OECD Product Market Regulation (PMR) Indicators: How does Switzerland 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
Switzerland
1.53
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
Switzerland 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. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to the Canton of Zurich. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Overall, regulatory barriers to competition in Switzerland are slightly above the OECD average. The administrative burden imposed on new firms is relatively light and regulatory procedures when firms interact with the government are simple. In contrast, public ownership is high in many sectors of the economy, in particular in network sectors. Further, while barriers to FDI and tariffs barriers are low, barriers to entry for foreign suppliers and to trade facilitation are higher than in many other OECD countries.
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
Switzerland
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
Switzerland
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 the Canton of Zurich. 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 all network sectors is far from international best practices, in particular in gas, road transport, and e-communications. In contrast, the regulatory framework in most professional services and, to a lesser extent, retail distribution is among the most competition-friendly in the OECD.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Switzerland 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 Switzerland 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. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to the Canton of Zurich. 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 Switzerland.
Strengths
Challenges
The regulatory framework in the service sectors is one of the most competition-friendly in the OECD. Professional services, in particular, benefit from low entry requirements and non-distortive conduct regulation.
Retail distribution has a regulatory set-up that is more conducive to competition than in many OECD countries. In particular, there are no restrictions on the number, location and ownership of pharmacies.
Laws and regulations are easy to access and understand. In addition, the government has undertaken significant efforts to reduce the administrative burden imposed on new firms.
Regulatory barriers to competition in network sectors are quite extensive. They are due to a combination of regulations that are far from internationally accepted best practice and public ownership of the largest operators in many of the sectors.
The presence of state-owned enterprises is pervasive, in particular in network industries. The sale of these shares requires a legislative intervention. Given the high level of public ownership in the economy, the governance of state owned enterprises could be better aligned with OECD best practices.
Border procedures for international trade could be simplified.
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