Competition Policy and Environment

The analytical note reviews modes of environmental regulation and identifies some anticompetitive effects that can accompany them. Such regulations might be used to gain a competitive advantage. A common principle of the different modes of intervention, whether by government through direct regulation and economic instruments, by industry or by a combination of government and industry is that the polluter pays, so that producers and consumers bear the full social cost of their actions. When production has harmful effects on the environment, those effects must be reflected in costs, so the pricing mechanism can perform its role as an indicator. This principle is consistent with competition policy to the extent that it remedies a market failure, internalising the pollution externality. This document comprises proceedings in the original languages of a roundtable on Competition Policy and the Environment which was held by the Committee on Competition Law and Policy in May 1995. It is published as a general distribution document under the responsibility of the Secretary General of the OECD to bring information on this topic to the attention of a wider audience. This compilation is among the first one which will be published in a new OECD series named “Competition Policy Roundtables”.