Governments should consider competition, and its potential benefits, across the whole range of their policies. Establishing a framework of competition law and liberalising sectors is important, but so is assessing the competitive effects of regulations and government intervention in other policy areas.
Why should governments assess policies?
All types of government policies can affect market competition, for good or bad. Governments should ensure that social or other policies that are not intended to damage market competition do not do so unnecessarily or by accident. For example, if policies to enforce product standards or to ensure provision of essential goods, are badly designed, they might cause higher prices or worsen the quality of services for consumers.
In some instances, policies restricting competition are the result of businesses lobbying to avoid competition, in other cases they may simply be the result of insufficient assessment being carried out at the policy design stage. In many cases, alternative approaches can be found to achieve the policy’s purpose, while avoiding unnecessary restrictions of competition.
Competition can also be used to make policy more effective. Many governments have discovered that they can use markets for more efficient policy delivery – for example, by establishing markets in pollution rights, to meet environmental targets at least cost.
Pro-competitive policies and the OECD
The OECD takes account of competition across the range of its policy advice and encourages governments to assess their own policies for opportunities to enhance competition. The Competition Committee and its working parties have published several best practice roundtables on pro-competitive policy reform. The OECD Competition Assessment Toolkit provides a framework for assessing policies’ competitive effect.
In addition, the OECD provides it for governments’ own use through OECD capacity building events and on occasion through direct assistance with implementation.
For further information on the OECD work related to pro-competitive policy reforms, please contact us at DAFCOMPContact@oecd.org.