COMPETITION ASSESSMENT

John Davies, Head, Competition Division

October 2014

Regulation can stifle growth by

hampering productivity

Source - Arnold, J., Nicoletti, G. and Scarpetta, S. (2011). “Does anti-competitive regulation matter for productivity? Evidence from European firms”. IZA Discussion Paper No. 5511.

Increase in multi-factor productivity compared to regulatory stance

Fa

ster

gro

win

g

More regulated

Pro-competitive reform can help

Source: OECD. *Three-year moving average

-4

-2

0

2

4

6

8 Smoothed* GDP growth - Australia and OECD

Australia

OECD - Total

"Hilmer reforms": competition assessment of all new and existing laws

and regulations

OECD has developed a Toolkit

Step One: Competition

Checklist: Does the Law

or Regulation: Limit the number or

range of suppliers?

Limit the ability of

suppliers to compete?

Reduce the incentive of

suppliers to compete

vigorously?

Restrict consumer choice?

OECD has developed a Toolkit

Step Two: Full evaluation

of selected rules

Identifying the underlying policy objectives;

Stating alternative regulations;

Evaluating the competitive effects of each alternative; and,

Comparing the alternatives.

OECD has developed a Toolkit

Applied in Mexico in joint project with competition agency covering:

• Banks

• Airports

• Limits on foreign participation in:

– Telecoms

– Broadcasting

– Transportation

• Municipal regulations

Reviewed 4 sectors in Greece, totalling 21% of GDP, in 2013

Issue Annual Benefit Number of provisions affected

Value, €m

“Fresh” milk €33m (consumer benefit/year) 2 33

Levy on flour €8m-11m (value of levy/year) 1 8

Sunday trading €2.5bn (annual expenditure), plus 30,000 new jobs

3 2 500

Sales and discounts €740m (annual turnover) 9 740

Over the Counter pharmaceuticals €102m (consumer benefit/year)

23 102

Marinas €2.3m (annual turnover) 10 2

Cruise business €65m (annual turnover) 4 65

Advertising €1.8b (consumer benefit/year) 14 1 800

Everything else ??? 263 ???

Total: €5.2bn + ???

Romania has more regulated product markets than OECD countries

0

0.5

1

1.5

2

2.5

3

3.5

Ind

ia

Ch

ina

Bra

zil

Tu

rkey

Ind

on

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n F

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tio

n

So

uth

Afr

ica

Isra

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Cro

ati

a

Me

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o

Ko

rea

Gre

ece

Slo

ven

ia

Ro

ma

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Cy

pru

s

Po

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La

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Bu

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Ma

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ain

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na

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pa

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ch R

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Bel

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epu

bli

c

Hu

ng

ary

Po

rtu

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l

Ger

ma

ny

Fin

lan

d

Est

on

ia

Au

stra

lia

Ita

ly

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w Z

eala

nd

De

nm

ark

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stri

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Un

ited

Sta

tes

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ited

Kin

gd

om

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ds

Source: OECD 2013: http://stats.oecd.org/Index.aspx?DataSetCode=PMR#

0

0.5

1

1.5

2

2.5

3

3.5

4

Ind

ia

Ch

ina

Bra

zil

Tu

rkey

Isra

el

Me

xic

o

Ma

lta

So

uth

Afr

ica

Sp

ain

Cy

pru

s

Icel

an

d

Ro

ma

nia

La

tvia

Ch

ile

Cro

ati

a

Irel

an

d

Ind

on

esia

Gre

ece

Ko

rea

Cze

ch R

ep

ub

lic

Slo

ven

ia

Bel

giu

m

Lu

xem

bo

urg

Sw

eden

Bu

lga

ria

Hu

ng

ary

No

rwa

y

Au

stra

lia

Fra

nce

Ja

pa

n

Ger

ma

ny

Po

lan

d

Lit

hu

an

ia

Est

on

ia

Sw

itze

rla

nd

Fin

lan

d

Ru

ssia

n F

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n

Un

ited

Kin

gd

om

Po

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Ca

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da

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ited

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Romania has relatively high barriers to entrepreneurship

Source: OECD 2013: http://stats.oecd.org/Index.aspx?DataSetCode=PMR#

• Review three sectors:

– Food processing

– Transport (freight)

– Construction (materials, tenders)

• Joint team OECD-RCC

• OECD report to Government of Romania

• Detailed recommendations for implementation

• Capacity building and knowledge transfer

Plan for joint work with Romanian

Competition Council