The Bank of Italy and the Italian Competition Authority presented a joint report finding that competitive conditions in Italy remained generally stable between 2010 and 2023, broadly matching other major European economies and contrasting with weakening competition in the United States. The assessment nevertheless identifies high concentration in certain sectors and limited scope to challenge leading firms’ market positions. The aggregate mark-up in the non-financial, non-agricultural private sector rose moderately from 1.20 to 1.23, mainly reflecting higher margins within individual sectors rather than a shift toward more profitable sectors. Increases were particularly evident in manufacturing, energy and wholesale trade, while professional services recorded declining margins, partly reflecting earlier liberalization measures. Market concentration rose during the sovereign debt crisis before declining to levels close to those of 2010 by 2023. Regulated services with high entry barriers remained highly concentrated, with maritime and air transport undergoing further consolidation. Business dynamism remained a constraint on competition. The net firm entry rate was negative for much of the past decade before turning positive from 2021, supported by the economic recovery and crisis support measures. Leading firms’ positions remained persistent, although this eased overall. Italy’s numerous micro-enterprises often exert limited competitive pressure on larger firms, while unfavorable demographic trends have reduced business turnover. The report identifies further liberalization, new firm entry and growth among the most productive businesses as potential ways to strengthen competition and limit the accumulation of market power.
Bank of Italy and Italian Competition Authority report broadly stable competition but persistent concentration in some sectors
A joint report by the Bank of Italy and the Italian Competition Authority finds that competition remained broadly stable from 2010 to 2023, despite a moderate rise in mark-ups. High concentration in some regulated sectors and entrenched market leaders remain concerns, although net firm entry returned to positive territory from 2021. Further liberalization and stronger business entry and growth could improve market contestability.