Regulation is crucial to help markets work and to ensure that they deliver outcomes that are in line with government’s policy goals. However, regulation may sometimes have unintended consequences on competition. For instance, imposing product standards that are used by certain competitors, but not others, will tilt the playing field in their favour. Competition will also be distorted if some market players, for example incumbents, are subject to old regulations that are less costly to comply with, while new entrants must abide by new and stricter regulations.

The intervention of policy makers should have a clear rationale and minimise restrictions of competition necessary to achieving public policy objectives.

State support can be used to change the incentives and the behaviour of enterprises, for example when there are market failures and the market on its own would not achieve an outcome that is desirable for society. Nevertheless, state support has the potential to distort competition, both in domestic markets and internationally. This occurs when state support benefits some competitors but not others. As a result, the competitors benefitting from support would have less incentives to be efficient and competitive. Similarly, state support may result in inefficient firms, which would have otherwise exited the market, remaining in the market.

Competitive neutrality should be preserved when designing measures that may enhance an enterprise’s market performance and distort competition, in order to ensure a level playing field and reap its benefits.

The Toolkit was developed to help governments in their implementation of competitive neutrality principles set out in the Recommendation on Competitive Neutrality. It deals with the legal framework, including competition law and enforcement, the regulatory environment and public procurement, as well as the measures that may enhance a competitor’s performance, such as state support and compensation for public service obligations.

It consists of good practice approaches based on examples drawn from international experience from OECD members and non-members, complemented by a set of questions (Competitive Neutrality Checklist) and a framework of analysis.

The Toolkit provides competition authorities and other public officials with tools to identify government policies that may distort the level playing field and develop alternatives that minimise such distortions. It was developed to be used by both competition authorities and other bodies, such as government departments that are responsible for developing new regulations or central units in charge of regulatory impact assessment. It also supports the assessment both of new regulations and policies as they are being developed and of existing ones.

As part of the Toolkit, the OECD Competitive Neutrality Checklist consists of a list of questions, based on the good practices provided by the Competitive Neutrality Toolkit, to help competition authorities and policy makers identify regulations or state support measures that may have the potential to distort competitive neutrality. When a measure receives a negative response to at least one question, an in-depth analysis is suggested to further investigate the policy intervention.

In 2004, a first in-depth discussion was held on the role of the state in the market and the potential distortion of competition arising from the advantages granted to state entities. 

In 2009, a second roundtable discussion looked more closely at the challenges of enforcing competition rules against state-owned enterprises. 

In 2012, the Competition Committee engaged in a joint project with the OECD’s Working Party on State Ownership and Privatisation Practices to map national practices that address the issue of public-private competition. It compiled a compendium of OECD Recommendations, Guidelines and best practices that may have implications for competitive neutrality.

In 2015 the OECD produced a Note on Competition Policy & Competitive Neutrality and an Inventory of Competitive Neutrality Distortions and Measures categorising various types of distortions, the rules and tools available in various jurisdictions as well as OECD related instruments. 
In 2018, the OECD Global Forum on Competition held a roundtable discussion to look at investigations into anti-competitive conduct mergers, and agreements by SOEs.

In 2019, the OECD held a session with presentations by delegations on the tool that they use to address competitive neutrality issues in their markets.

In 2021, the OECD Global Forum on Competition held a discussion on the promotion of competitive neutrality by competition authorities.

In addition to the above-mentioned discussions and material, the OECD also conducted in-country projects to assess competitive neutrality.

From 2018-2021 the project Fostering Competition in ASEAN included a component reviewing competitive neutrality in the sector of small-package delivery services in each of the ASEAN member countries. Outputs can be accessed on this page: Towards a Level Playing Field between SOEs and Private Entities in ASEAN.