No to profit regulation for contracted welfare services

Press release

The investigations of the Welfare Commission have not shown any so-called excess profits in those welfare markets where the contract award is made after an exposure to competition . Therefore, there is no need to regulate profits. This is the view expressed to the government by the Swedish Competition Authority.

The Swedish Competition Authority opposes the commission’s proposal that welfare profits should be regulated. If these proposals are implemented, the Swedish Competition Authority believes that they should not apply to those operations where contracts have been awarded following an exposure to competition, in accordance with the procurement rules.

“The procurement of goods and services in a competitive situation is often a very efficient way of using public funds”, declares the acting Director-General of the Swedish Competition Authority, Karin Lunning.

“If profit levels become abnormally high, this is usually an indication that competition needs to be improved either in that particular market or in the awarding process.”

The Swedish Competition Authority points out that there are several different regulations that give private companies the right to receive public funding without being exposed to competition. This is the case for the public funding of private schools, for example. The problems referred to by the commission primarily apply to such areas.

The Swedish Competition Authority rejects the commission’s proposal that welfare services that fall short of the threshold values should be exempted from the procurement rules. If implemented, such a proposal would mean that contracts worth approximately SEK 7 million would be entirely unregulated.

“A so-called ‘free zone’ for contracts of around SEK 7 million would increase the risk of corruption, as well as leading to reduced opportunities for monitoring and following up”, states Karin Lunning.

The Welfare Commission has also made a number of proposals for the rules governing the awarding of welfare services. In this context, the Swedish Competition Authority has no opposition to the replacement of the Act on System of Choice  (LOV) with a new law that is unconnected to the procurement rules.

For further information, please contact:
Jimmy Dominius, Press Officer, Tel. +46(0)76-542 15 80,
Stefan Jönsson, Deputy Head of Department, Tel +46(0)8-700 15 95

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