National competition authorities and competitive neutrality challenge

Maintaining competitive neutrality on markets where private and public firms compete is a necessary (but often ignored) complement to competition law enforcement. Indeed on such markets, competition without competitive neutrality will result in misallocation of resources and inefficiencies. The lack of competitive neutrality, which can take many different forms, comes either from differences in the governance of public and private firms or from the fact that the government (national or local) is both the regulator of the market and one of the actors of the market through its state owned firm(s). Competitive neutrality is dealt with very differently across OECD countries. In some countries, the issue of competitive neutrality is largely ignored whereas in some other countries elaborate frameworks regarding the governance of public firms and the transparency of their accounts ensure a high degree of competitive neutrality. An analysis of these different approaches and the examination of a number of competition authority’s decisions or court’s judgements dealing with competition issues in markets where private and public firms compete show both the necessity of ensuring competitive neutrality in order to promote competition and the difficulty of the task, particularly on an ex post case-by-case basis, and allow us to make a number of suggestions to governments and to competition authorities.