Why is evaluation of competition interventions important?

Governments everywhere are increasingly interested in assessing the effects of their policies and the effectiveness of public institutions.

Competition policy is no exception. Competition agencies affect the economy by taking decisions on cases under competition law. With their governments, they can influence market competition in the economy more widely through policy interventions.

For that, competition authorities should be able to:

• step back and analyse the effects of their law enforcement activities on markets; and
  
  
• understand how policy changes that intend to increase competition affect both the specific areas they are targetting and the economy as a whole.

Given its importance, “Evaluation of competition interventions” has become one of the strategic priorities for the OECD’s work on competition.

Between 2012 and 2014, we will be gathering evidence of existing best practices in such evaluations and trying to expand the range of techniques that can be used.

The OECD has published the outcome of a stocktaking exercise on this topic in the beggining of 2013. The note “Evaluation of competition enforcement and advocacy activities” discusses the outcome of a survey of 46 competition agencies that aimed to find out whether and how they assess the impact of their activities and what kind of information they provide to the government and the public on this impact.

See also:

Objectives and broad categories under study

With this study, the OECD will be working on improving the methods to measure the effects of competition interventions under three broad categories:

• Evaluation for accountability
• Ex-post evaluation of specific interventions. 
• Evaluation of broader impact on the economy

More on these can be found below. We welcome ideas on  how to advance our understanding of these three areas, and we will be posting papers and other materials here as they are generated.  Some of the OECD’s previous work is highly relevant to the topic as well.

Evaluation for accountability

Competition authorities (like other public bodies) need to report their activities to Government, the public and other stakeholders typically through annual reporting.

Increasingly, such authorities are interested in finding measures of the outcomes they have achieved in the economy in addition to more traditional measures of activity. These measures of outcomes are highly valued by governments as they are typically simple measures of things that matter (such as benefits to customers).  However, if measures are too simple to reflect the complex economic reality, they could misrepresent the work of the competition authority, or even lead to biases towards those interventions that produce the largest measured effects at the expense of important but less tangible outcomes.

The OECD will be exploring this tension in its work to identify good practices in this area.

Ex-post evaluation of specific interventions

Competition authorities need to look back at cases where they took decisions to enforce competition law (or decided not to do so), to learn from the effects of such interventions.  Many competition authorities do this, and some have regular programmes by which the lessons learnt can feed back, to improve their practices. There is widespread agreement that authorities need to carry out such evaluation. 

The OECD’s work will therefore focus on identifying good existing practices, and exploring ways of extending the analytical framework, for example to consider the longer-term benefits of interventions and their effects on long-run market structure and performance.

Evaluation of broader impact on the economy

Ultimately, competition policy should be justified by its beneficial effects on the economy and well-being (for example, its effects on growth, innovation, or employment). 

These links are not always well understood.  There is strong evidence demonstrating that more competitive industries typically have higher rates of productivity growth, and that uncompetitive monopolies are slow to innovate.

Since the picture is a complex one, and there is relatively little analysis of the effects of competition policy specifically on these variables, the OECD is interested in identifying these links while drawing together and building upon the best existing analysis in this area.

If you have questions, comments or would like further information on the OECD work related to evaluation of competition interventions, please contact us at DAFCOMPContact@oecd.org.

Links and documents

• Evaluation of competition enforcement and advocacy activities: results of an OECD survey, 2013 (pdf). Also available in French.

• Assessment of the Impact of Competition Authorities' Activities, Note by Stephen Davies, 2013 (pdf)

• Evaluating the impact of competition law enforcement, Note by Peter Osmosi, 2012 (pdf)

• Impact Evaluation of Merger Decisions, 2011 (pdf)

• Evaluation of the Actions and Resources of Competition Authorities, 2005 (pdf)

• Indicators of Product Market Regulation

• OECD work on Regulatory Impact Analysis

OECD Competition Assessment Toolkit

‌Guidelines for Fighting Bid Rigging in Public Procurement

Best practice roundtables

Calendar of activities

Competition assessment toolkit

Country reports & peer reviews

Fighting bid rigging in public procurement 

Recommendations

Reports by the Competition Committee

Reports by competition agencies

Work in progress

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