This document summarizes tools and developments relating to competitive neutrality in Norway. It discusses Norway's competition law, EU/EEA state aid rules, and a government committee established in 2016 to identify factors affecting competition neutrality and ensure compliance with state aid frameworks. The committee recommended adhering to the Market Economy Operator Principle, subjecting public economic activity to taxes above a turnover threshold, and giving the Norwegian Competition Authority enforcement powers. The NCA supports ensuring equal competition but cautions against overzealous application of the MEOP that could restrict socio-economic efficiency. A further impact analysis was commissioned before public hearings on concrete proposals in 2020.

1. Tools for Addressing Competitive Neutrality
- Developments in Norway
OECD WP2 June 2019

2. The many potential sources of
distortions
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3. Current Tools Relating to Norway
• Competition law
– Applies to any private or public entity that carries out commercial
activities regardless of the legal nature of the firm
– The NCA can according to section 9e in the competition act “call
attention” to restrictive effects on competition of “public measures”
and, where appropriate, submitting proposals aimed at furthering
competition and facilitating market access by new competitors
• EU/EEA state aid rules
– Enforced by the Efta Surveillance Authority (ESA)
– Notification scheme; enforcement focus on “state aid” being
incompatible with the functioning of the internal market
– Six criteria:
• state resources must be involved,
• the recipient must be involved in economic activity,
• the aid imply an advantage for the recipient,
• the aid must favor certain undertakings or the production of certain
goods,
• the aid must distort competition and finally,
• it must have an actual or potential effect on trade
• Enforcement vacuum?
The «universe» of causes to
competition
neutrality concerns
State aid:
«hard»
enforcement
by ESA
Soft
enforcement:
«Call attention
to»
Prohibition
regulations in
competition act

4. «Equal Terms of Competition»
Government Committee Mandate
• In 2016, the Norwegian government appointed a
committee with a mandate:
– to identify different factors that could affect competition
neutrality;
– identify public activities that are exempt from tax and
covered by the unlimited guarantees which also constitute
economic activity and subject to the EEA-agreement's rules
regarding incompatible state aid;
– assess to what extent the current Norwegian rules comply
with the EEA-framework on state aid;
– do an empirical assessment of the extent of eventual problems
and finally:
– propose measures that are «necessary» to bring current
framework in line with the EEA agreement as well as
measures that «preferably» should be implemented to ensure
competition neutrality and efficient use of resources, while at
the same time undermining to possibility for public entities to
fulfill their mission in a cost-effective manner
• Committe presented its conclusions and
recommendations primo 2018
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5. Main Recommendations (by the majority of the
government committee)
• A duty to apply a proper, consistent and transparent separation of accounts, as
well as the application of transparent and objectively justifiable cost accounting
principles, but no duty to corporatize economic activity within a public entity
• A duty to adhere to the Market Economy Operator Principle (MEOP), thus ensuring
that the unlimited guarantee for economic activity with public entities not
constitute illegal aid (by majority of committee)
– Adhering to the MEOP implies that the value of the guarantee would be priced, in the same
way as a private investor would put a price on providing a guarantee
• Economic activity should be subject to taxes in the same way as other private
economic activity;
– A certain threshold relating to turnover was preferred to determine if the economic activity
should be subject to tax
• Control measures should be introduced to ensure that public entities adhere to
MEOP, even when the activity would not be subject to EEA-state aid regulations
• A majority of the committee recommended that the Norwegian Competition
Authority had the competence to enforce adherence
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6. THE NCA’s Hearing Statement
• The NCA underlines the importance of equal terms of competition
between public and private entities to ensure efficient utilization of
society's resources
• The efficiency principle implies that public entities should be
allowed to utilize spare capacity and exploit economies of scale
and scope in the same way and based on the same pricing
principles as private competitors
• In this regard, the NCA emphasizes the importance of not applying
MEOP in the EU/EEA state aid context in a way that restricts socio-
economic efficiency and ultimately: competition
• The NCA shares the (majority of the) committee’s recommendation
with regard to a duty to have separate accounts and not imposing a
duty to corporatize
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7. Way Forward
• A socio-economic impact analysis exploring
this aspect of the commission’s report in more
depth commissioned by the government
– Map the magnitude of potential distortions
– Analyse how the proposals may impact potential
exploitation of economies of scale and scope as
well as utilization of spare capacity in short and
long term perspective
• Public hearing with concrete proposals
expected in 2020
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