Today, the Federation of Industry (SI) is convening a manufacturing conference at Harpa. There, burdensome regulation is being discussed, with a focus on the implementation of rules in the European Economic Area and the enforcement of laws in Iceland.
On this occasion, it is therefore appropriate to recall the previous recommendations of the Competition Authority to the relevant government authorities and the OECD's proposals for changes to industrial sector regulation.
The Competition Authority has long advocated that the government here in the country carry out a so-called competition assessment of laws and regulations and apply such an assessment, where appropriate, to other policy measures. Competition assessment is an efficient methodology aimed at promoting competition and counteracting barriers to competition, whilst also tackling unnecessary regulatory burden and inefficiency.
A formal competition assessment was first introduced in this country in a report from the Competition Authority to the government., No. 2/2009. This is a methodology for assessing whether the relevant rules or decisions of the authorities affect competition. If such an effect is present, it is assessed whether other, less restrictive means are available to achieve the government's objectives, and the option that most supports competition and is least likely to hinder it is chosen.
The OECD has published guidance on this methodology under the title „Competition Assessment Toolkit“ .
In autumn 2020, the OECD published a report on a specific competition assessment of the laws and regulations in the construction industry and tourism. The Icelandic government entered into an agreement with the OECD to carry out the assessment, and the project was undertaken in close cooperation with the Competition Authority. Published by the Competition Authority. News about the report in November 2020.
The OECD report makes 316 recommendations for improvements to laws and regulations in the construction industry. Among other things, the proposals include amendments to the building regulations, creating scope for innovative housing solutions, simplifying the licensing process and streamlining the planning process, to name but a few.
A number of proposals for regulatory simplification are therefore put forward, which will include, among other things, increased efficiency in the implementation of the rules. In part, the proposals involve simplifying the implementation of the legislation that Iceland has adopted on the basis of the EEA Agreement.
It could be said that for the competition assessment, the assessors put themselves in the shoes of people in the country who are looking to get a new roof over their heads. The process follows the people as they find a plot of land, decide on its use, have the house designed, then enlist various trades for the build, with the necessary supervision, and finally move in. Obstacles faced by the people are identified, and less obstructive solutions are proposed.
The financial benefits of implementing the recommendations were also assessed. The OECD estimated that regulatory reforms in the construction and tourism industries could, on balance, yield benefits equivalent to around 11% of Iceland's gross domestic product, or over 30 billion krónur annually (based on 2020 conditions).
For the most part, the proposals have not been successful so far. The benefits to the Icelandic public and the economy as a whole of implementing these proposals in the current circumstances, where construction costs have risen sharply and various setbacks have occurred, most recently the ordeal of the people of Grindavík, need no further elaboration.
As previously stated, the simplification of regulations and their implementation is being discussed at the Confederation of Industry's conference today. This gives hope that the organisation will urge that the OECD's proposals for regulatory changes in the construction industry be placed on the agenda.
Such an attitude would be in good agreement with surveys that the Competition Authority has conducted among company executives on competition issues in Iceland. A survey conducted last year revealed that a large proportion of company managers believed they were encountering barriers to competition in their market.
Thus, just over a quarter of them felt they would be aware of anti-competitive laws and regulations to a great, very great or some extent. Even more, or nearly a third, felt they were aware of collusion in their market and a little over a third felt they were aware of the abuse of a dominant market position. The survey covered, among other things, professions within the remit of the SI. Further results from the survey will be published in the coming weeks.
These findings are in line with previous surveys conducted by the Competition Authority on the attitudes of managers towards competition. They indicate executives' intolerance of the competitive constraints they perceive themselves to be under, and that it is necessary to strengthen enforcement of competition law's prohibition rules.
Furthermore, the findings should serve as a prompt for the government to increasingly assess the competitive effects of laws and regulations (competitive assessment) and to remove obstacles in this area.
Páll Gunnar Pálsson
The author is the Director General of the Competition Authority.
This article was published as an article on www.visir.is 25 January 2024
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