In 2021, the OECD Council adopted the Recommendation on Competitive Neutrality providing a set of principles to ensure that government actions are competitively neutral and that all enterprises face a level playing field, regardless of factors such as the enterprises’ ownership, location or legal form. The Recommendation aims at guaranteeing that competition is not unduly prevented, restricted or distorted.

The OECD Recommendation on Competitive Neutrality [OECD/LEGAL/0462], hereafter the “Recommendation”, defines competitive neutrality as “a principle according to which all Enterprises are provided a level playing field with respect to a state’s (including central, regional, federal, provincial, county, or municipal levels of the state) ownership, regulation or activity in the market”. It recommends that government intervention, for instance through regulation or state support, not distort competition in markets, i.e. that it not tilt the playing field in favour of certain market participants.

This chapter provides an introduction to the Competitive Neutrality Toolkit, including its structure and main objectives. It also highlights the importance of competitive neutrality and clarifies how the toolkit relates to the Competition Assessment Toolkit and how both documents can be used in a complementary way.

This chapter provides an overview of the main ways in which the state intervenes in markets, including when it (i) establishes and enforces the regulatory environment, including competition law; (ii) acts as a buyer or supplier of goods and services; (iii) influences the choices of suppliers through state support; and (iv) supports the provision of public services by either privately-owned or publicly-owned enterprises. In addition, it describes the potential to distort competition of each of these state interventions and how they are addressed by the OECD Recommendation on Competitive Neutrality. It also presents the scope of the Recommendation.

A well designed and effectively enforced competition law can bring many benefits, such as lower prices, better quality products and services, more choices to consumers, and ultimately economic growth and development. To reap the benefits of competition, all competitors in a given market should be subject to the same competition rules. This chapter presents a set of questions to guide the analysis, good practices and examples on how to implement the OECD Recommendation on Competitive Neutrality in competition law and enforcement.

Although regulation is often required to ensure that markets work well and deliver outcomes that are in line with government’s policy objectives, it is necessary to ensure that the regulatory framework and its enforcement maintain a level playing field to all enterprises, regardless of their ownership, location or legal form. This chapter presents a set of questions to guide the analysis, good practices and examples on how to implement the OECD Recommendation on Competitive Neutrality in the regulatory environment.

Competition is an integral dimension of public procurement. Establishing open, fair, non-discriminatory and transparent conditions in public procurement helps promote efficiency, ensure that goods and services offered to public entities match their preferences more closely, and lead to lower prices, better quality, more innovation and higher productivity. This chapter presents a set of questions to guide the analysis, good practices and examples on how to implement the OECD Recommendation on Competitive Neutrality in public procurement.

Although state support can have a sound rationale and achieve important policy objectives, it might distort competition in favour of certain enterprises. As a result of state support, some enterprises may have artificially lower costs or a stronger financial position than their competitors. The competitors that gain market shares and are more successful would therefore be those that gain privileges instead of those that offer better value to consumers. This chapter presents a set of questions to guide the analysis, good practices and examples on how to implement the OECD Recommendation on Competitive Neutrality in state support.

Public service obligations are placed upon selected market actors in order to ensure to all consumers an appropriate access to essential services, which would not be provided by the market under commercial conditions. The assignment and delivery of public service obligations can, under certain circumstances, distort competition. This chapter presents a set of questions to guide the analysis, good practices and examples on how to implement the OECD Recommendation on Competitive Neutrality in public service obligations.

This chapter provides a framework of analysis for identifying and assessing policies that may distort competitive neutrality and for developing alternatives to avoid or reduce such distortions. It is set to be carried out in five steps: (i) screening of the policy intervention using the Competitive Neutrality Checklist; (ii) identification of the policy objective and benefits of the policy intervention; (iii) analysis of the impact of the policy intervention on competition; (iv) identification of alternative policy options; and (v) balancing of benefits and competition distortions, and selection of the most appropriate option.