Distortion of competition is a perennial concern of competition policy and a key challenge for new markets. The research problem herein elaborates on the concept of competitive neutrality by analysing its theoretical underpinnings with a view to promoting meaningful political debate and related administrative and legal reforms topical in a number of economies, including Finland. A fundamental aim of the article is to contribute to developing a theoretical framework for further studies of competitive neutrality and distortion of competition.
There is a conceptual connection between competitive neutrality and distortion of competition: competitive neutrality implies undistorted competition, where a trading partner whose purchase of a certain product the rival companies compete for will make his choice among the alternatives offered by the rival firms solely on the basis of his preferences. In that case, the preference ranking he constructs of the rivals’ products is not affected by any outside factor. Competitive neutrality is a multidimensional and disputed issue because distortions of competition have a broad institutional background. The consequences of lacking competitive neutrality and main types of policy response to competitive neutrality problems are also discussed.World Competition