OECD Product Market Regulation (PMR) Indicators: How does the Denmark 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
Denmark
1.02
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
Denmark 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
Overall, regulatory barriers to competition in Denmark are among the lowest in the OECD. Indeed, the country has a competition friendly regulatory set-up in many domains and sectors. Barriers to domestic and foreign trade are low and the state has limited involvement in the economy. The administrative burden for setting up a new firm is low, and there are limited barriers to entry in key network and service sectors. However, some improvements are still possible in the system for evaluating the impact on competition of new and existing regulations, and in the regulation of 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
Denmark
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
Denmark
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 The regulatory set-up in most network sectors in Denmark is in line with international best practice, in particular in ecommunications and air and rail transport. However, regulations could be improved in transport by road and by water. Regulatory barriers to competition in many professional services are low, with the exception of lawyers who still face entry barriers and conduct restrictions.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Denmark 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 Denmark 5 most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2
1 0 Lawyers
Accountants
Architects
Civil engineers
Professional services
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 Denmark are among the lowest in the OECD, still there is scope for improving product market regulation in some areas.
Strengths
Challenges
Denmark has a very lean licensing regime, which benefits from the existence of a ‘one-stop-shop’ for informing businesses about licenses and notifications and for issuing and accepting all of them. There is a “silence is consent” rule that reduces waiting times, and there are ongoing programmes to review and reduce the number of licenses.
The administrative burden on new firms, whether limited liability companies or personally-owned enterprises, is one of the lowest among OECD countries.
The regulatory set-up in the e-communications sector is one the most competition friendly in the OECD, as the government does not own shares in any of the operators, and regulation is close to international best practice.
Denmark lacks explicit regulation of the interactions between interest groups and policymakers, and public officials do not have to respect any cooling-off period when they leave their post.
Most network sectors have a competition-friendly regulatory set up. However, transport of passengers by water, is one of the leastcompetition friendly sectors among OECD countries. This is due to the existence of local monopolies and public ownership of firms in several segments of the sector. In addition, there is no legal separation between port authorities and operators of terminal facilities providing commercial service.
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