OECD Product Market Regulation (PMR) Indicators: How does the Germany 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
Germany
1.08
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
Germany 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 Barriers in Service Barriers to Trade on Start-ups & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to Bavaria. Source: OECD 2018 PMR database.
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ECONOMY-WIDE HIGHLIGHTS Overall, regulatory barriers to competition in Germany are among the lowest in the OECD. The regulatory set-up is competition friendly in many domains and sectors, particularly in the areas of complexity of regulatory procedures and in the assessment of the impact of new regulations on competition. Licensing procedures benefit from the existence of a single one-stop shop that provides firms not just with information on licences and permits, but also issues them. In addition, the rules that regulate access to public contracts for the provision of goods, services, and public works are in line with key OECD best practices. However, there is scope for greater simplification of the administrative requirements imposed on new businesses, and public ownership of firms across the economy is above the OECD average.
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
Germany
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
Germany
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to Bavaria. 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.
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SECTOR-SPECIFIC HIGHLIGHTS The regulatory set-up in network sectors, in particular in gas and in air and water transport, is very competition friendly. Regulations in retail trade are also conducive to competition. In contrast, numerous regulatory constraints exist in the retail sale of medicines, such as limits on who can own pharmacies and on where non-prescription medicines can be sold. Similarly, regulatory barriers to competition in most professions are relatively high.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Germany 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 Germany 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. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to Bavaria. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
Regulatory barriers to competition in Germany are among the lowest in the OECD. Still, there is scope for improving product market regulation in some areas.
Strengths
Challenges
The licensing system is competition-friendly. It includes a ‘silence is consent’ rule and the existence of a single ‘one-stop-shop’, which provides businesses with information about their licensing requirements and can issue all necessary licences and permits.
Regulation of the air transport sector in Germany is among the most competition friendly in the OECD area: there is limited public ownership, and there are low barriers to entry.
The regulatory framework for the public procurement of goods, services and public works is aligned with key OECD best practice.
Public ownership of firms is more extensive than in many OECD countries, with the government controlling companies in several sectors, including electricity, e-communications, transportation and financial services.
The administrative requirements to set up new firms are burdensome, and a large number of procedures have to be fulfilled before a business can start to operate.
Most professional services are heavily regulated, both in terms of entry requirements and of conduct restrictions. This is especially true for notaries, accountants, and civil engineers.
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