The calculations of the Competition Council (the CC) show that, over the three-year period, the institution's work has benefited the public on average 26 million euros annually. However, analysing only the results of last year's work, the benefit to public can be measured above 52 million euros. Thus, considering the institution's budget in 2021, each euro allocated to the institution last year generated a public benefit of approximately 24.28 euros.
Juris Gaiķis, the chairman of the CC: “The number of infringement cases or penalties imposed by the Competition Council does not serve as a basic criterion for assessing the efficiency of the institution. Our aim is not primarily to penalize companies but to raise their awareness of fair competition and prevent possible infringements. The consumer's benefit from competing markets is one of the indicators of the institution's effectiveness, which it focuses on in its investigative, supervisory, and educational activities. For a period of three years, we had set ourselves a bar – to achieve a public benefit of at least 24 million euros, but in 2021 with hard work this bar has been significantly exceeded.”
The calculation of the benefit to public is based on the methodology recommended by the Organisation for Economic Co-operation and Development (OECD). To adapt it to the specifics of the Latvian economy, it has been supplemented with recommendations from the European Commission and external experts and other practical opinions of the competition authorities of the Member States of the European Union.
In order to calculate the public benefit, the decisions made by the institution during the reporting period are evaluated. By detecting violations and thus preventing cartels and abuse of dominant position, the CC provides direct and immediate benefits to businesses and consumers, for example, preventing possible unjustified price increases. In addition, the positive effect of the institution's preventive actions, such as warnings and negotiation procedures against certain undertakings that had committed minor infringements of cartels or had abused a dominant position, is considered. The calculation also assesses the merger control provided by the institution with an aim not to allow excessive concentration of market power.
It should be emphasized that fines imposed by the CC and paid by companies are not taken into account in the calculation of the public benefit, as their primary purpose is to prevent and deter similar violations in the future.
Benefit from the investigation of cartels
In 2021, the most significant contribution to public - 60% of the estimated public benefit or more than 30 million euros – was made by the fight against cartels. In 2021, the CC discovered two cartels – “Construction companies' cartel”, in which ten construction companies were fined for a long-term prohibited agreement on conditions for participation in public and private construction procurements. Another cartel was a land reclamation cartel. Two land reclamation companies - Ltd. “Valkas meliorācija” and Ltd. “Agromeliorators” illegally agreed on the terms of participation in three procurement procedures organized by the capital company of the Ministry of Agriculture.
Benefit from the elimination of the abuse of a dominant position
Similarly, a significant benefit to public was provided by the CC's decisions taken on the abuse of a dominant position, amounting to almost 40% of the estimated public benefit, or more than 20 million euros.
A significant benefit from this 40% was provided by the CC's work on the so-called “Tīrīgas” case, where Riga intended to close the waste management market to competition for 20 years. In 2021, the CC reached an agreement with Riga's City Municipality and Ltd. “Getliņi EKO”. The settlement provided that the parties would not abuse their dominant position in the future, and after receiving the analysis of competition law economists, the municipality will present the plans for further waste management organization in Riga. Riga Municipality also paid a fine in the amount of 500 000 euros to the state budget, while Ltd. “Getliņi EKO” paid 385 000 euros.
Benefit from preventive actions
The preventive work of the CC, such as warnings and negotiation procedures, provided a public benefit of more than 300 thousand euros in 2021, while the merger control carried out by the institution, preventing an unfavourable concentration of market power of companies, provided a public benefit of about 80 thousand euros.
The year 2021 was significant because of the institution's activity providing prevention measures, which is twice as high as in 2020. Implementing the “Consult First” principle, in cases of small market participants and possible minor violations, nine prevention measures have been implemented, educating and warning a total of 24 legal entities about possible violations of the Competition Law. Last year, the desire of companies to merge and strengthen their position in the market also increased significantly. Thus in 2021, the CC has made twice as many merger decisions as in 2020 to avoid excessive market concentration. Last year, 22 merger decisions were made - the highest number of decisions adopted in a year in the last five years.