OECD Product Market Regulation (PMR) Indicators: How does Lithuania 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
Lithuania
1.19
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
Lithuania 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 Lithuania are among the lowest in the OECD. The administrative burden on new firms and the licensing regime are among the leanest and the evaluation of regulations for their impact on competition is in line with international best practice. In addition, barriers to foreign trade and investments are very low. In contrast, public ownership is extensive, in particular in network sectors, and the governance of these stateowned enterprises is not in line with many key OECD best practices.
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
Lithuania
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
Lithuania
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 In terms of sector-specific regulations, the regulatory framework in most network industries is not very competition friendly when compared with other OECD countries. This is because the government still owns shares in the largest operators in most network sectors. Further, there is scope to relax the regulation of some professional services. In contrast, the regulatory framework in retail trade is competition-friendly, with no constraints on shop opening hours and few licensing requirements.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Lithuania 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 Lithuania 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 Lithuania are limited, but there is scope for improving product market regulation in some sectors and domains.
Strengths
Challenges
The administrative requirements necessary to set up new personally owned enterprises and limited liability companies are among the lowest in the OECD. In addition, the licensing regime benefits from a ‘onestop-shop’ for informing businesses about licensing requirements and for issuing all licences and permits. The government has also put in place programs to review and reduce the number of licenses.
There is scope to strengthen further the corporate governance of state-owned enterprises. For example, there are still state-owned enterprises involved in commercial activities while they are not subject to private company law, and in some sectors state-owned enterprises can still benefit from a more favourable treatment than privately owned firms.
The rules that regulate the interaction between interest groups and public officials during the regulatory process and regulations that deal with conflicts of interest concerning public officials are broadly in line with international best practices.
While conduct restrictions for most professions are limited, lawyers and notaries face very strict regulations. For example, only lawyers can own and have voting rights in law firms and they are banned from cooperating with other professions.
The regulatory framework for the public procurement of goods, services, and public works is in line with key OECD best practice.
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