Local authorities must reduce public restrictions on competition and encourage competition.

The Competition Authority has sent a letter to all municipalities in Iceland, dated 29 November, reminding them of the urgency of striving to reduce public restrictions on competition and instead encouraging it. In doing so, it is possible to improve the welfare of businesses and residents and, at the same time, lay a stronger foundation for the local economy. It is generally recognised that strengthening competition is the right response to an economic crisis.

The letter reminds local authorities of several opinions issued in recent years which address related issues.

• Opinion of the Competition Authority No. 1/2012, Competition considerations must be taken into account when leasing and selling public sector property. It is recommended that public bodies, at either national or local level, seek tenders through an objective, impartial and transparent process when selling or leasing property or other scarce resources to parties engaged in competitive activities.
• Opinion No. 3/2009, Planning, land allocation and competition. It therefore, among other things, directed Icelandic municipalities to have certain principles in mind when dealing with planning matters and the allocation of plots of land.
• Opinion No. 4/2009, Public procurement, competition and barriers to competition. It directs public bodies, including local authorities, to use procurement procedures where appropriate and to monitor the application of competition law in the conduct of procurement. The opinion was accompanied by, among other things, a checklist to help tenderers spot illegal collusion.

The background to the letter is that the Competition Authority recently published its first-ever opinion, No. 1/2012. The opinion was presented to the ministries and the ten largest municipalities in the country by letter, dated 25 September. The Competition Authority also requested that the Association of Icelandic Municipalities bring the opinion to the attention of all its member municipalities.  As this has not been done, the Competition Authority has decided to send the aforementioned letter to all municipalities.

The letter can be accessed here.