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OECD Secretary-General

Presentation of the Competition Assessment Review of Iceland

 

Transcript of Video Message

Opening remarks by Angel Gurría

OECD Secretary-General

10 November 2020 - Paris, France


Dear Ministers, Ladies and Gentlemen,


I am delighted to join you, at least digitally, to present the final Report of the OECD Competition Assessment Review of Laws and Regulations in Iceland.


This report is the result of a close and fruitful co-operation between the OECD and the Icelandic authorities. I want to start by thanking those involved in the inter-governmental High Level Committee, representing around a dozen Ministries and Departments, who provided substantial commitment and support to the project.


I especially want to thank the Minister of Tourism, Industry and Innovation, Ms Gylfadóttir, and her team, as well as Director-General Pálsson and his team from the Icelandic Competition Authority.


Their dedication and determination made this project possible.

 

The importance of such a project amid the current crisis

The COVID-19 pandemic has triggered an unprecedented health and economic crisis, with considerable consequences.


We project Iceland’s GDP to decline by 11% in 2020, and unemployment to rise to 9% . And, as for countries all around the world, we foresee a slow and uncertain recovery until a vaccine or a treatment is found.


We are in a very different environment from when we launched the project. Back then, Iceland's infrastructure, environment and housing were under strain from fast-paced economic growth and booming tourism. The construction sector, with stringent licensing requirements and tightly regulated professions, acted as a bottleneck, curtailing housing, especially in Reykjavík.


Since then, economic growth and tourism have taken a hit. This is why this report takes on a new form of urgency in such a difficult context. But, as crises bring hardship, they also offer opportunities. Pro-competitive regulatory reform, which can encourage growth, increase productivity and enable flexibility, would be a key policy tool for the Icelandic Government to build a more resilient economy as it forges ahead to recovery.

 

An overview of the Competition Assessment Review

The Competition Assessment Review, launched in March 2019, aimed to address regulatory restrictions, improve the business environment, strengthen innovation and ensure sustainable growth.


Over the past 18 months, our joint project team assessed around 630 legal texts leading to 438 recommendations for reform across the tourism and construction sectors.


Let me give you a brief overview of some of its key findings.


First, in the construction sector, we recommend streamlining planning processes, and simplifying, clarifying and digitising building permit processes. This should help to reduce costs in construction, which is a key sector accounting for about 9% of Iceland’s GDP, and 8 % of employment.


Second, regarding professions, we recommend a broad review to narrow or abolish reserved activities where the policy objective is not clear, or could be otherwise achieved. For example, Icelandic regulations require bakers to hold professional licenses. We recommend abolishing this requirement and simply applying food safety rules, which are a more effective way of protecting consumers.


Such measures will reduce costs, improve consumer choice, and bolster employment and productivity.


Third, we provide numerous recommendations for the tourism sector. For instance regarding airports, we recommend considering alternative ownership models, or tariff regulation of airport services. The current ownership and regulatory model, where Isavia owns all Icelandic airports, results in low efficiency and high costs. Applying our recommendations would increase competitive pressures on Isavia, leading to greater efficiency gains and reduced costs.

 

The expected benefits found by the report

If implemented, the recommendations in the report could generate over EUR 200 million annually, around 1% of Iceland’s GDP, by contributing to a more flexible business environment, promoting higher productivity and creating new employment opportunities. The direct benefits could include greater consumer choice, incentives for firms to innovate and operate more efficiently, and lower prices in Iceland. This would likely drive greater productivity and economic growth.


Even if the direct benefits remain to be reaped, I am confident that this competition assessment has already generated significant indirect benefits for Iceland.


Thanks to the inter-ministerial coordination and the active engagement of various stakeholders in the preparation of this report, Iceland has now built the internal capacity and practical knowledge required for further competition assessment work.


I hope that competition assessment will, from now on, be considered as an integral part of policymaking and reform in Iceland. This expertise will be central to ensuring that the reforms needed to generate the significant benefits outlined in the report are implemented.

 

Dear Ministers, Ladies and Gentlemen:


This crisis is giving us a unique opportunity to take bold decisions, to build back better. I trust that Iceland will make the most of this opportunity to accelerate its ambitious reform effort to keep strengthening its economy and promoting more inclusive and sustainable growth through better policies for better lives.


Once again, the OECD is ready to help, please count on us!  Thank you.

 

 

 

See also:

OECD work on Competition

OECD work with Iceland

 

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