OECD Reviews of Regulatory Refo - OECD

Foreword......Page 5
Acknowledgements......Page 6
TABLE OF CONTENTS......Page 7
Part I – OECD REVIEWS OF REGULATORY REFORM IN THE CZECH REPUBLIC......Page 9
Executive Summary......Page 10
Czech progress in creating a regulatory and institutional framework for the market.........Page 15
… fundamental economic liberalisation was launched......Page 16
After a rapid start, the benefits of reform were slowed by the consequences.........Page 17
The regulatory reform job is not finished, and important decisions contrary to market principles.........Page 18
The Macroeconomic Context for Sectoral Regulatory Reform......Page 19
… but regulatory weakness and a failure to privatise banks resulted in too-easy access.........Page 20
Figure 1.1.  Macroeconomic indicators......Page 21
Box 1.2. Ownership structure and privatisation in the Czech Republic......Page 22
Several regulatory shortcomings contributed to poor performance…......Page 23
… which, in turn, led to a currency crisis and the abandonment of the exchange rate regime......Page 24
Reforms have sparked the kind of firm-level restructuring that will set the scene for…......Page 25
Privatisation in the banking sector should improve corporate governance and contribute.........Page 26
Strengthened prudential control in the banking sector will reduce the risks of a private.........Page 27
Box 1.3. Changes to prudential supervision in the banking sector......Page 28
The Czech Securities Commission, created in January 1998, has been active in formulating.........Page 29
Financial markets have been disentangled from non-financial interests......Page 30
Reform of the network industries is proceeding in telecommunications…......Page 31
Table 1.2. Participation of the National Property Fund in strategic companies......Page 32
… energy…......Page 33
Recent steps have greatly improved corporate governance in the Czech Republic......Page 34
While recent steps are helpful, there is an ongoing need to improve bankruptcy law......Page 35
… while market opening and efforts to attract FDI are now paying off......Page 37
Price liberalisation has gone very far, but rent controls still impede labour mobility.........Page 38
Anticipated Effects of Further Regulatory  Reform......Page 39
Strengthening creditor rights will help ensure that resources are channelled.........Page 40
Completion of financial market reform is expected by end-2001, but there is no room for complacency......Page 41
… while continued strong inflows of foreign direct investment should help further improve.........Page 42
Further reform to Czech labour markets will boost the benefits of competitive markets......Page 43
Economic reforms leaped ahead of institution-building, and further efforts are needed to re-build.........Page 44
Box 2.1. Managing regulatory quality in the Czech Republic......Page 45
The Czech process for developing laws and regulations is well structured and can be a solid.........Page 47
Box 2.2. Fighting corruption in the Czech Republic*......Page 48
Publication of an annual legal agenda enhances the other public consultation mechanisms.........Page 49
The neutrality, skills, and co ordination capacities of the public administration merit.........Page 50
… particularly in the crucial area of regulatory enforcement......Page 51
Decentralisation of the state to new regional governments should be carefully structured.........Page 52
Reform of the judiciary can assure fair and efficient functioning oftransactions between citizen.........Page 53
Design and operation of the new sectoral regulatory institutions require further consideration.........Page 54
Box 2.3. The regulatory environment for SMEs in the Czech Republic......Page 55
For a decade, the competition authority played a central role in guiding the restructuring.........Page 56
Competition law institutions are well-designed…......Page 57
Box 3.1. Potential competition problems will require continuing vigilance......Page 58
Co-ordination of competition policy in other regulated sectors, such as utilities, seems to be.........Page 59
… as is oversight of state aids......Page 60
New tools are needed to deal with violations such as horizontal cartels......Page 61
Decentralisation to regions and municipalities might create new competition issues…......Page 62
