasance, bordering on corruption."
On July 22, 2008, a bill was unanimously approved in the Democrat-controlled House
to tighten regulations concerning airplane maintenance procedures,
including the establishment of a whistleblower office and a two-year
"cooling off" period that FAA inspectors or supervisors of inspectors
must wait before they can work for those they regulated.
The bill also required rotation of principal maintenance inspectors and
stipulated that the word "customer" properly applies to the flying
public, not those entities regulated by the FAA. The bill died in the United States Senate Committee on Commerce, Science, and Transportation that year. In 2008 the FAA proposed to fine Southwest $10.2 million for failing to inspect older planes for cracks,
and in 2009 Southwest and the FAA agreed that Southwest would pay a
$7.5 million penalty and would adapt new safety procedures, with the
fine doubling if Southwest failed to follow through. In September 2009, FAA Administrator Randy Babbitt issued a directive mandating that the agency use the term "customers" only to refer to the flying public.
In a June 2010 article on regulatory capture, the FAA was cited
as an example of "old-style" regulatory capture, "in which the airline
industry openly dictates to its regulators its governing rules,
arranging for not only beneficial regulation but placing key people to
head these regulators."
Legal scholars have pointed to the possibility that federal agencies such as the Federal Communications Commission (FCC) had been captured by media conglomerates. Peter Schuck of Yale Law School
has argued that the FCC is subject to capture by the media industries'
leaders and therefore reinforce the operation of corporate cartels in a
form of "corporate socialism" that serves to "regressively tax
consumers, impoverish small firms, inhibit new entry, stifle innovation,
and diminish consumer choice".
The FCC selectively granted communications licenses to some radio and
television stations in a process that excludes other citizens and little
stations from having access to the public.
Michael K. Powell, who served on the FCC for eight years and was chairman for four, was appointed president and chief executive officer of the National Cable & Telecommunications Association,
a lobby group, effective April 25, 2011. His role has been the cable
industry’s leading advocate, spokesman, and representative in its
relationship with the U.S. Congress, the Administration, the FCC, and
other federal agencies.
Meredith Attwell Baker was one of the FCC commissioners who approved a controversial merger between NBC Universal and Comcast. Four months later, she announced her resignation from the FCC to join Comcast's Washington, D.C. lobbying office.
Legally, she is prevented from lobbying anyone at the FCC for two years
and an agreement made by Comcast with the FCC as a condition of
approving the merger will ban her from lobbying any executive branch agency for life. Nonetheless, Craig Aaron, of Free Press,
who opposed the merger, complained that "the complete capture of
government by industry barely raises any eyebrows" and said public
policy would continue to suffer from the "continuously revolving door at
the FCC".
In July 2019, congresswomen Elizabeth Warren and Pramila Jayapal issued a letter (citing a report by the Project On Government Oversight)
showing concerns for the composition of the FCC's Communications
Security, Reliability and Interoperability Council (CSRIC), questioning
whether it could effectively serve the public interest if the majority
of its members were representatives of the private sector. They wrote
that "having the FCC's policy-making process rely on input from
individuals employed by, or affiliated with, the corporations that it is
tasked with overseeing is the very definition of regulatory capture".
Federal Reserve Bank of New York
The Federal Reserve Bank of New York
(New York Fed) is the most influential of the Federal Reserve Banking
System. Part of the New York Fed's responsibilities is the regulation of
Wall Street, but its president is selected by and reports to a board dominated by the chief executives of some of the banks it oversees. While the New York Fed has always had a closer relationship with Wall Street, during the years that Timothy Geithner was president, he became unusually close with the scions of Wall Street banks, a time when banks and hedge funds were pursuing investment strategies that caused the financial crisis of 2007–2008, which the Fed failed to stop.
During the crisis, several major banks that were on the verge of collapse were rescued via the Emergency Economic Stabilization Act of 2008. Geithner engineered the New York Fed's purchase of $30 billion of credit default swaps from American International Group (AIG), which it had sold to Goldman Sachs, Merrill Lynch, Deutsche Bank and Société Générale. By purchasing these contracts, the banks received a "back-door bailout" of 100 cents on the dollar for the contracts.
