OECD reviews of regulatory reform Regulatory reform in Italy.

404 Pages·2001·2.46 MB·English

by  OECD

«
GOVERNANCE
OECD Reviews of Regulatory Reform OECD Reviews of Regulatory Reform
Regulatory Reform in Italy
Regulatory
Starting later than many countries, Italy devoted the 1990s to "catching up" with the leading OECD countries
Reform in Italy
in economic and governance reforms. The scope, speed and consistency of structural reforms by multiple
governments were remarkable. Accumulated rigidities and practices of decades were re-assessed, and many
rejected. Awareness of the excessive role of the state in the economy led to broad policy and institutional
changes in favour of transparency, public sector efficiency, and market competition. By 1999, Italy’s privatisation
programme was among the largest in the OECD. Reform of Italy’s regulatory state is a formidable task, but early
results, such as reduced red tape and stronger accountability of the public service are appearing. Yet enhancing
the growth potential of the Italian economy – following years of comparatively slow growth, relatively high
inflation, low foreign direct investment, and a declining market share in world trade – justifies faster and deeper
regulatory reform to address the substantial reform agenda still outstanding. Long-standing income gaps
between north and south could be narrowed by revitalised domestic markets. Better regulatory practices are
GOVERNANCE
particularly needed at regional and local levels, whose decisions increasingly decide Italy’s future.
Italy is among several OECD countries to request a broad review by the OECD of its national regulatory practices
and domestic regulatory reforms. This Review presents an integrated assessment of regulatory reform in
framework areas such as the quality of the public sector, competition policy and enforcement, and market
openness. It also contains chapters on sectors such as telecommunications, electricity, and railways, and an
assessment of the macroeconomic context for reform. The policy recommendations present a balanced plan
of action for both short and longer term based on best international regulatory practices.
In the same series:
Regulatory Reform in the Czech Republic
Regulatory Reform in Denmark
Regulatory Reform in Greece
Regulatory Reform in Hungary
Regulatory Reform in Ireland
Regulatory Reform in Japan R
Regulatory Reform in Korea e
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Regulatory Reform in Mexico
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Regulatory Reform in the Netherlands l
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Regulatory Reform in Spain t
o
Regulatory Reform in the United States r
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The general policy analysis which is the basis for these country reviews is presented in the OECD Report on R
Regulatory Reform: Synthesis, and the supporting two-volume OECD Report on Regulatory Reform: Sectoral and e
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Thematic Studies, published in 1997. o
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OECD Reviews of Regulatory Reform
Regulatory Reform
in Italy
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
00_cover.fm Page 2 Friday, April 6, 2001 8:54 AM
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into
force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD)
shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising standard of
living in Member countries, while maintaining financial stability, and thus to contribute to the
development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member countries in the
process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in
accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France,
Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries
became Members subsequently through accession at the dates indicated hereafter: Japan
(28thApril1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland
(22ndNovember 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The
Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD
Convention).
Publié en français sous le titre:
LA RÉFORME DE LA RÉGLEMENTATION EN ITALIE
© OECD 2001
Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained
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FOREWORD
The OECD Review of Regulatory Reform in Italy is one of a series of country reports carried out under
the OECD’s Regulatory Reform Programme, launched in 1998 in response to a mandate by OECD Ministers.
The Regulatory Reform Programme is aimed at helping governments improve regulatory quality — that
is, reforming regulations which raise unnecessary obstacles to competition, innovation and growth, while
ensuring that regulations efficiently serve important social objectives.
The Programme is part of a broader effort at the OECD to support sustained economic development,
job creation and good governance.It fits with other initiatives such as our annual country economic surveys;
the Jobs Strategy; the OECD Principles of Corporate Governance; and the fight against corruption, hard-core
cartels and harmful tax competition.
Drawing on the analysis and recommendations of good regulatory practices contained in the1997 OECD
Report to Ministers on Regulatory Reform, the Regulatory Reform Programme is a multi-disciplinary process of in-
depth country reviews, based on self-assessment and on peer evaluation by several OECD committees.