... and stronger consumer policy would be useful companion to competition policy......Page 63
In terms of border restrictions, the Czech Republic has successfully created one of the most open.........Page 64
Foreign trade was crucial in assisting the transformation of the Czech economy…......Page 65
… and foreign investment was even more important in aiding recovery, particularly later.........Page 66
Increased competition and continued restructuring are likely tobring some calls for protection; .........Page 67
Box 4.2. The OECD efficient regulation principles for market openness......Page 68
… while transparency in public procurement has increased…......Page 69
Regulations largely give foreign market participants equal competitive opportunities.........Page 70
Harmonisation of product regulations and mutual recognition agreements, mainly driven.........Page 71
The business environment should be streamlined and made predictable......Page 72
The competitive framework for electricity and gas is not yet complete;…......Page 73
If adopted, the proposals will slow competition and damage the competitiveness of the Czech economy......Page 74
Box 5.1. The consequences of privatising a vertically integrated utilities......Page 76
The concentrated and vertically integrated structure of the sector is the biggest barrier.........Page 75
Figure 5.1. One and two firm concentration levels for selected countries or regions, 1998......Page 77
Competition in the gas sector will depend on effective access to storage and transmission.........Page 78
The transmission grid has been put at arms-length from CEZ a.s. to prevent discrimination.........Page 79
Price rebalancing will depend on rational pricing policies......Page 80
Without improved performance, the rail sector will continue to divert resources away.........Page 81
Competition alone will not solve the efficiency problems in CD......Page 82
Road transport is now a competitive market, though it has been hit hard by the economic…......Page 83
Attention should turn now the inefficient regulation of European transport......Page 84
The Czech Republic began late with reform in the telecommunications sector…......Page 86
Yet further action is needed to induce the vigorous competition that will bring prices.........Page 87
Figure 6.1. OECD composite basket of business telephone charges, November 2000......Page 88
Pending completion of privatisation, confusion about the role of the state in company management .........Page 89
Development of a fair, transparent and stable competitive environment for all market players.........Page 90
Full price re-balancing and elimination of cross-subsidies is imperative for the development.........Page 91
… while a simplified price cap scheme would increase transparency and certainty......Page 92
Fair and effective competition must be vigorously promoted especially in local markets.........Page 93
Streamlining regulation will be an ongoing challenge.......Page 94
Progress has accelerated since 1997 to close the gaps in regulatory frameworks revealed.........Page 96
… but some recent proposals are contrary to the overall positive reform pattern.........Page 97
The Czechs are beginning to see concrete benefits of regulatory reform in key sectors......Page 98
To speed up results, a broad and co ordinated approach across product, labour, and financial.........Page 99
Policy Options for Regulatory Reform......Page 100
Managing Regulatory  Reform......Page 116
Notes......Page 117
Bibliography......Page 120
Part II – BACKGROUND REPORTS......Page 122
Background Report on Government Capacity toAssure High Quality Regulation......Page 123
Table of Contents......Page 124
Executive Summary......Page 125
1.1.The administrative and legal environment in the Czech Republic......Page 128
Box 1.  Good practices for improving the capacities of national administration to assure.........Page 129
Box 2.  Privatisation in the Czech Republic......Page 130
Box 3. Selected findings from the World Bank: public administration in the Czech Republic......Page 131
1.2.Recent regulatory reform initiatives......Page 132
Box 4. The Czech legislative process......Page 134
Box 5. The Czech “Concept Papers”......Page 135
2.2.Mechanisms to promote regulatory reform within the public administration......Page 137
