Product market competition and economic performance in Hungary
Economics Department Working Papers 381. The establishment of competitive markets has been one of the cornerstones Hungarian economic policy over the past decade, alongside a successful strategy of attracting foreign investment. Broad statistical measures show no signs of endemically weak domestic competition, though the country's relatively low productivity among domestic business likely signals some sheltering from international competition. The generally healthy level of competition is partly because competition legislation and its enforcement are of a good standard. Nevertheless, room for improvement is suggested in a number of areas. In particular, it is argued that individuals should be able to initiate legal actions directly, i.e. without having to proceed via the competition authority. And, it is suggested that sanctions against individuals in hard-core cartel cases are introduced. In examining specific sectors, this paper is critical of the pace of progress towards competition in the network industries. The rail network, for instance remains fully state-owned and run. And, problems remain in those industries which have been privatised and opened up to competition. In particular there are instances of continued regulation of consumer prices as well as state ownership or influence on other aspects of supply chains which contributes to a dominance of incumbent providers. Concern is also expressed about competition levels in some other areas of the economy. In particular, professional associations are judged as often having some rules and regulations that excessively limit competition and it is concluded that on EU membership, the size and structure of agricultural subsidies may not induce rapid restructuring. This paper is part of the OECD's 2004 economic survey for Hungary and is one of a series of reviews on competition issues across OECD Member countries.
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