The country Reviews are not comprehensive, but, rather, targeted at key reform areas.Each Review has
the same structure, including three thematic chapters on the quality of regulatory institutions and government
processes; competition policy and enforcement; and the enhancement of market openness through regulatory
reform.Each Review also contains chapters on sectors such as electricity and telecommunications, and an
assessment of the macroeconomic context for reform in the country under review.
The country Reviews benefited from a process of extensive consultations with a wide range of government
officials (including elected officials) from the country reviewed, business and trade union representatives,
consumer groups, and academic experts from many backgrounds.
These Reviews demonstrate clearly that in many areas, a well-structured and implemented programme
of regulatory reform has brought lower prices and more choice for consumers, helped stimulate innovation,
investment, and new industries, and thereby aided in boosting economic growth and overall job creation.
Comprehensive regulatory reforms have produced results more quickly than piece-meal approaches; and
such reforms over the longer-term helped countries to adjust more quickly and easily to changing circumstances
and external shocks.At the same time, a balanced reform programme must take into account important social
concerns.Adjustment costs in some sectors have been painful, although experience shows that these costs
can be reduced if reform is accompanied by supportive policies, including active labour market policies,
to cushion adjustment.
While reducing and reforming regulations is a key element of a broad programme of regulatory reform,
country experience also shows that in a more competitive and efficient market, new regulations and
institutions are sometimes necessary to assure that private anticompetitive behaviour does not delay or
block the benefits of reform and that health, environmental and consumer protection is assured.In countries
pursuing reform, which is often difficult and opposed by vested interests, sustained and consistent political
leadership is an essential element of successful reform efforts, and transparent and informed public dialogue
on the benefits and costs of reform is necessary for building and maintaining broad public support for
reform. 3
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Regulatory Reform in Italy
The policy options presented in the Reviews may pose challenges for each country concerned, but they
do not ignore wide differences between national cultures, legal and institutional traditions and economic
circumstances. The in-depth nature of the Reviews and the efforts made to consult with a wide range of
stakeholders reflect the emphasis placed by the OECD on ensuring that the policy options presented are
relevant and attainable within the specific context and policy priorities of each country reviewed.
The OECD Reviews of Regulatory Reform are published under the responsibility of the Secretary-
General of the OECD, but their policy options and accompanying analysis reflect input and commentary
provided during peer review by all 29 OECD Member countries and the European Commission and during
consultations with other interested parties.
The Secretariat would like to express its gratitude for the support of the Government of Italy, the Italian
Parliament, and the Italian independent authorities for the OECD Regulatory Reform Programme and their
consistent co-operation during the review process.It also would like to thank the many OECD committee
and country delegates, representatives from the OECD’s Trade Union Advisory Committee (TUAC) and
Business and Industry Advisory Committee (BIAC), and other experts whose comments and suggestions were
essential to this report.
ACKNOWLEDGEMENTS
This series of Reviews of Regulatory Reform in OECD countries was completed under the
responsibility of Deputy Secretary-General Sally Shelton-Colby. The Review of Italy reflects
contributions from many sources, including the Government of Italy, the Italian Parliament, and the
Italian independent authorities, including the Autorità garante della concorrenza e del mercato, the Autorità
per l’energia elettrica e il gas, the Autorità per le garanzie nelle comunicazioni, and the Bank of Italy. Major
contributions were also made by the Committees of the OECD, representatives of Member
governments, and members of the Business and Industry Advisory Committee (BIAC) and the Trade
Union Advisory Committee (TUAC), as well as other groups. This report was peer reviewed on 23
March 2001 in the OECD’s Ad Hoc Multidisciplinary Party on Regulatory Reform.
