To promote the competitiveness of the Latvian economy, the Organisation for Economic Co-operation and Development (OECD), in its report on the Latvian economy published on 25 April, recommends strengthening the powers of the Competition Council (CC) to ensure the competitive neutrality of state capital companies and to supervise the financial or banking system in Latvia.
On 25 April 2024, the OECD Secretary-General Mathias Cormann visited Latvia to present the latest Economic Survey of Latvia and its recommendations for the development of the Latvian economy.
OECD Secretary-General Mathias Cormann stressed that Latvia has low customer mobility in the banking sector and weak competition in the financial system, which leads to high borrowing costs, thus reducing companies’ access to credit. It is therefore particularly important to strengthen the role of the CC in supervising financial markets and implementing competition policy in the sector. In addition, the OECD survey points to the need to extend the powers of the CC in the competitive neutrality area, given that state capital companies remain at a high risk of adversely affecting business growth and creating barriers to entry for new firms in service sectors. Therefore, the OECD recommends extending the powers of the CC to carry out market studies and initiate regulatory assessments, as well as to assess the efficiency of state capital companies.
To improve competition rules, the OECD recommends aligning the existing Competition Law with the EU Merger Regulation by introducing a stop-the-clock principle. This would allow the CC to suspend merger reviews until the missing information is provided by the merging parties. In addition, the OECD recommends that the CC continue its ongoing work on IT development, increasing the CC’s resources for IT equipment and software development, as well as staff training. This will expand the CC’s IT laboratory and existing facilities for better quality ex-post evaluations.
Juris Gaiķis, Chairman of the CC: “The OECD recommendations clearly show that the CC is moving in the right direction and is aware of the “weak points” that need to be improved, as the OECD recommendations are largely in line with the already developed CC Operational Strategy for 2023–2029 and the priorities set out in the existing government action plan. However, effective competition and its development depend directly on a strong and independent competition supervisor, so we hope to be heard by Latvian policymakers on strengthening the powers of the CC.”
The OECD Economic Survey for Latvia is available on the OECD website: https://www.oecd.org/economy/latvia-economic-snapshot/ (available in English), while the summary in Latvian is available at: https://www.em.gov.lv/lv/media/19041/download?attachment.
According to OECD practice, such surveys are published every two years.