OECD Encourages Competition To Speed Recovery

by Ulrika Lomas, Tax-News.com, Brussels

23 February 2009

Governments must resist protectionism and keep markets open to competition as they seek ways to get their economies going again, according to OECD Secretary-General Angel Gurría.

“We must ensure that today’s policies to manage the crisis will not be the source of tomorrow’s problems,” Mr. Gurría said in his opening address at the OECD Global Forum on Competition in Paris. “Robust competition policy is essential to prevent long-run harm when economic conditions stabilise.”

While recognising that emergency measures in a crisis may sometimes stray from the principles of sound competition, he urged governments to ensure that any support for individual companies and national champions should be transparent and temporary. “It is crucial that any restriction of competition during this critical period be carefully thought out, temporary and monitored,” said Mr Gurría.

“We must never lose sight of the underlying principles of sound competition. The case for national champions is weak – the protection of incumbents and ailing firms is likely to dampen growth in both developing and developed countries,” he said.

“It also risks escalating global protectionist measures and beggar-thy-neighbour responses. We must avoid interventionist industrial policies that favour incumbents, that seek to pick winners, or to reward losers,” he added.

Mr Gurría underlined the vital role of competition in increasing productivity and economic performance, and in preventing further market distortions. “Competition law and policy should continue to ensure a level playing field that is underpinned by clear rules and strong enforcement by competition authorities,” he said.

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