In the OECD Secretariat, the following people contributed substantially to the review of Italy:
the former Head of Programme on Regulatory Reform and lead drafter: Scott H. Jacobs; Document
preparation: Jennifer Stein; Economics Department: Chapter 1 was principally prepared by
Alessandro Goglio, and benefited from work by Giuseppe Nicoletti on regulatory indicators; Public
Management Service:Cesar Córdova-Novion; Trade Directorate: Sophie Bismut, Anthony Kleitz;
Directorate for Financial, Fiscal and Enterprise Affairs: Patricia Heriard-Dubreuil, Bernard J.
Phillips, Sally Van Siclen, Michael Wise; Directorate for Science, Technology, and Industry: Wonki
Min, Dimitri Ypsilanti; General Secretariat: Steve Cutts. The Head of the Programme on Regulatory
Reform is Rolf Alter.
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TABLE OF CONTENTS
Part I
Executive Summary.................................................................................................................................................. 9
Chapter 1. Regulatory Reform in Italy................................................................................................................. 15
Chapter 2. Government Capacity to Assure High Quality Regulation............................................................ 47
Chapter 3. The Role of Competition Policy in Regulatory Reform.................................................................. 61
Chapter 4. Enhancing Market Openness through Regulatory Reform............................................................ 69
Chapter 5. Regulatory Reform in Electricity, Gas, and Railroads.................................................................... 77
Chapter 6. Regulatory Reform in the Telecommunications Industry.............................................................. 89
Chapter 7. Conclusions and Policy Options for Regulatory Reform................................................................ 99
Annex Figure......................................................................................................................................................... 119
Annex Tables......................................................................................................................................................... 121
Notes...................................................................................................................................................................... 131
Bibliography.......................................................................................................................................................... 135
List of Boxes
1.1. What is regulation and regulatory reform?.............................................................................................. 17
1.2. The rise and fall of the Italian model of public enterprises.................................................................. 25
1.3. Completing reforms in road freight: Is the end of the tunnel at last in sight?.................................... 35
2.1. Managing regulatory quality in Italy......................................................................................................... 49
2.2. How many regulations does Italy have?.................................................................................................. 50
2.3. Unwinding the legal knot in Italy.............................................................................................................. 52
2.4. Two best Italian practices: self-certification and one-stop shops........................................................ 53
2.5. Transparency of regulatory systems in selected OECD countries in 1998.......................................... 56
2.6. The role of the Italian Parliament in regulatory reform......................................................................... 60
3.1. Major competition problems contribute to Italy’s relatively higher inflation..................................... 62
3.2. Protecting consumers by challenging horizontal restraints in Italy...................................................... 64
3.3. The costs of judicial appeals..................................................................................................................... 66
3.4. Local and regional regulation: retailing and solid waste disposal....................................................... 68
4.1. The OECD efficient regulation principles for market openness........................................................... 71
4.2. Reducing the cost of the state by opening public procurement in Italy............................................. 74
5.1. Improving authorising procedures for generation plants in Italy......................................................... 83
6.1. Spectrum allocation in Italy....................................................................................................................... 96 5
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Regulatory Reform in Italy
List of Tables
1.4. Major privatisations in Italy in the 1990s................................................................................................. 30
4.1. Inflows of Foreign Direct Investment, 1996-99........................................................................................ 70
5.1. Differences in costs between Italy and European union producers.................................................... 84
6.1. Italy’s mobile subscriber penetration ranking among OECD countries.............................................. 90
Annex Tables
1.1. Main macroeconomic indicators............................................................................................................. 121
1.2. Sectoral regulatory reform in Italy.......................................................................................................... 122
1.3. Potential impacts of regulatory reform in Italy..................................................................................... 127
List of Figures
