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Public sector activities in commercial markets

26. maj 2016
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Summary

The main focus of this analysis is on revenue-funded activities which may be carried out by government institutions and by government-funded, self-governing institutions and on municipal commercial activities under the authority of written legislation or the municipal authority rules (kommunalfuldmagten). 

The overall scope of these activities is difficult to determine. Government players carry out revenue-funded activities worth approx. DKK 2.4 billion annually. Most of these activities are carried out in commercial markets, mainly within the areas of knowledge services and education. However, no information is available about the total commercial activities of Danish municipalities, and the assessment is that most municipalities do not have a total overview of the scope. 

The analysis focuses on three areas: 1) pricing of revenue-funded activities and municipal commercial activities, 2) enforcement of the rules on revenue-funded activities and municipal commercial activities; and 3) the right to carry out revenue-funded activities and municipal commercial activities.

As far as pricing is concerned, the Danish rules do not fully comply with OECD recommendations. Thus, there is no consistent adjustment for the advantages that may be associated with public ownership. As a case in point, Danish authorities etc. are not obliged to include commercial profit in the price of their commercial services. The analysis also finds significant differences in the amount of profit included by government players in their pricing.

The Danish Competition Council recommends that the Danish rules to prevent distortion of competition be clarified and, in particular, that centralised guidelines be prepared to implement the OECD recommendations in this area and ensure that prices are set to a greater extent according to so-called competitive neutrality principles.

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