Thursday, August 18, 2022
  • Login
CEO North America
  • Home
  • Business
    • Entrepreneur
    • Industry
    • Innovation
    • Management & Leadership
  • CEO Interviews
  • CEO Life
    • Art & Culture
    • Food
    • Health
    • Travel
    • Environment
  • Opinion
  • News
  • Multimedia
No Result
View All Result
  • Home
  • Business
    • Entrepreneur
    • Industry
    • Innovation
    • Management & Leadership
  • CEO Interviews
  • CEO Life
    • Art & Culture
    • Food
    • Health
    • Travel
    • Environment
  • Opinion
  • News
  • Multimedia
No Result
View All Result
CEO North America
No Result
View All Result

The important role of competition authorities in promoting competitive neutrality

in Management & Leadership
The important role of competition authorities in promoting competitive neutrality
Share on FacebookShare on Twitter

The competition policy community often focuses on the actions of companies, but the state may also adopt measures that significantly distort the competitive landscape. In the run-up to the 2021 Global Forum on Competition, the OECD’s Jordi Calvet Bademunt and Sophie Flaherty analyse how state intervention can affect competitive neutrality and the main tools available to competition authorities to help ensure a level playing field.

“Competitive neutrality” is defined by the OECD as a principle whereby all enterprises are ‘provided a level playing field with respect to a state’s (including central, regional, federal, provincial, county, or municipal levels of the state) ownership, regulation or activity in the market’. A level playing field will allow the most efficient firms with the best products to enter the market and expand, while pushing inefficient firms to exit. Competition is encouraged, meaning that resources are optimized, productivity increases and consumers enjoy the benefits of lower prices, more choice, better quality products and services, and more innovation.

Competition distortions

State intervention can distort the level playing field in a number of ways, disrupting market dynamics and softening competition by favoring some market players over others.  Examples include:

  • Exemptions to competition law for specific firms or sectors may significantly undermine competitive neutrality. To ensure competitive neutrality, competition law should apply and be enforced in a non-discriminatory manner to all enterprises, unless overriding public policy objectives require otherwise. In addition, existing exemptions should be regularly re-assessed to see whether they are still justified and proportionate.
  • Regulatory frameworks may also treat some market players (including public, private, domestic, and foreign enterprises) differently to others, either because they are not applicable to all competitors or because they provide for selective exemptions for certain requirements. Competitive neutrality requires that all enterprises competing in a market are subject to the same regulatory requirements, irrespective of their ownership, nationality or legal form.
  • Public procurement. Legislation and tender terms may establish requirements or processes that favor specific types of companies, like state-owned enterprises (SOEs) or domestic businesses, over others. Where measures are adopted to support certain companies (such as small and medium enterprises) on public-policy grounds, they should be carefully considered in terms of their effectiveness and their likely impact on competition.

Public support measures are financial advantages provided by the state to enterprises, which may selectively favor certain firms, giving them a competitive advantage in the market over competitors. To preserve competitive neutrality, competition impacts should be considered in the design and granting of public support measures.

Rules determining the grant of exclusive and special rights, specifically for the provision of public services may give some enterprises undue advantages over others and in turn distort competition. Competitive neutrality can be protected by selecting public service operators through an open, fair and transparent bidding process; adopting fair and transparent public service compensation standards; and clearly defining any exclusive right and limiting it to the fulfillment of the public service obligation.

Participants at the 2021 Global Forum on Competition will discuss potential competitive neutrality distortions arising from state actions and the role of competition authorities in leveling the playing field. The discussion will build on the OECD’s extensive work on competitive neutrality, which culminated in the recently adopted Recommendation on Competitive Neutrality.

Tools for competition authorities

The promotion of competitive neutrality by competition authorities (2021)

Competition authorities have a number of specific tools they can use to promote competitive neutrality. These tools can be broken down into three broad categories.

The first set of tools involves legal powers for competition authorities to prevent regulatory and administrative acts that distort competitive neutrality. The extent of these powers varies greatly across jurisdictions. In some, competition authorities can directly remove anti-competitive acts and even fine public bodies (generally SOEs) and public officials. However, in other jurisdictions, competition authorities can only challenge acts that harm competitive neutrality before a court. Binding decisions (of an authority or a court) can be particularly effective in promoting competitive neutrality.

The second set of tools include those allowing competition authorities to review legislation and contribute to reform initiatives by providing advice to government on their potential competition implications. Competition authorities are well-placed to conduct competition assessments, given their technical capacities – and they can conduct them pursuant to specific powers or obligations or as a part of their general advocacy functions. Competition assessments are typically carried out through mandatory regulatory impact assessments, ad hoc assessments of laws and regulations and market studies or sector inquiries. Although competition authorities’ recommendations are often non-binding, various authorities have reported a positive impact of their advocacy efforts.

