OECD Product Market Regulation (PMR) Indicators: How does Italy 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
Italy
1.32
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
Italy
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
Regulatory barriers to competition in Italy are slightly below the OECD average. The administrative burden on startups is in line with the OECD average, and the licensing regime is among the leanest. The government controls firms in a number of industries, but only a few of these state-owned enterprises are large operators in network sectors. Yet, the corporate governance of these state-owned enterprises could be better aligned with OECD best practices. There is scope for making regulations in the service sectors more competition-friendly, and for introducing clear rules to regulate the interaction between policymakers and interest groups.
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
Italy
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
Italy
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 Regulatory barriers to competition in network industries are limited, whereas the regulatory framework for retail distribution is among the least competition friendly in the OECD. In addition, there are significant regulatory barriers to entry in professional services compared to other OECD countries, especially for architects and civil engineers. Notaries are also heavily regulated, through not more than in many other OECD countries.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Italy 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 Italy 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 Italy are below the OECD average, but there is scope for improving product market regulation in some sectors and domains.
Strengths
Challenges
The licensing regime is one of the leanest among OECD countries. There is a ‘one-stop-shop’ that provides businesses with information about licenses and notifications, and issues them. There is also a ‘silence is consent’ rule that reduces the waiting time for the approval of licences, and there are ongoing programs to review and reduce the number of licenses.
In some network services, namely road and water regulation and fixed e-communications, the regulatory set-up is in line with international best practice.
State-owned enterprises still benefit from exemptions from some of the laws and regulation that apply to privately owned firms. In addition, in some sectors there is no obligation for state-owned enterprises to separate commercial and noncommercial activities, creating the risk of unfair cross-subsidies.
There are no rules that regulate the interaction between interest groups and policymakers. This creates the risk of favouring incumbent firms. In addition, members of the government and of legislative bodies have no compulsory cooling-off period when they leave their post.
The regulatory set-up for retail distribution is not very conducive to competition. Entry requirements for large outlets are rigid, and regulations on sales promotions and requirements imposed on online outlets are restrictive when compared with most OECD countries. In addition, there are limits on the number and location of pharmacies, as well as on the types of outlets where non-prescription medicines can be sold.
Professions are heavily regulated, both in terms of entry requirements and of constraints on their conduct. In particular, there are often limitations on ownership and voting rights in professional firms, on the type of advertising allowed, and on interprofessional cooperation.
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