Regulating Market Activities by the Public Sector

In a number of countries, the public sector carries out a wide range of commercial activities, notably as a result of pressures on government budgets and extensive public sector reforms since the 1980s. These activities have come under closer scrutiny as governments are more concerned about competitive distortions, since these activities can benefit from advantages unavailable to private competitors. Public sector firms may enjoy financial advantages (tax benefits, lower-cost financing) over their private competitors. Public sector providers also may be able to engage in anticompetitive practices because they are de facto or de jure exempt from competition law. In addition, public sector providers may benefit from subsidies for meeting public service obligations which they can use to cross-subsidise their competitive activities. Finally, public sector providers may derive advantages from lax public procurement rules. The Roundtable discussed the competitive neutrality problem and solutions implemented through wide-ranging competition law provisions. This document comprises proceedings in the original languages of a Roundtable on Market Activities which was held by the competition Committee in June 2004.