2.3.Co-ordination between levels of government......Page 138
Box 6. The European Acquis communautaire......Page 141
3.1.Administrative transparency and predictability......Page 142
Box 7. Fighting corruption in the Czech Republic*......Page 146
3.2.Choice of policy instruments: regulation and alternatives......Page 147
3.3.Understanding regulatory effects: the use of Regulatory Impact Analysis (RIA)......Page 148
3.4.Institutional design......Page 150
4. Dynamic Change: Keeping Regulations Up-to-date......Page 151
5.1.General assessment of current strengths and weaknesses......Page 152
5.2.Policy options for consideration......Page 153
5.3.Managing regulatory reform......Page 158
Annex 1. Chronology of Public Management Developments......Page 160
Notes......Page 162
Bibliography......Page 168
Background Report on the Role of Competition Policy in Regulatory Reform......Page 170
Table of Contents......Page 171
Executive Summary......Page 173
1.1.Context and history......Page 174
1.2.Policy goals......Page 175
1.3.Competition policy in reform......Page 176
2.1.Horizontal agreements......Page 178
Box 2. The competition policy toolkit......Page 179
Box 3. The EU competition law toolkit......Page 180
2.2.Vertical agreements......Page 181
2.3.Abuse of dominance......Page 182
2.4.Mergers......Page 183
2.7.Unfair competition......Page 185
3.1.Competition policy institutions......Page 186
3.2.Competition law enforcement......Page 187
3.3.Other enforcement methods......Page 188
3.4.International trade issues in competition policy and enforcement......Page 189
Table 1. Trends in resources......Page 190
Table 3. Trends in competition policy actions......Page 191
Table 4. Competition Act actions by sector (1995-1999)......Page 192
4.1.Economy-wide exemptions or special treatments......Page 193
4.2.Sector-specific exclusions, rules and exemptions......Page 195
5. Competition Advocacy for Regulatory Reform......Page 197
Box 4. Advocacy to counter abuse of dominance: insurance......Page 198
Tabl e 7. Competition advocacy interventions......Page 199
6.1. Competition policy institutions are sound, and help point the way to dealing with other issues......Page 200
6.2. Capacities for and impediments to change......Page 201
6.3. Policy options for consideration......Page 202
6.4. Managing regulatory reform......Page 203
Notes......Page 205
Bibliography......Page 206
Background Report on Enhancing Market Openness Through Regulatory Reform......Page 207
Table of  Contents......Page 208
Acronyms......Page 210
Executive Summary......Page 211
1.1.Structural reforms and market openness......Page 212
1.3.Trade liberalisation......Page 213
Box 1. EU accession......Page 214
Table 2. Commodity structure of Czech foreign trade......Page 215
1.4.Foreign investment......Page 216
Table 3. Foreign Direct Investment......Page 217
2.1.Transparency, openness of decision making and of appeal procedures......Page 218
2.2.Non-discrimination......Page 221
2.3.Measures to avoid unnecessary trade restrictiveness......Page 222
2.4.Measures to encourage use of internationally harmonised measures......Page 225
Figure 1. Annual production of standards by the CSNI......Page 226
Box 3. Harmonisation in the European Union: The New Approach and the Global Approach......Page 227
2.5.Recognition of equivalence of other countries’ regulatory measures......Page 228
Table 4. Mutual Recognition Agreements concluded or negotiated by the Czech Republic......Page 229
2.6.Application of competition principles from an international perspective......Page 230
Table 5. Foreign trade in the automobile sector......Page 231
3.2.Retail sector......Page 232
3.3.Telecommunications......Page 233
3.4.Electricity......Page 234
4.1.General assessment of current strengths and weaknesses......Page 235
4.3.Policy options......Page 236
Notes......Page 239
Bibliography......Page 241
Background Report on Regulatory Reform in Electricity, Gas, Road and Rail Freight......Page 242
Table of Contents......Page 243
Executive Summary......Page 245
1. Introduction to the Energy Sector......Page 247
Box 1. Czech electricity sector at a glance1999......Page 248
Figure 1. One and two firm concentration levels for selected countries or regions......Page 249
Figure 2. Electricity generation by fuel, 1973-2020......Page 250
