COMPLETING THE TRANSITION TO A

COMPETITIVE DOMESTIC ECONOMY

OECD Economic Survey of the Czech Republic 2014

2

Income convergence must rely on a stronger service sector

• The Czech private service sector is among the smallest In percentages of total gross value added, 2012

3

Advantages of a stronger service sector

• Lower prices of service inputs – Boost competitiveness

• More innovative services– Boost job creation and wages

• Exploit domestic resources of growth– Requires human capital accumulation

4

Competition is inhibited by :

• Red tape– Gold plating and entry barriers for

professional services• Public ownership• Uneven application of competition

policy– Little success in uncovering hard-core

cartels• Weak regulation of network

sectors

5

Despite progress, there are still barriers to entrepreneurship

6

Czech Republic has the highest number of regulated professions in the EU

7

Corruption is another entry barrier

8

Competition friendly measures• Reduce legal delays for contract

enforcement• Lower barriers to entry in (professional)

services • Improve regulatory impact assessments• Control SOEs within a single authority

with professional corporate governance • Privatise and divest business-related

state-owned enterprises and activities

9

The competition authority initiates relatively few cases and often in public tender bid rigging

10

Reinforce competition law enforcement

• Secure a well-functioning leniency programme

• Improve the scope for private litigation• Increase sanctions for bid-rigging in

public procurement• Use sector inquiries • Remove the food retailing regulation

from the competition policy framework

11

Network prices are relatively high: in the mobile phone area as well as in….

OECD 100 calls mobile basket¹, in USD, November 2013

12

High pre-tax industry electricity prices compensate households (unlike DNK and NLD) and are compensated by the public purse

13

More competition in network sectors

• Better co-ordination between the competition authority and sector regulators

• Effective independence of all network regulators

• Effective ownership unbundling or holding structures with financial separation of all activities

• Secure cost-based access for MVNOs, and remove barriers for becoming Full MVNOs

14

• Thank you• Děkuji