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This report responds to this request. It highlights existing competitive neutrality practices and current challenges faced by policy makers committed to level the playing field between public and private business. It provides a catalogue of generally accepted national practices that illustrate implementation of aspects or elements of competitive neutrality and highlights examples of challenges that may be encountered. The report aims to serve as inspiration to governments that are confronted with similar challenges and aim to achieve competitive neutrality. The practices discussed in the report are consistent with the 2005 OECD Guidelines on the Corporate Governance of State-Owned Enterprises (OECD, 2005a). The coverage of this report is broader than the Guidelines in that it applies not only to state-owned enterprises, but also other government activity of a commercial nature.

This report is part of an ongoing project on the “State in the Market Place” of the Corporate Governance Committee’s Working Party on State Ownership and Privatization Practices and was developed jointly with the Competition Committee. The Secretariat’s draft report was prepared by Hans Christiansen and Sara Sultan of the OECD Corporate Affairs Division and was given final approval and declassified by these respective bodies in April 2012. The development of the report has benefited from comprehensive consultation with the Business and Industry Advisory Committee (BIAC), the Trade Union Advisory Committee (TUAC), other consultation partners and non-member economies. The report may be read in conjunction with two comprehensive stocktaking papers concerning national practices and OECD sources which address aspects or elements of competitive neutrality which are publicly available. (OECD 2012a, 2012b)

Most policy makers agree that competitive neutrality is a sound idea and member governments of the OECD have demonstrated their commitment to a level playing field. This commitment has been voiced at the ministerial level on a number of occasions. Most recently on the occasion of the 2011 Commemoration of the 50th Anniversary of the OECD during the Meeting of the Council at Ministerial Level, the Chair remarked, “As the OECD enhances its engagement with emerging economies, it must also continue its groundbreaking work to develop multidisciplinary guidelines for the treatment of state-owned and state-controlled enterprises…whether they are owned by shareholders or states, all companies should operate on a level playing field consistent with the principles of competitive neutrality.”