Table 1. Generation mix and ownership......Page 251
2.2.Price comparison with other countries......Page 253
Figure 4. Electricity prices in IEA countries, 1999, household sector......Page 254
2.3.Policy objectives of the Czech Republic and EU electricity policy......Page 255
2.4.Regulatory institutions and policies......Page 256
2.5.Remaining competition issues in the Czech electricity sector......Page 258
Box 3. Framework for assessing competition issues in the Czech electricity industry......Page 259
Box 4. Effects of competition in electricity......Page 262
2.6.An independent, expert, and accountable regulator......Page 263
2.7.The consequences of privatising a vertically integrated utilities......Page 265
2.8.Conclusions and policy options for the Czech electricity sector......Page 266
3. The Gas Sector in the Czech Republic......Page 267
3.1.Description of the Czech gas sector......Page 268
Figure 5. Natural gas consumption, 1973-2020......Page 269
Table 4. Annual average natural gas prices (1998)......Page 270
Figure 7. Gas prices in IEA countries, 1999......Page 271
3.3.Policy objectives of the Czech Republic and regulatory institutions......Page 272
3.4.Remaining competition issues in the Czech gas sector......Page 273
3.5.Conclusions and policy options for the Czech gas sector......Page 276
5. The Road Freight Sector in the Czech Republic......Page 278
Table 5. Number of road freight transport companies in Czech Republic......Page 279
Table 7. Development of goods transport in the Czech Republic......Page 280
5.2.Regulatory institutions and policies......Page 281
Box 6. European Union price and entry regulation in road freight services......Page 282
Box 7. ECMT agreements on trucking......Page 284
Table 8. Comparison of traffic volumes and waiting times at borders (2000)......Page 285
5.3.Competitive neutrality and “excessive competition”......Page 286
5.4.Conclusions and policy options for the Czech road freight sector......Page 287
6.1.Description of the rail sector......Page 288
Table 9. Czech rules on CD and track access, and EU rail access/competition directives......Page 291
6.2.The structure of the railway sector......Page 289
6.3.Regulatory institutions and policies......Page 290
6.4.Conclusions and policy options for the Czech railway sector......Page 296
Notes......Page 298
Road and Rail Transport......Page 299
Background Report on Regulatory Reform intheTelecommunications Industry......Page 301
Table of  Contents......Page 302
Executive Summary......Page 304
1.1.The national context for telecommunications policies......Page 305
1.2.Key legislation installing the Czech Republic regulatory regime......Page 306
Figure 1. Industry and ownership structure......Page 307
1.4.Market participants......Page 308
Table 2. Telecommunications sector liberalisation, 1990-2001......Page 309
2.1.Regulatory institutions and processes......Page 311
Table 4. Number of CTU employees, 1993-2000......Page 313
3.1.Regulation of entry and licensing......Page 314
3.2.Interconnection and regulation of interconnection prices......Page 316
Table 5. Price Decision No. 02/PROP/2001 setting the maximum prices for interconnection.........Page 318
Tabl e 6. Český Telecom’s prices  for domestic calls......Page 319
Table 7. Český Telecom’s Prices per minute for International calls......Page 320
3.3.Streamlining regulation......Page 324
3.4.Quality of service......Page 325
3.5.Universal service......Page 326
Box 1. Operators with significant market share......Page 327
3.7.Internet access......Page 328
4.1.Introduction......Page 329
Table 9. Fixed line network development indicators......Page 330
4.3.Market and revenue growth......Page 331
4.5.Price performance......Page 332
Figure 3. OECD composite basket of residential telephone charges, November 2000......Page 333
Table 11. OECD basket of international telephone charges, August 2000......Page 334
Figure 4. OECD basket of consumer mobile telephone charges, November 2000......Page 335
4.7.Internet pricing performance......Page 336
Table 13. OECD Internet Access Basket for 30 hours at peak times using discounted PSTN rates.........Page 337
4.9.Productivity......Page 338
4.10.Benefits to community and employment......Page 339
Box 3. Weaknesses......Page 340
5.3.Policy recommendations......Page 341
Notes......Page 345