Friday, August 28, 2009
Posted by D. Daniel Sokol
As some of you know, I have a forthcoming article in the BYU Law Review titled "Competition Policy and Comparative Corporate Governance of State Owned Enterprises." I am very interested in government's role in anti-competitive practices. A new press release from the Swedish Competition Authority has caught my eye. According to the press release:
Swedish government bodies can in future be prevented from engaging in business activities that distort competition. This is the implication of a legislative proposal that the Government has just presented to the Riksdag (parliament).
“It’s good that we’re now getting rules that prevent public actors from competing with private companies on unfair terms,” says Dan Sjöblom, Director General of the Swedish Competition Authority. “This is an important addition to the prohibitions in our competition laws.”
The proposals will enable the Competition Authority and entrepreneurs to approach the Stockholm City Court and apply for a municipality, a state actor or a county council to be prohibited from engaging in a certain business activity in a manner that distorts competition. An exception is if the activity (procedure) is judged to be in the public interest and therefore defensible.
A central, regional or local government body that undertakes a business activity does not do so on the same terms as a private company. The conditions under which they operate differ. A government agency or municipality cannot be declared bankrupt, and such bodies possess the kind of financial power that very few private enterprises can even get close to.
“The new legal provision will act as a deterrent,” says Dan Sjöblom. “Municipalities or agencies engaging in or planning to launch business activities that compete with companies in the market will in future have to think very carefully before doing so.”
The Competition Authority receives numerous complaints about conflicts caused by public actors competing with private ones. Often, those hardest hit by this type of unfair competition are small businesses operating in local markets.
The Competition Authority welcomes the new rules, which are to apply from 1 January 2010 if approved by the Riksdag.