Had the New York Fed allowed AIG to fail, the contracts would have been
worth much less, resulting in much lower costs for any taxpayer-funded
bailout. Geithner defended his use of unprecedented amounts of taxpayer funds to save the banks from their own mistakes,
saying the financial system would have been threatened. At the January
2010 congressional hearing into the AIG bailout, the New York Fed
initially refused to identify the counterparties that benefited from AIG's bailout, claiming the information would harm AIG.
When it became apparent this information would become public, a legal
staffer at the New York Fed e-mailed colleagues to warn them, lamenting
the difficulty of continuing to keep Congress in the dark. Jim Rickards calls the bailout a crime and says "the regulatory system has become captive to the banks and the non-banks".
Interstate Commerce Commission
Historians, political scientists, and economists have often used the Interstate Commerce Commission
(ICC), a now-defunct federal regulatory body in the United States, as a
classic example of regulatory capture. The creation of the ICC was the
result of widespread and longstanding anti-railroad agitation. Richard Olney, a prominent railroad lawyer, was asked by a railroad president if he could do something to get rid of the ICC. Olney, who later was appointed Attorney General in the Grover Cleveland administration, replied in an 1892 letter,
The Commission… is, or can be made,
of great use to the railroads. It satisfies the popular clamor for a
government supervision of the railroads, at the same time that
supervision is almost entirely nominal. Further, the older such a
commission gets to be, the more inclined it will be found to take the
business and railroad view of things.… The part of wisdom is not to
destroy the Commission, but to utilize it.
Nuclear power is a textbook example of the problem of
"regulatory capture"—in which an industry gains control of an agency
meant to regulate it. Regulatory capture can be countered only by
vigorous public scrutiny and Congressional oversight, but in the 32
years since Three Mile Island, interest in nuclear regulation has
declined precipitously.
Then-candidate Barack Obama
said in 2007 that the five-member NRC had become "captive of the
industries that it regulates" and Joe Biden indicated he had absolutely
no confidence in the agency.
The NRC has given a license to "every single reactor requesting one", according to Greenpeace USA nuclear policy analyst Jim Riccio to refer to the agency approval process as a "rubber stamp". In Vermont, ten days after the 2011 Tōhoku earthquake and tsunami that damaged Japan's Daiichi plant in Fukushima, the NRC approved a 20-year extension for the license of Vermont Yankee Nuclear Power Plant, although the Vermont state legislature had voted overwhelmingly to deny such an extension. The Vermont plant uses the same GE Mark 1 reactor design as the Fukushima Daiichi plant. The plant had been found to be leaking radioactive materials through a network of underground pipes, which Entergy, the company running the plant, had denied under oath even existed. Representative Tony Klein, who chaired the Vermont House
Natural Resources and Energy Committee, said that when he asked the NRC
about the pipes at a hearing in 2009, the NRC didn't know about their
existence, much less that they were leaking. On March 17, 2011, the Union of Concerned Scientists
(UCS) released a study critical of the NRC's 2010 performance as a
regulator. The UCS said that through the years, it had found the NRC's
enforcement of safety rules has not been "timely, consistent, or
effective" and it cited 14 "near-misses" at U.S. plants in 2010 alone. Tyson Slocum, an energy expert at Public Citizen
said the nuclear industry has "embedded itself in the political
establishment" through "reliable friends from George Bush to Barack
Obama", that the government "has really just become cheerleaders for the
industry."
Although the exception, there have been instances of a revolving door. Jeffrey Merrifield, who was on the NRC from 1997 to 2008 and was appointed by presidents Clinton and Bush, left the NRC to take an executive position at The Shaw Group, which has a nuclear division regulated by the NRC.
The NRC Office of Inspector General concluded that Merrifield violated
federal ethics laws by failing to recuse himself from matters affecting
prospective employers with which he was interviewing.
Although the NRC referred the matter to the Justice Department for
civil action and to the U.S. Attorney's office for criminal action,
neither office pursued the matter. However, most former commissioners return to academia or public service in other agencies.
A year-long Associated Press
(AP) investigation showed that the NRC, working with the industry, has
relaxed regulations so that aging reactors can remain in operation.
