The project run by the Finnish Competition and Consumer Authority (FCCA) to harmonise licensing and supervision practices has received an honourable mention in the Competition Advocacy Contest organised by the World Bank and the ICN (International Competition Network). The purpose of the Contest was to highlight competition-promoting projects implemented in 2014, which facilitated entrepreneurs’ entry to markets, fostered economic growth and reduced inequality. In particular, the FCCA project was commended for its systematic implementation, analysis of practical problems and presentation of corrective recommendations. The award was announced in Sydney on May Day. The Contest involved 31 projects from various countries.
The FCCA project and its report underlines inconsistent interpretation practices, particularly in the areas of construction and local planning, social welfare and health care services, the restaurant sector and taxi services. Similar problems were also found in the grocery trade and the energy sector. The report focused on the operations of the Regional State Administrative Agencies and Centres for Economic Development, Transport and the Environment, but also included examples of the practices of local authority building supervision agencies and the National Supervisory Authority for Welfare and Health (Valvira).
Enterprises interviewed during the project considered it particularly intolerable that officials file appeals against the decisions of other officials even if no one else, such as competitors or consumers, has complained about the decisions. Uncertainty of how to interpret rules and legislation is a disincentive for investment, entrepreneurship and innovation. Moreover, appeal processes are lengthy and tedious, delaying investments and in some cases leading to the cancellation of projects.
The FCCA report on this topic was published in April 2014. Since then, various ministries and agencies have launched projects of their own to harmonise their practices.
Anomalies highlighted in the project
The most important anomaly highlighted in the project was related to an enterprise’s potential to prosper on the market. Put simply, enterprises that should prosper are those whose products or services – in terms of price, quality and availability – make customers and consumers want to buy them. However, a profusion of complex regulation and its inconsistent application may lead to a scenario in which the enterprises that prosper are those which best know how to navigate shifting interpretations of regulation and legislation and which are best at cooperating with the authorities.
Another major anomaly was found in investment decisions: here, it is essential to be able to estimate future returns on investment with at least reasonable accuracy. Anticipating future revenues and expenses may become substantially more difficult in the face of inconsistent licensing and supervision practices.
A third anomaly related to the efforts of enterprises to cut costs by duplicating their business models in various parts of the country. Contradictory practices can lead to unnecessary extra costs if the business model is accepted in some municipalities but not in others. These extra costs are passed on to consumers.
Read the FCCA press release of 25 April 2014 and the report Viranomaiskäytännön yhtenäisyys ja kilpailun edistäminen (Uniformity in licensing and supervision practices and promoting competition) (pdf, 67 pages) (in Finnish)