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State-Owned Enterprises as Global Competitors

A Challenge or an Opportunity?

image of State-Owned Enterprises as Global Competitors

An estimated 22% of the world’s largest firms are now effectively under state control, this is the highest percentage in decades. These firms are likely to remain a prominent feature of the global marketplace in the near future. The upsurge of state-owned enterprises (SOEs) as global competitors has given rise to concerns related to a level playing field.  Some business competitors and observers claim that preferential treatment granted by governments to SOEs in return for public policy obligations carried out at home can give SOEs a competitive edge in their foreign expansion. The OECD has taken a multidisciplinary approach, looking at the issue from the competition, investment, corporate governance and trade policy perspectives.  The report aims to sort fact from fiction, and develop a stronger understanding, based on empirical evidence, on how to address growing policy concerns with regard to SOE internationalisation. The report concludes that although there is no clear evidence of systematic abusive behaviour by SOE investors, frictions need to be addressed, in view of keeping the global economy open to trade and investment.

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Competition law and policies applicable to state-owned enterprises

The enforcement of competition law has been and continues to be an important lever in levelling the playing field in markets where SOEs and other market actors compete. This chapter looks at specific competition law approaches, drawing on case examples, applicable to the conduct of SOEs. It draws three main pillars: preventing the abuse of dominance, blocking or remedying anti-competitive mergers, and breaking up cartels. It also points to some challenges for competition enforcement where SOEs and crossborder transactions are concerned. It draws attention to additional levers, beyond competition enforcement that can serve to level the playing field. It points to advocacy; competitive neutrality; harmonized accountability and transparency requirements; and consistent application of rules concerning subsidies or state aid, as means to ensure that policies in one jurisdiction do not advertently or inadvertently impact the competitive environment in others.

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