The third set of tools are those dealing with the control of public support measures. Although most competition law regimes around the world have a limited role in this area, very few authorities can rely on more general powers allowing them to intervene against anti-competitive state interventions (usually those by local and provincial governments). The European Union is one of these few exceptions, having adopted a state aid regime that involves both an ex-ante screening procedure and an ex-post assessment mechanism. However, the primary role for most competition authorities in relation to public support is advocacy. Competition authorities can, for example, support governments by drafting guidelines for public bodies that incorporate competition considerations in the design of public support measures.

Some may argue that competitive neutrality issues may not be easily addressed within the existing enforcement powers of many competition authorities, but enforcement powers do exist and advocacy remains a powerful tool. Competition authorities can help minimize distortive state actions by engaging with governments and administrations to convince them of the benefits of leveling the playing field and by supporting them in designing a competitively neutral framework. 

Courtesy OECD

Tags: Anti-Trustcompetition authoritycompetitive neutrality

Related Posts

Beyond “agree to disagree”: why leaders need to foster a culture of productive disagreement and debate
Management & Leadership

Beyond “agree to disagree”: why leaders need to foster a culture of productive disagreement and debate

Global m&a industry trends: 2022 mid-year update
Industry

Global M&A industry trends: 2022 mid-year update

Zero-based transformation: the big reset
Industry

Zero-based transformation: The big reset

How has covid-19 reshaped the way americans want to work?
Industry

How has COVID-19 reshaped the way Americans want to work?

Employee health contributes to organizational health
Health

Employee health contributes to organizational health

8 of the ‘soft skills’ employees want to see on your resume
Management & Leadership

8 of the ‘soft skills’ employees want to see on your resume

What 52,000 people think about work today
Industry

What 52,000 people think about work today

Global gender gap report 2022: wef
Entrepreneur

Global Gender Gap Report 2022: WEF

5 top women leaders on what’s needed to bridge the gender gap
Entrepreneur

5 top women leaders on what’s needed to bridge the gender gap

Closing the gender gap for women could help economies out of crisis
Entrepreneur

Closing the gender gap for women could help economies out of crisis

No Result
View All Result

Recent Posts

  • U.S. existing home sales fall for sixth straight month
  • U.S. streaming overtakes cable TV viewing for the first time
  • Why people and AI make good business partners / TED
  • How the CEO’s leadership in digital transformation can tip the scales toward success
  • Retail sales flat in July amid fall in gas prices

Recent Comments

    Archives

    Categories

    • Art & Culture
    • Business
    • CEO Interviews
    • CEO Life
    • Editor´s Choice
    • Entrepreneur
    • Environment
    • Food
    • Health
    • Highlights
    • Industry
    • Innovation
    • Issues
    • Management & Leadership
    • Multimedia
    • News
    • Opinion
    • PrimeZone
    • Printed Version
    • Travel
    • Uncategorized

    Meta

    • Log in
    • Entries feed
    • Comments feed
    • WordPress.org

    CEO Latin America | ES

    • CONTACT
    • GENERAL ENQUIRIES
    • ADVERTISING
    • MEDIA KIT
    • DIRECTORY
    • TERMS AND CONDITIONS

    Editorials – george.hatfield@ceo-na.com
    Editor-in-Chief - paul.imison@ceo-na.com
    Advertising – media@ceo-na.com

    AUSTIN

    600, Congress Avenue
    14th Floor
    Austin, TX.
    78701
    USA
    +1 512 649 0340

    NEW YORK

    110 Wall St.,
    3rd Floor
    New York, NY.
    10005
    USA
    +1 212 432 5800

    CEO Latin America | ES

    • CONTACT
    • GENERAL ENQUIRIES
    • ADVERTISING
    • MEDIA KIT
    • DIRECTORY
    • TERMS AND CONDITIONS

    Editorials –
    george.hatfield@ceo-na.com
    Editor-in-Chief -
    paul.imison@ceo-na.com
    Advertising –
    media@ceo-na.com

    AUSTIN

    600, Congress Avenue
    14th Floor
    Austin, TX.
    78701
    USA
    +1 512 649 0340

    NEW YORK

    110 Wall St.,
    3rd Floor
    New York, NY.
    10005
    USA
    +1 212 432 5800

    CEO North America © 2022 - Sitemap

    No Result
    View All Result
    • Home
    • Business
      • Entrepreneur
      • Industry
      • Innovation
      • Management & Leadership
    • CEO Interviews
    • CEO Life
      • Art & Culture
      • Food
      • Health
      • Travel
      • Environment
    • Opinion
    • News
    • Multimedia

    © 2022 JNews - Premium WordPress news & magazine theme by Jegtheme.

    Welcome Back!

    Login to your account below

    Forgotten Password?

    Retrieve your password

    Please enter your username or email address to reset your password.

    Log In
    Are you sure want to unlock this post?
    Unlock left : 0
    Are you sure want to cancel subscription?