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COMPETITION IN PUBLIC SERVICES: SEARCH FOR BALANCE AND PROPORTION

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Which public services should be provided by state and municipal companies and which should be entrusted to private companies? These questions were raised by participants of the international conference “Do We Need Competition in Public Services”. The event, which took place on September 16 in Vilnius, was organized by Konkurencijos taryba in collaboration with the Seimas and Lithuanian Free Market Institute.

During her welcome speech Ingrida Šimonytė, Chair of the Committee on Audit of the Seimas, noted that state participates in economic activities in a number of ways, e. g., by establishing the procedure of the regulation of taxes, by providing grants and tax incentives, as well as offering different services. However, state also creates conditions for the restriction of competition, and fails to evaluate the real outcomes and consequences of its actions on taxpayers.

Acting Head of the OECD Competition Division Antonio Capobianco shared international experience on the concept of competitive neutrality and the provision of public services by municipal companies and private companies. During his speech A. Capobianco highlighted that in some countries, e. g., in China, state companies become significant players of global markets and have the power to win control over such significant sectors as energy or supply of raw materials.

“OECD has no intention to claim which way is best when choosing a public service provider. However, we always keep an eye on situations showing that state-owned enterprises can enjoy competitive advantages when operating in the markets, in contrast to their private competitors. There is no doubt that state businesses should avoid granting privileges to their companies and ensure a level playing field for all, said the OECD representative.

Mats Bergman, Professor of Economics at Södertörn University, provided examples on the improved competition and increased consumer choice when social services were handed over to private companies. 30 years ago municipalities in Sweden decided to procure elderly care services, which later encouraged other private service providers to participate in the market, and resulted in noticeable changes in the quality of the service to consumers.

In Lithuania, on the other hand, there is still quite a lot of heated debate over the definition of public services and their provider. Representatives from the Seimas, Ministry of Economy and Innovation, National Audit Service of Lithuania, Association of Local Authorities and Lithuanian Free Market Institute were invited to participate in the discussion and share their views on the topic.