Chapter 4: Competition for Public Services
Large potential for increased competition for public services
Chapter 4 investigates competition for public services. The public sector is just as important as the private sector as far as the objective to increase competition is concerned.
Using international comparisons, the chapter illustrates that Danish legislation basically provides the possibility to choose freely among alternative providers of welfare services. But alternative suppliers’ actual ability to attract users is quite a different story. Waiting lists and lack of information about providers are the main reasons why users may not actually experience freedom of choice between different suppliers. Moreover, in some cases, private suppliers receive an inferior public compensation per user served compared to public suppliers providing similar services. Finally, private suppliers are in some cases excluded from providing certain welfare services.
Therefore, the Competition Authority suggests that suppliers of welfare services are subjected to compulsory publication of a given set of indicators for the quality of the service they provide. At the same time the Competition Council needs further authority to intervene against municipalities that contrary to legislation discriminate between public and private suppliers.
The chapter also points out that use of public procurement has hardly developed in recent years. Analyses carried out by the Competition Authority indicate that municipalities can increase their use of public procurement putting out to tender additional services worth at least DKK 14 billion (approx. EUR 1,8 billion). The Competition Authority therefore recommends that additional efforts are made to promote usage of public procurement. As a first step, increased supervision with municipalities may clarify whether municipalities do in fact comply with current legislation on public procurement. Another way to promote public procurement could be to compensate municipalities individually for a part of the costs related to usage of public procurement (e.g. contract and supervision costs). Such a compensation scheme should be paid for by the municipalities themselves redistributing funds from municipalities with modest use of public procurement to municipalities with relatively intensive use of public procurement.
(Lau Nilausen, Pia Ziegler)