Greece is going through the deepest recession in the euro area. Since the onset of the crisis it has had a sharp contraction in GDP and an increase in joblessness, especially among youth. Steps have been taken to strengthen public finances and to implement the structural reforms that are needed to restore growth and competitiveness over the longer term.

The Greek crisis was largely caused by both the adverse international economic environment, following the collapse of Lehman Brothers in 2008, and by the chronic weaknesses of the Greek economy, high debt and dwindling competitiveness.

For five years, Greek society has been undergoing a painful transition process, driven by the need to restore public finances and tackle other macroeconomic imbalances. Lasting stability and a return to prosperity also require deep structural reforms in the economy. Only in this way can we deliver sustained growth and better living conditions for the people of Greece. And exactly here lies the importance and value of this report.

The work undertaken by the Greek authorities in recent years to reinforce competition law and strengthen the Hellenic Competition Commission, to simplify business administration and to liberalise professional services, has demonstrated their political willingness to address existing regulatory barriers to competition that have contributed to holding back the economic recovery.

This assessment identifies distortions to competition in Greek legislation and proposes recommendations for the removal of regulatory barriers to competition in four key areas of the Greek economy: food processing, retail trade, building materials and tourism, with additional investigation of cross-cutting legislation that concerns these four areas. The 555 regulatory restrictions that were identified were analysed, and the report makes 329 specific recommendations, with an additional 40 provisions that are an administrative burden to businesses. Among the benefits from increased competition will be lower prices and greater choice and variety for consumers as a result of entry of new, more efficient firms or from new forms of production in existing firms. This report identifies the sources of those benefits and, where possible, provides quantitative estimates. If the particular restrictions that have been identified during the project are lifted, the OECD has calculated a positive effect for the Greek economy of around EUR 5.2 billion.

Within the food processing sector, regulatory barriers to competition were identified especially within the dairy and bakery industries. Obstacles are often created by the fact that the legislation frequently provides restrictive definitions of certain food products or their components, or activities which do not take into consideration recent technological developments or the practice in other EU countries. For instance, legislation concerning the shelf life of milk protects local markets from internal and foreign competition to the detriment of consumer choice and welfare. The Code of Foodstuffs and Beverages contains various obsolete provisions that should be removed. A levy is placed on flour, a basic food product, to the detriment of competition. The recommendations will contribute to simplifying the business environment and allow the market to function more freely. Estimates are given on consumer benefits for milk and flour which could reach over EUR 40 million a year.

Although recent legislation enacted in 2013 has addressed the issues of Sunday trading and the distribution of products and services, the deregulation has been only partial, and restrictive provisions still harm competition. Obstacles remain for larger stores and chains to adopt more flexible hours; there are also continuing restrictions on season sales, discounts and promotions. The restriction on distribution channels of over-the-counter medicines and dietary supplements, and the establishment and operation of pharmacies all limit competition and lead to under-investment in these areas. Limitations for outdoor trade and street markets, fuel retail and the pricing of books lead to a rigid retail process, inefficient distribution channels and limited incentives for innovation. The study examines the harm to competition and quantifies the benefits for both consumers and retailers in terms of both increased employment and greater investment in the sector. Total consumer benefits are estimated at around EUR 3.34 billion a year from full liberalisation. Two annexes provide more detail in the form of a quantitative study on the impact of liberalising Sunday trading and a cross-Europe study of over-the-counter medicines and diet supplements.

The building materials sector covers many categories of economic activity. This assessment studied legislative restrictions in categories such as cement production and mines and quarries, and evaluated both harmonised and non-harmonised European standards for construction products. Specifically, transport and distribution centres for cement and exploitation rights for mines and quarries were studied with evaluation of existing harm to competition and potential benefits if restrictions are lifted. The categorisation of harmonised, non-harmonised and national specifications, which are set to ensure a uniform level of quality of products and constructions standards, is discussed for a variety of materials used in construction, among them plastic tubes, steel and chemicals and paints. The non-harmonisation of these specifications creates a double standard and constitutes a barrier to entry for manufacturers and suppliers to operate. The cumulative effect of the recommended changes will make building materials markets more open and competitive to the benefit of consumers.

Tourism is both an important contributor to the Greek economy and, as an activity, touches on almost every aspect of the economy. The assessment studied legislation in the transport sector as well as in a variety of special tourism activities such as car racing tracks, athletic and coaching tourism, convention and conference centres and therapeutic tourism. Restrictions on smaller hotels, such as price approvals and legislation against improvements were also addressed. Restrictions on cruises, recreational vessels and marinas, as well as requirements for price notification, barriers to entry and geographical restrictions arose from attempts to set minimum quality standards, protect consumers and prevent certain activities from competing. Uncertainty for investors and barriers to entry reduce incentives to lower prices or offer better quality services. The intervention of the state or central organisations in the economic activity of various sectors of the industry, such as accommodation, is an effective barrier to competition. The benefits to the Greek economy from lifting restrictions on cruises and marinas are estimated at EUR 67.3 million annually.

A number of provisions cut across the four sectors already analysed and their horizontal nature may have a potential serious impact on competition. Among the issues analysed are fees imposed on advertising, rules pertaining to the establishment of companies, licensing issues and restrictions on transportation. A literature study indicates that Greece’s high advertising fees are unique in the world. Quantitative estimates indicate that eliminating the advertising fee will increase consumer welfare by EUR 1.8 billion annually, as well as generating around 800 new jobs in the advertising business. Restrictions on establishment licences, both on physical units and length of business activity are a barrier to entry and development of businesses. Temporary and permanent licences for trucks are also addressed. The business activities or inputs analysed in this section feed through the whole economy, which will have important multiplicative effects across the whole economy.

The four sectors outlined in the preceding chapters accounted for 21% of Greece’s GDP by output in 2011 and almost 27% of total employment. The process used in this assessment was divided into four stages: in the first two stages 1 053 pieces of legislation were identified, collected and scanned. In total, 555 individual provisions were identified as restrictive and potentially harmful to competition. In stages 3 and 4 the provisions were assessed and analysed to establish the harm caused to competition, whether a loss of efficiency, loss of consumer benefits or a loss of foregone turnover and revenue. A total of 329 recommendations to remove the identified barriers to competition are made. If the recommendations are fully implemented, the benefits to the Greek economy will be long-lasting in terms of greater consumer choice and variety, lower prices, increased productivity and ultimately higher economic growth. Two annexes, one on the methodology used and one describing the results of the analysis by provision, existing legislation, harm to competition, recommendations and potential benefits are included at the end of the publication.