Morocco: The Competition Council for a “gradual” abolition of state aid

The Competition Council unveiled this week its report for the year 2021, presented to King Mohammed VI. In this reportthe council headed by Ahmed Rahhou returns in particular to the situation of competition, last year, in the kingdom, in a context marked by the resumption of economic recovery, after the crisis linked to Covid-19.

“It is certain that competition has been ardently tested in this context of crisis and also appears in this crucial stage of the evolution of the Moroccan economy as a major challenge of the new development model”, indicates the council. in the presentation of the report addressed to the sovereign. “All the priorities of economic recovery are impacted by the situation of the Covid-19 pandemic”, we add.

Tertiary activities “mainly benefited” from state aid in 2021

The council thus recognizes that “this recovery remains dependent on the speed of deployment of the vaccination campaign, new mutations of the virus and government decisions on how to manage health risks”. The Board also recognizes that the support measures deployed at the start of the pandemic crisis by the Economic Watch Committee and the mechanisms engaged in the context of the 2020 amending finance law were all oriented towards cushioning the shocks simultaneously affecting the capacities productive and the demand for goods and services. “The balance between supply and demand support measures has made it possible to control the general level of prices on the goods and services markets during this stabilization period,” he says with satisfaction.

Thus, last year, “State aid focused on the objectives of recovery and rehabilitation, through the implementation of the “Pact for economic recovery and employment” signed in July 2020 between the ‘state, companies and the banking sector’. An agreement which “provides direct financial benefits, in the form of financial assistance from a dedicated fund and intended for investment projects within the framework of Public-Private Partnerships or to strengthen the capital of companies for the purposes of their development, or even in the form of indirect advantages, represented by loans guaranteed by the State or by an operationalization of national preference in public procurement”.

The report recalls that “some of this aid has taken the form of agreements and contracts with sectoral federations”, adding that it is the tertiary activities which “benefited mainly from these agreements, namely tourism, the events and caterers and that of amusement parks and games”.

The RSU, “conducive framework” for mitigating the effects of price increases

In the particular context that the national economy is going through, in addition to the importance of ensuring the “competitive neutrality” and the “temporality” of the aid, it seems “necessary to manage its abolition appropriately at the end of the crisis”, recommends the advice. He explains that “their hasty withdrawal risks leading to the bankruptcy of companies and accentuating concentration in certain markets, while their late withdrawal risks reinforcing the dependence of certain companies and weakening their competitiveness and their incentive to innovate”.

The report also welcomes the adoption, by the government, of a set of measures aimed at setting up a strategic stock of basic products and health products, with a view to allowing a regular supply of the markets, while remaining attentive fluctuating developments in international markets. “By striving to give better visibility to the supply of goods and services over the medium and long term, the spontaneous adjustment between supply and demand is likely to be made in an optimal manner, preventing any exaggerated rise in prices. maintained by a possible shortage of the products”, estimates the council.

The latter recognizes, further, that the upward trend in prices observed at the world level, on energy and food products, and which has impacted the national economy as well as the purchasing power of citizens, “has called for an acceleration of the implementation of the support program for citizens in application of the Royal High Instructions. “To this end, the project relating to the establishment of a Unified Social Register, the generalization of which is planned for the end of 2022, constitutes a favorable framework allowing the mitigation of the negative effects of the increase in prices, while by guaranteeing an effective channeling of direct state aid and maintaining a competitive functioning of the markets”, we consider.