Competitive neutrality means that state-owned and private businesses compete on a level playing field. This is essential for the effective use of resources within the economy and thus the achievement of growth and development. While the principle of competitive neutrality is gaining wide support around the world, obtaining it in practice is a much more difficult question.
The OECD is engaged in multiple projects to assist policy makers in designing, adopting, and implementing appropriate policies. This page provides access to work completed to date.
On 31 May 2021, the OECD Council adopted a recommendation establishing a set of principles to ensure that governments’ actions are competitively neutral and that all enterprises face a level playing field, irrespective of factors such as the enterprises’ ownership, location or legal form. It recommends adopting and maintaining neutral market rules, so that adhering governments ensure that the legal framework is neutral and that competition is not unduly prevented, restricted or distorted. Finally the recommendation calls governments to avoid selective advantages and measures that may unduly enhance an enterprise’s market performance and distort competition. Access the full text of the recommendation.
This voluntary standard outlines a set of best practices for transparency and disclosure by internationally-active SOEs and their owners. The aim of this standard is to complement the existing provisions of the OECD Guidelines on Corporate Governance of State-Owned Enterprises as well as the Recommendation of the OECD Council on Competitive Neutrality. These instruments support the preservation of competitive neutrality. This standard aims to ensure that internationally-active SOEs operate efficiently, transparently and on equal footing with private companies in the global marketplace.
2018/2021 - In the framework of the OECD project Fostering Competition in ASEAN, a series of reviews assessed issues related competitive neutrality in the sector of small-package delivery services in each of the ASEAN member countries. Access the country reports and related materials.
An estimated 22% of the world’s largest firms are now effectively under state control. The upsurge of state-owned enterprises (SOEs) as global competitors has given rise to concerns regarding their competitive situation. Taking a multidisciplinary approach, the OECD has looked at the issues from the competition, investment, corporate governance and trade policy perspectives.
Some business competitors and observers claim that compensation granted by governments to SOEs in return for public policy obligations carried out at home as well as other advantages enjoyed by SOEs but not privately-owned firms can give SOEs a competitive edge in international markets. The challenge is that in a globalised economy, some state interventionist policies can have beggar-thy-neighbour effects. The risk of not addressing such concerns is that trade and investment partners may revert to protectionist responses, which in turn may discourage much-needed international investment. In this context, the OECD hosted a half-day dialogue on the topic of SOEs as global competitors.
The recent surge in competition between state and private firms in global markets calls for a reflection on how to minimise any potentially distortionary effects on international trade and investment created by state enterprises while at the same time restraining any undue protectionist policy responses directed at them. This paper provides an assessment of the extent and nature of existing and potential problems as well as a stocktaking of regulatory approaches that can be used to alleviate them.
This book sheds light on how financing decisions are made regarding state-owned enterprises and synthesises national policies and practices. It also examines a broad range of financial transactions and conditions which might make the cost of operating SOEs materially different than for private competitors, and identifies whether any mechanisms are in place to neutralise such differences.
State-owned and other state-invested enterprises (SIEs) have become more prominent in the global economy over the last decade. A growing role for state-invested enterprises in the marketplace is not in itself onerous. According to an OECD consensus, as expressed through the Organisation’s legal instruments, SOEs can be operated according to similarly high standards of governance, transparency and efficiency as private companies, in which case the ownership issue is moot. However, only some of the world’s most advanced economies, following decades of reform of their SOE sectors, have approached this point. Moreover, when SOEs operate across borders the challenges may multiply. With this background, this paper compares the difference between SIEs and non- SIEs in five sectors: air transportation, electricity, mining, oil & gas and telecommunication.
State-owned enterprises - Trade effects and policy implications (2013)
Competitive Neutrality: Maintaining a level playing field between public and private business (2012)
National Practices concerning competitive neutrality (2012)
Compendium of OECD recommendations, guidelines and best practices bearing on competitive neutrality (2012)
Competitive neutrality and state-owned enterprises in Australia (2011)
State-owned enterprises and the principle of competitive neutrality (2009)
Competitive neutrality and state-owned enterprises (2011)
Accountability and Transparency: a Guide for State Ownership (2010)
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