Substudy 19: Competition and Regulation

In spite of a multitude of measures to intensify competition, Austria still suffers from a dearth in competitive attitude. The advantages of size (increasing returns to scale) and the opportunity to gain international competitive strength by mergers (rather than innovation) are overestimated. After a first wave of liberalisation, characterised by the reform of the Industrial Code and some "genuine" privatisation, progress towards deregulation is now stagnating. Liberalisation of the telecoms market was a notable success, especially because new technologies were introduced in this market. As to energy utilities, after some initial price cuts competition has now come to a virtual standstill. Freelance services in Austria are still among the most restrictively regulated sectors in all of Europe. Comparatively minor reforms could substantially boost the competitive intensity of the Austrian economy and help to make better use of the growth potential.