OECD Product Market Regulation (PMR) Indicators: How does the Czech Republic compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Czech Republic
1.30
OECD average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Czech Republic 5 Most competition-friendly countries
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Regulatory barriers to competition in the Czech Republic are slightly below the OECD average. Public ownership is limited in scope and there are low barriers to foreign trade and investments. The administrative burden on firms when interacting with the government is low, and the requirements for opening new businesses are also limited. In contrast, there is scope for improving the licensing regime, as well as for introducing rules ensuring transparency and accountability in the interaction between interest groups and policy-makers.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Czech Republic
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Czech Republic
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS Overall, the regulatory framework in network sectors is more competition-friendly than in many other OECD countries, especially in the energy and e-communications sectors. In contrast, the regulatory framework in the service sectors is less conducive to competition. Many professions are highly regulated, and in the retail distribution sector there is room for reducing regulatory barriers to competition. In contrast, regulations in the retail sale of medicines are very competition-friendly.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Czech Republic 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Czech Republic 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
Regulatory barriers to competition in the Czech Republic are limited, but there is room for improving product market regulation in some sectors and areas.
Strengths
Challenges
The policy-making process is transparent. There is an obligation to draft all laws and regulations in plain language, and a database of all laws and regulations is available online. In addition, an agenda with a list of all the regulations that will be introduced, modified or repealed is published ahead of each regulatory period.
The regulatory set-up in the e-communications sector is one of the most competition-friendly in the OECD: the extent of state ownership is limited, and regulation is close to international best practice.
Rules regulating the retail sale of medicines impose very few barriers to competition. Non-prescription medicines can be sold in a variety of retail outlets, including online, and there are no restrictions on the number, location, opening hours, and ownership of pharmacies.
Entry requirements and conduct restrictions for many professional services, especially notaries and lawyers, are strictly regulated.
The requirements for opening up new businesses are low, but there is scope for improving the licensing regime. For example, there is no “silence is consent” rule, which can speed up the administrative process, and national and subnational governments do not keep a complete count of the number of permits and licenses required to enter the market.
There is no regulation requiring transparency in the interactions between interest groups and policymakers, which may favour lobbying activities by incumbents. In addition, public officials have no compulsory cooling-off period when they leave their post.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), " The 2018 Edition of the OECD PMR Indicators and Database – Methodological Improvements and Policy Insights", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org