The AP found that wear and tear of plants, such as clogged lines,
cracked parts, leaky seals, rust and other deterioration resulted in 26
alerts about emerging safety problems and may have been a factor in 113
of the 226 alerts issued by the NRC between 2005 and June 2011. The NRC repeatedly granted the industry permission to delay repairs and problems often grew worse before they were fixed.
However, a paper by Stanford University economics professors John
B. Taylor and Frank A. Wolak compared the financial services and
nuclear industries. While acknowledging both are susceptible in
principle to regulatory capture, they concluded regulatory failure –
including through regulatory capture – has been much more of a problem
in the financial industry and even suggested the financial industry
create an analog to the Institute of Nuclear Power Operations to reduce regulatory risk.
Similarly in the case of the Allen StanfordPonzi scheme, there were repeated warnings of fraud from both inside and outside the SEC for more than a decade. But the agency did not stop the fraud until 2009, after the Madoff scandal became public in 2008.
The SEC has been found by the U.S. Senate Committee on Finance, the Senate Judiciary Committee and a federal district court to have illegally dismissed an employee in September 2005 who was critical of superiors' refusal to pursue Wall Street titan John Mack. Mack was suspected of giving insider information to Arthur J. Samberg, head of Pequot Capital Management, once one of the world's largest hedge funds. After more than four years of legal battles, former SEC investigator Gary J. Aguirre filed papers in a Freedom of Information Act
(FOIA) case he had against the SEC, seeking an order to force the SEC
to turn over Pequot investigation records to him on the grounds that
they had not charged anyone. Aguirre had already provided incriminating
evidence of Pequot's insider trading involving Microsoft trades to the SEC in a letter on January 2, 2009. The morning after Aguirre's FOIA papers were filed, the SEC announced they had filed charges against Pequot and Pequot had agreed to disgorge $18 million in illegal gains and pay $10 million in penalties. A month later, the SEC settled Aguirre's wrongful termination lawsuit for $755,000.
The list of officials who have left the SEC for highly lucrative
jobs in the private sector and who sometimes have returned to the SEC
includes Arthur Levitt, Robert Khuzami, Linda Chatman Thomsen, Richard H. Walker, Gary Lynch and Paul R. Berger. The Project on Government Oversight
(POGO) released a report on May 13, 2011, which found that between 2006
and 2010, 219 former SEC employees sought to represent clients before
the SEC.
Former employees filed 789 statements notifying the SEC of their intent
to represent outside clients before the commission, some filing within
days of leaving the SEC.
Reporter Matt Taibbi
calls the SEC a classic case of regulatory capture. On August 17, 2011,
Taibbi reported that in July 2001, a preliminary fraud investigation
against Deutsche Bank was stymied by Richard H. Walker, then SEC enforcement director, who began working as general counsel for Deutsche Bank in October 2001. Darcy Flynn,
an SEC lawyer, the whistleblower who exposed this case also revealed
that for 20 years, the SEC had been routinely destroying all documents
related to thousands of preliminary inquiries that were closed rather
than proceeding to formal investigation. The SEC is legally required to
keep files for 25 years and destruction is supposed to be done by the National Archives and Records Administration.
The lack of files deprives investigators of possible background when
investigating cases involving those firms. Documents were destroyed for
inquiries into Bernard Madoff, Goldman Sachs, Lehman Brothers, Citigroup, Bank of America and other major Wall Street firms that played key roles in the 2008 financial crisis.
The SEC has since changed its policy on destroying those documents and
as of August 2011 the SEC investigator general was investigating the
matter.
Federal Trade Commission
The decision known as In re Amway Corp.,
and popularly called "Amway '79", made the FTC a captive regulator of
the nascent multi-Level marketing industry. The situation came to a head
in December 2012, when hedge fund Pershing Square Capital management
announced a $1-billion short position against the company, and evidently
expected the FTC to act, which, to date, it has not. From a forensic
accounting standpoint, there is no difference between a Ponzi-scheme
like the Madoff scandal, and a pyramid scheme, except that in the latter the money is laundered through product sales, not investment. The press has widely reported on why the FTC won't act, e.g. Forbes
though legal opinion has been very supportive in some quarters, such as
William K. Black, who was instrumental in bringing thousands of
criminal prosecutions in the S&L scandal, which was also rife with
problems of regulatory capture.
