OECD report identifies competition-distorting rules & provisions in Greek tourism
An 11-month investigation by the Organization for Economic Co-operation and Development (OECD) in cooperation with Greece’s authorities into the country’s food processing, retail trade, building materials and tourism sectors has identified a wide range of regulations and legal provisions that undermine competition.
In the “Competition Assessment Review of Greece” report, the OECD made 76 recommendations for specific tourism provisions out of the 132 provisions on tourism that were analyzed in-depth during the course of the project.
“Despite many changes in tourism legislation, our review of the laws and regulations on the sector has indicated that some obsolete or restrictive provisions that harm competition still remain,” the OECD notes.
The organization underlined that if some of its recommendations are implemented, for example from lifting restrictions on cruises and marinas, the benefits to the Greek economy are estimated at 67.3 million euros annually.
The OECD recommends lifting barriers to entry (such as for hotels, cruise operations, marinas, recreational vessels, car rental with a driver, tourist coaches) and obligations on price notifications and approvals.
“Our recommendations aim at making the environment more flexible and attractive – or cheaper – for businesses,” the organization said.
The main findings of the OECD’s report include comments and recommendations on:
In a section entitled “Barriers to entry into the tourism sector,” the OECD refers to the Greek hotel market and to the law that “effectively prevents anyone from entering the lucrative luxury hotel market by converting an existing house or building.”
Specifically, according to law, if an investor bought an old building, even a large one, that could acquire more than 1-star with additions of rooms and improvement of services, he is obliged to demolish it and to rebuilt it in order to receive more stars. “The above procedure would require substantially more resources and hence constitutes a barrier to entry,” the OECD says.
Also, the OECD comments that “The rules on election to the Hellenic Chamber of Hotels clearly pose a barrier to entry.
The OECD focuses on the restriction that allows only roundtrip cruise trips by any cruise operator who home ports in Greece. Journey’s of cruise ships must also last at least 48 hours.
This clearly restricts non-circular cruises and partial cruise services and, thus, the possibility of passengers embarking and disembarking at different ports. It also leaves out of the Greek tourist market bundled packages that mix cruises and land-based vacations such as cruising for a few days and then remaining at a chosen island destination for the rest of the holiday (from one of the ports of call of the cruise ship).
The OECD recommends abolishing the round trip restriction while keeping the 48-hour minimum cruise duration restriction (to clearly differentiate between cruises and ferry services).
Despite some revisions to the legal framework, the OECD sees that there are still provisions in the current regulation for marinas that restrict competition.
The organization notices that pricing rules are unnecessarily restrictive and lists a series of laws and provisions that “set unnecessarily strict licensing rules.”
The OECD says that the most harm caused to the sector is the regulatory provision that prohibits berthing in fishing and commercial ports if there is an operating marina within five nautical miles. “This provision clearly aims at protecting marinas from competition and at granting local monopoly rights. This provision should be explicitly repealed,” the organization comments.
The OECD does not make any recommendations on the legal provisions that prevent tourist coaches from competing with KTEL coaches.
However, the organization underlines that “the activities of tourist coaches could be enhanced to improve competition within the market without affecting regular coach services.
“We recommend that tourist coaches be allowed to make stops, to pick up or to drop off their passengers in multiple destinations, while still complying with the requirement to carry a predetermined group of customers as required by the current legislation,” OECD says.
To read the OECD’s whole mention of the Greek tourism sector, press here (chapter 4, pages 181-220).