Message prepared by the Ministry of Economics

At its meeting on 14 December 2021, the Cabinet of Ministers approved amendments to the Competition Law (hereinafter - the draft law) with the aim of strengthening the Competition Council (hereinafter - the CC), providing the necessary guarantees of independence, resources and enforcement powers for effective investigation and prevention of competition law violations. The draft law will be submitted to the Saeima for adoption.

"By improving the Competition Law, we will not only strengthen the functional and financial independence of our main competition supervisor, the Competition Council, but will also promote fair competition in the business environment," emphasizes Jānis Vitenbergs, the Minister of Economics.

The draft law envisages that the CC will be under the supervision of the Cabinet of Ministers in the future and not Ministry of Economics like before. Furthermore, the operational independence of the CC will be strengthened by providing the institution with complete independence in resolving the internal organizational issues of the institution.

Among other things, the draft law stipulates that the selection of candidates for the position of the chairman of the Council and members of the Council in an open competition will be organized by the Cabinet of Ministers, entrusting the functions of the secretariat to the State Chancellery. The Cabinet of Ministers will also decide on the dismissal of the chairman and a member of the Council.

The draft law also provides for the harmonization of the powers of competition authorities at the EU level to effectively investigate and detect antitrust infringements.

Accordingly, it is planned to review the time allotted by the CC within the procedural activities for sealing the market participant's premises to obtain and preserve evidence. The right to receive support from other law enforcement institutions within the framework of procedural activities (inspection) has also been clarified, incl. the right of the CC to authorize the officials of the competition authorities of other Member States to actively assist in the implementation of proceedings, if the CC conducts proceedings in the name and on behalf of the competition authority of another Member State.

The draft law also clarifies the responsibility of market participants, their associations, and other persons if incomplete explanations are provided and the obligation of persons involved in the case under investigation to provide access to information (data) available to them.

Among other things, the draft law provides for a review of the fines applicable to a market participant, setting changes in the thresholds of the applicable maximum fine.

The deterrent effect of fines varies considerably across the European Union, which significantly reduces deterrence. Thus, it is particularly important to unify the minimum amount of fines within the EU for infringements of European Union competition law (infringements provided for in the first paragraph of Article 101 and Article 102 of the Treaty on the Functioning of the European Union). Accordingly, the draft law clarifies the legal norms of the Competition Law that apply to the criteria for calculating fines. They provide that the infringer's liability for infringements of European Union competition law will henceforth be determined by its worldwide turnover and that the maximum fine imposed on operators for infringements of the prohibition on agreements and abuses of a dominant position will be 10 % of their net turnover in the last financial year worldwide.

At the same time, the draft law envisages expanding the scope of the Leniency Program, incl. to expand cooperation with market participants in the disclosure of prohibited vertical agreements on resale price maintenance or passive sales restriction. The Leniency Program is an important tool that helps to detect competition law infringements in cooperation with the CC and facilitates more effective prosecution of market participants involved in an infringement, while enabling the market participant to obtain immunity from a fine.

Finally, the draft law is supplemented with the procedure and regulations for mutual co-operation between competition authorities. This will ensure a more efficient exchange of information between authorities in the event of international cooperation and a more effective investigation and detection of cross-border competition law infringements.

With the adoption of the draft law, Directive 2019/1 / EU of the European Parliament and of the Council on the provision of conditions to enable the competition authorities of the Member States to enforce competition rules more effectively and to ensure the proper functioning of the internal market will be implemented in Latvian legislation.