Public actors must not compete with private

Press release

Municipalities and other public actors should not be allowed to operate in functioning markets, since they force out established businesses and obstruct market entry. Worst hit are small local enterprises.

The Government’s plans to introduce legislation to combat the problems that arise when government agencies and municipalities compete with private businesses are therefore most welcome, says the Swedish Competition Authority, commenting on the proposals.

The Competition Authority often receives complaints about pricing or other forms of exclusion that occur when municipalities or government agencies sell goods or services in competition with private businesses. Frequently, such competition has the effect of excluding small local businesses. Current rules concerning municipalities, public utilities and government agencies have proved totally inadequate for dealing with competitive problems of this kind. Under the Government’s proposals, the Competition Authority will be able to seek the prohibition of anti-competitive practices and operations except where these are considered to be in the public interest.

“The legislation now being prepared by the Government will have a very favourable effect on those businesses – often small local operators – that are currently exposed to the kind of public activities that distort competition,” says Acting Director General Jan-Erik Ljusberg. “Applying the new rules will be an important task for us.”

Before the summer, the Government presented a memorandum outlining rules for solving the problems that arise when agencies, municipalities or county councils operate in the same market as private businesses.
”Municipalities and other public actors do not have to consider the same things as private actors when doing business,” says Jan-Erik Lundberg.

”There may be differences, for instance, in the extent to which they are able to take risks, the level of returns required and the extent to which deficits can be covered by public funds. Factors like these affect pricing and competition, and place private businesses at a disadvantage.

“Small businesses in local markets must be able to operate securely and not have to feel that they are being forced out unfairly by a municipality or a government agency.”

In its comments to the Government, which also include an expert opinion submitted by Professor Torbjörn Andersson, the Competition Authority notes that the proposed rules for resolving conflicts will not solve all the problems that may arise when public actors operate in competitive markets. Public activities that distort competition cannot for instance be prohibited if they are consistent with Swedish law, with other statutes or with binding directives or regulations.

The Competition Authority wants to see clarification of what is covered by the new rules and what is not.

Under the Government’s proposals, it will only be possible to take action against anti-competitive behaviour on the part of public actors if such behaviour is not considered to be “in the public interest”. In the Competition Authority’s opinion, the burden of proof regarding what may or may not be considered to be in the public interest should lie with the public actor, not with the Competition Authority.

For further information, please contact:
Jimmy Dominius, Press Officer, tel +46 (0)8-700 15 80 or +46 (0)73-773 15 80
Charlotte Zackari, Head of Legal Dept, tel +46 (0)8 700 16 13 or +46 (0)73-733 16 13

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