Governments everywhere are increasingly interested in assessing the effects of their policies and the effectiveness of public institutions. Competition policy is no exception. Competition agencies affect the economy by taking decisions on mergers and allegedly anticompetitive behavious under competition law. Through their advocacy activities they can influence policy making and this have an impact on specific sectors and on the economy as a whole. Furthermore, they are often called to show the impact that their enforcement and advocacy activities have on the affected markets and on consumers, as well as more widely on macro-economic variables.
From 2012 to 2016, the Evaluation of competition interventions was one of the strategic priorities of the OECD’s Competition Committee work. Through discussions, roundtables and workshops the OECD has gathered evidence of existing best practices in this area and has tried to expand the range of techniques that can be used.
Broad categories studied and resulting outputs
The OECD work on improving the methods to measure the effects of competition interventions focused on three broad categories:
The in-depth analysis of each category allowed us to come up with three specific publications to address the issues under study.
Evaluation for accountability and the Guide on Impact Assessment
Competition authorities, like other public bodies, need to regularly report about their activities to government, the public and other stakeholders typically on an annual basis.
Increasingly, such authorities are interested in providing measures of the expected 'impact' on consumers of the decisions on mergers and antitrust infrigements they took over the period under examination. These measures allow them to present in a concise manner the contribution that their work brings to society.
To help competition authorities in quantifying the value of their work the OECD has developed a simple methodology that authorities could refer to, when carrying out an impact assessment of their most recent activities. This methodology, together with examples and suggestions on how to present its results are illustrated in the Guide on competition impact assessment.
Ex-post evaluation of specific competition enforcement interventions and the Reference Guide
The challenge faced by competition agencies when enforcing competition law is enormous. With limited information, resources and time, these agencies must evaluate the likely competitive impact of unprecedented changes in how markets operate and whether their interventions/non-interventions would lead to better market outcomes. The periodic ex post analysis of the actual effects of enforcement decisions a few years after these are taken is a tool that can help agencies better understand the impact of their interventions and to improve future decision making.
Some competition agencies are undertaking them many more are interested in starting to. To support them in this endeavour the OECD has published a Reference Guide that provides an introduction to the topic, as well as numerous examples and extensive references to the work done so far in this area.
Evaluation of broader impact on the economy and the Factsheet
Ultimately, competition policy should be justified by its beneficial effects on the economy and on consumers’ welfare (for example, its effects on growth, innovation, and employment).
The links between competition policy interventions and macro-economic variables are not always well understood. However, there is strong evidence demonstrating that more competitive industries typically have higher rates of productivity growth, and that less competitive sectors are slower to innovate.
The OECD has published a Factsheet that illustrates the links between competition and macroeconomic outcomes and presents the most recent academic analysis in this area.
This reference guide presents an in-depth overview of all the issues linked to ex-post assessments. It contains numerous examples and references. It is a great tool for agencies who want to start performing such evaluations and for those who would like to improve the quality of evaluations they already make. More about the rerence guide.
To help competition agencies advocate their work, this factsheet summarises evidence on the links between competition and macroeconomic outcomes, such as productivity, growth, innovation and employment. Access the factsheet.
This guide provides a simple and easy methodology for determining the likely benefits that consumers will derive from competition agencies’ decisions and suggestions on how to present the results of the assessment to ensure that they are correctly interpreted. Access the guide on impact assessment.
Documents and links
Evaluation of competitive impacts of government interventions, Discussion held in February 2014
Competition and macroeconomic outcomes factsheet, Discussion held in October 2013
Secretary-General Gurría talks about the role of competition in improving productivity and growth, Iceland, September 2013.
Evaluation of competition enforcement and advocacy activities: results of an OECD survey, 2013 (pdf). Also available in French.
Assessment of the Impact of Competition Authorities' Activities, Note by Stephen Davies, 2013 (pdf)
Evaluating the impact of competition law enforcement, Note by Peter Osmosi, 2012 (pdf)
Impact Evaluation of Merger Decisions, 2011 (pdf)