Anticompetitive Effects of Commercial Government Initiatives: an Experimental Evaluation

Since the 2010s public entities throughout Europe have increasingly set up commercial initiatives to generate additional revenue. Think of a national Forestry Service trading in timber or biomass, or a statistics agency providing consulting services. Because EU competition law does not apply to activities related to the exercise of public authority, these commercial initiatives may fall outside the reach of competition law scrutiny. Therefore, it is of importance to determine to what extent these commercial government initiatives can lead to anticompetitive outcomes in markets. While commercial government initiatives can behave anticompetitively with impunity, is it also likely that they will? To find this out, we are developing an experimental market simulation in which we let commercial government initiatives compete with ‘regular’ private firms. In these simulations we observe for predation by the commercial government initiatives, and collusion by the ‘regular’ private firms.