1.2. Synopsis of summary indicators of product market regulation by domain ....................................... 33
1.3. Real GDP developments compared........................................................................................................ 40
2.1. Progress in the use of regulatory quality tools in Italy, 1998-2000....................................................... 47
5.1. International price comparisons – industrial electricity prices in selected OECD countries........... 78
5.2. International price comparisons – household electricity prices in selected OECD countries......... 79
5.3. One and two firm concentration levels for selected countries or regions........................................... 81
6.1. OECD national business tariff basket, 1991-98 ...................................................................................... 91
6.2. OECD composite business basket, November 2000............................................................................. 92
6.3. OECD composite residential basket, November 2000 ......................................................................... 92
Annex Figure
1.1. Comparative indicators of product market regulation in OECD countries............................................ 119
Part II
Background report on Government Capacity to Assure High Quality Regulation....................................... 141
Background report on The Role of Competition Policy in Regulatory Reform............................................. 201
Background report on Enhancing Market Openness through Regulatory Reform....................................... 247
Background report on Regulatory Reform in Electricity, Gas, and Railroads............................................... 293
Background report on Regulatory Reform in the Telecommunications Industry......................................... 355
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Part I
OECD REVIEW
OF REGULATORY REFORM
IN ITALY
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EXECUTIVE SUMMARY
Starting later than many countries, Italy devoted the 1990s to “catching up” with the leading OECD
countries in economic and governance reforms. The scope, speed and consistency of structural reforms by
multiple governments were remarkable. Today, Italy continues to move faster than many countries in
addressing the substantial reform agenda that is still outstanding. Regulatory reform was only one of many
changes in Italy in the 1990s, but it was an essential one. Following the macroeconomic stabilisation
programme of the early 1990s, regulatory reform helped attack many of the underlying structural problems
in the economy and the public administration.
The decade of the 1990s, at the confluence of multiple political and economic challenges, domestic and
external, was in some respects shock therapy for Italy. Accumulated rigidities and practices of decades were
re-assessed, and many were rejected. An increasing awareness of the excessive role that the state played
in economic life led to consequent policy and institutional changes. As the political landscape was redrawn,
aspects of the centralised state were dismantled and many statist economic policies were replaced with
more transparent and pro-competitive policies.
Chapter 1. The macroeconomic context for regulatory reform.By the early 1990s, improvements in the long-run
economic performance of Italy had become conditional upon the elimination of major macroeconomic and
microeconomic impediments, often interconnected. At the same time, the limits of state intervention were
reached with adoption of a harder position on state aids, which led to bankruptcy of some state enterprises.
As bankruptcy became a serious threat for public operations, Italy’s commitment to privatisation became
firmer, accompanied by reforms of financial markets, corporate governance, and the public administration.
Privatisation took off in 1993, and by 1999 Italy had become one of the largest privatisers in the OECD.
Macroeconomic stabilisation in preparation for European monetary union further triggered a broad programme
of structural reforms. In addition, long-standing income gaps between north and south had not been reduced
by decades of centralised and statist strategies, and a revitalised market seemed to offer new hope for regional
development.
Despite these reforms and a widening programme of privatisation, by the end of 1997 Italy was still one
of the most regulated countries in the OECD. However, by end-2000, broad-based progress as regulatory
reform gained momentum was changing the national regulatory stance. Regulatory reform has already
contributed to better productivity performance and consumer welfare. For example, Italian consumers are
enjoying a wider range of services and lower prices in telecommunications. Regulatory reform and privatisation
transformed Italy’s financial markets by removing entry barriers and permitting new entrants. A reduction
in the burden of government has already resulted in some welfare gains. On the other hand, reform of the
energy, transport, and insurance sectors, although in many respects bolder than the EU directives standards,
were started late. Freedom in postal services is advancing, but a costly step backward may have been
taken, while development of a more competitive retail distribution system has been slowed by the regions.
Accelerating the pace of regulatory reform will improve growth and job creation in Italy, and settling
outstanding restructuring and competition issues in network industries will boost consumer welfare.
Chapter 2. Government capacity to assure high quality regulation.Italy’s governance and market reforms are the
first broad-based attempt in post-war years to transform the role and practices of the state. These reforms
have gone beyond simple adjustments to improve the performance of the existing system. Rather, reforms
have established new relations between the state, citizens, and the market. Reform of the regulatory state 9
OECD 2001