OECD Product Market Regulation (PMR) Indicators: How does Iceland 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
Iceland
1.44
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
Iceland
OECD average
5 Most competition-friendly countries
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 Iceland are somewhat higher than the OECD average. Public ownership is limited, the involvement of the government in business operations is low, and the assessment of the impact of new regulations on competition is broadly in line with OECD best practice. In contrast, regulatory barriers in network and service sectors as well as barriers to entry for foreign suppliers are higher than in many other OECD countries. Similarly, the administrative burden on new firms is among the highest in the OECD. Furthermore, there is scope for improving the regulations that govern the interaction between stakeholders and policymakers.
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
Iceland
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
Iceland
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 Due to its geographical characteristics, the gas and rail sectors do not exist in Iceland. The regulatory framework for the other network industries is competition-friendly, except for the electricity sector, where the government owns shares in the largest operators in generation and retail supply. Professional services, in particular estate agents, lawyers and architects are tightly regulated.
Regulation in network and service sectors PMR Indicators for network sectors* Index scale 0 to 6 from most to least competition-friendly regulation 6
Iceland
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5
4 3 2 1 0 Electricity
Air
Road
Energy
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 6
Iceland
OECD average
5 most competition-friendly countries
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
* There are no natural gas sector and no rail sector in Iceland. + 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
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Iceland.
Strengths
Challenges
The presence of state-owned enterprises is limited. The government does not own shares in any of the largest operators in the network sectors, with the exception of electricity and operation of airports.
The governance of state-owned enterprises is in line with most key OECD best practices.
The retail sale of pharmaceutical products is subject to less regulatory constraints than in most OECD countries. In particular, there are no restrictions on the number, location and ownership of pharmacies.
The administrative requirements necessary to set up new firms are burdensome as a large number of procedures have to be fulfilled before a personally owned enterprise or a limited liability company can be started. There is no “silence is consent” rule for licences and authorisations.
There is no liberalised wholesale market in the electricity sector and the government holds a large participation in the capital of the largest operators in the generation and the retail supply segments.
There are no rules regulating the interaction between policymakers and interest groups, nor any transparency requirement. For example, there is no compulsory registration for interest groups in a public registry, and there is no obligation on public officials to identify the interest groups that they consult or meet with during the regulatory process. In addition, public officials have no compulsory cooling-off period when they leave their post.
Lawyers, architects and real estate agents are more stringently regulated than in many OECD countries. In particular, the entry requirements create high barriers to entry both for local candidates and foreign professionals.
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