OECD Product Market Regulation (PMR) Indicators: How does Brazil compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Brazil
2.58
OECD countries Average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Brazil
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Regulatory barriers are higher in Brazil than in most OECD countries. There is scope for greater simplification of the administrative requirements imposed on new businesses, as well as for reducing the complexity of regulatory procedures. The rules governing public procurement fall short of OECD best practices, and there are high barriers to entry in the network sectors. By contrast, overall regulation in services is close to the OECD average, though with differences across sectors. Public ownership of firms in the surveyed sectors is also close to the OECD average. However, the governance of these enterprises could be improved to enhance their efficiency and to level the playing field between privately and publicly-owned firms.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Brazil
Barriers to Domestic and Foreign Entry
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Brazil
SECTOR-SPECIFIC HIGHLIGHTS In terms of sector-specific regulations, Brazil falls short of international best practices in many industries. The energy and transport sectors, with the exception of air transport, could benefit from a review of their regulatory setup to strengthen competition, reduce user costs and improve infrastructure. Professional services are subject to regulations that inhibit competition and innovation, such as constraints on the legal form that professional firms can take and territorial restrictions to the movement of professionals within the country. However, regulatory constraints to competition in general retail distribution and in the retail sale of medicines are lighter than in many OECD countries.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Brazil 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Brazil 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
The PMR results for Brazil show that there is room for improving in several areas. The country would benefit from a review of its regulatory set-up in many sectors and domains to identify and remove unnecessary regulatory obstacles to competition.
Strengths
Challenges
The air sector, which plays an important role in transportation, benefits from a competition-friendly regulatory set-up.
The regulatory framework for general retail trade is competition-friendly: owners can decide on shopopening hours, barriers to entry are limited to registration in a specific register, and, in general, there are few constraints to competition, even with respect to online sales.
The retail sale of medicines is less regulated than in many OECD countries. In particular, there are no restrictions on the number, location and ownership of pharmacies.
The regulatory framework for public procurement does not provide a level playing field for all potential bidders. For example, there are no obligations to publish tender documents online, nor to ensure that the requirements imposed on bidders are proportionate to the size and complexity of the tender.
In the natural gas and electricity industries, as well as in most transport sectors, a number of unnecessary constraints to competition are still common and more prevalent than in many OECD countries.
The process for opening up a new business is burdensome. Since there is no one-stop shop where all licenses and authorisations can be issued, four different bodies have to be contacted. In addition, there is no one-stop shop where all information on such licenses can be obtained.
Brazil would benefit from paying greater attention to competition when designing and assessing new regulation. In particular, there is no obligation to perform a regulatory impact assessment.
The country lacks rules for the wide and transparent involvement of stakeholders in the process of developing new regulations. In addition, rules disciplining the interaction between lobbyists and public officials are very limited.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), " The 2018 Edition of the OECD PMR Indicators and Database – Methodological Improvements and Policy Insights", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org