District of Columbia Taxicab Commission
The District of Columbia Taxicab Commission has been criticized
for being beholden to taxi companies and drivers rather than ensuring
that the district has access to a "safe, comfortable, efficient and
affordable taxicab experience in well-equipped vehicles".
Washington State Liquor Control Board and I-502
Some commentators have acknowledged that while Washington Initiative 502
"legalized" marijuana, it did so in a manner that led to a state-run
monopoly on legal marijuana stores with prices far above that of the
existing medical dispensaries,
which the State is now trying to close down in favor of the
recreational stores, where prices are two to five times higher than the
product can be obtained elsewhere.
Canadian examples
Canadian Radio-television and Telecommunications Commission
On February 2, 2011, CRTC chair Konrad von Finckenstein testified before the House of Commons Standing Committee on Industry, Science and Technology to defend the agency's decision. Critic Steve Anderson
said, "The CRTC's stubbornness in the face of a mass public outcry
demonstrates the strength of the Big Telecom lobby's influence. While
government officials have recognized the need to protect citizens'
communications interests, the CRTC has made it clear that their
priorities lie elsewhere."
Japanese examples
In
Japan, the line may be blurred between the goal of solving a problem
and the different goal of making it look as if the problem is being
addressed.
Nuclear opponent Eisaku Sato, governor of Fukushima Prefecture from 1988–2006, said a conflict of interest is responsible for NISA's lack of effectiveness as a watchdog. The agency is under the Ministry of Economy, Trade and Industry,
which encourages the development of Japan's nuclear industry.
Inadequate inspections are reviewed by expert panels drawn primarily
from academia and rarely challenge the agency. Critics say the main weakness in Japan's nuclear industry is weak oversight. SeismologistTakashi Nakata said, "The regulators just rubber-stamp the utilities' reports."
Both the ministry and the agency have ties with nuclear plant operators, such as Tokyo Electric. Some former ministry officials have been offered lucrative jobs in a practice called amakudari, "descent from heaven".
A panel responsible for re-writing Japan's nuclear safety rules was
dominated by experts and advisers from utility companies, said
seismology professor Katsuhiko Ishibashi who quit the panel in protest, saying it was rigged and "unscientific". The new guidelines, established in 2006, did not set stringent industry-wide earthquake standards, rather nuclear plant operators were left to do their own inspections to ensure their plants were compliant. In 2008, the NISA found all of Japan's reactors to be in compliance with the new earthquake guidelines.
Yoshihiro Kinugasa
helped write Japan's nuclear safety rules, later conducted inspections
and still in another position at another date, served on a licensing
panel, signing off on inspections.
Although warned about HIV contamination of blood products
imported from the U.S., the ministry abruptly changed its position on
heated and unheated blood products from the U.S., protecting the Green Cross and the Japanese pharmaceutical industry, keeping the Japanese market from being inundated with heat-treated blood from the United States. Because the unheated blood was not taken off the market, 400 people died and over 3,000 people were infected with HIV.
No senior officials were indicted and only one lower-level manager was indicted and convicted. Critics say the major task of the ministry is the protection of industry, rather than of the population. In addition, bureaucrats get amakudari jobs at related industries in their field upon retirement, a system which serves to inhibit regulators. Moriyo Kimura, a critic who works at MHLW, says the ministry does not look after the interests of the public.
Philippine examples
Tobacco control
in the Philippines is largely vested in the Inter-Agency Committee on
Tobacco (IACT) under Republic Act No. 9211 (Tobacco Regulation Act of
2003). The IACT's membership includes pro-tobacco groups in the Department of Agriculture and National Tobacco Administration,
as well as "a representative from the Tobacco Industry to be nominated
by the legitimate and recognized associations of the industry," the Philippine Tobacco Institute (composed of the largest local cigarette producers and distributors).
In a 2015 Philippine Supreme Court case, the Court ruled that the IACT
as the "exclusive authority" in regulating various aspects tobacco
control including access restrictions and tobacco advertisement,
promotion, and sponsorships. In this case, the Department of Health,
which is the primary technical agency for disease control and
prevention, was held to be without authority to create tobacco control
regulations unless the IACT delegates this function. The IACT's organization also limits the Philippines' enforcement of the World Health Organization Framework Convention on Tobacco Control.
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