On the priority tasks of the Competition Council in 2019
As usually, at the beginning of a new year the Competition Council of Latvia (the CC) publishes the tasks of the year. Fulfilment of these tasks should promote progress towards more efficient competition surveillance and prevention of competition distortions to facilitate growth of sectors and public benefits from strong and fair competition.
The list of current works is created based on the information we obtain from:
- research conducted in the previous period (cases, market surveillance, assessment of merger notifications and various applications);
- results of the public opinion survey, conducted in the autumn 2018;
- communication activities, meetings with companies, their organizations, also obtaining information from media;
- information on competition processes in other Baltic and European Union (EU) states.
The year 2019 is the last year of implementation of the CC three-year operational strategy; therefore, the authority will continue the work on the four defined directions.
1st direction. Strengthening of capacity, based on professional and responsible employees.
2nd direction. Exposure and prevention of significant competition infringements, market distortions, preclusion of adverse effects of market concentration.
3rd direction. Creation of understanding of market participants and public administrative bodies about free and fair competition, competition policy and culture.
4th direction. Strengthening of the authority role and recognition in international environment.
The CC needs professional and honest employees
Application of the Competition Law becomes more complicated each year. To make legally and economically correct assessment of conformity of market participants and their represented associations to the basic principles of fair competition, in-depth knowledge is required in many related fields – economics, law, IT, finances etc. Currently, the CC more than ever needs universal and honest professionals, who understand the dynamic changes of markets and are able to distinguish, which of these changes promote positive innovations and benefits to the public, and which – strengthen the market power of separate players and actually cause adverse effect on consumers by reducing the competition pressure.
Therefore, in the year 2019:
- we will continue investing in professional development of employees, ensuring training, transfer of knowledge, and transfer of professional experience and values of the authority to the new employees;
- we will continue improvement of the remuneration reform, commenced already in 2018, to attract and retain high level professionals;
- we will promote the image of employer, directing information events in particular towards youth, pupils and students, thereby shaping the understanding of competition culture among the future employers and employees.
To detect and prevent the most severe competition infringements in a timely manner
The public opinion survey carried out in 2018 revealed, that the public – entrepreneurs, associations, also local governments – agree, that there exist two major problems in the field of competition in Latvia: bid-rigging in public procurements and activities of public administrative bodies, which cause unequal competition conditions for entrepreneurs. The CC ensures compliance with these aspects also during its daily work, allocating a significant part of its resources.
In addition, the CC has to notice infringements related to abuse of market power, which are difficult to recognize and investigate due to their often complicated forms. The authority also has to assess an increasing number of merger transactions in order to prevent market concentration that is harmful for competition and has to carry out assessment of various sectoral policies and propose corrections of laws and other documents to ministries and other public authorities. Only in this way – through complex work – the competition environment in Latvia can be improved.
Therefore, in 2019, both for higher level of prevention – to discourage from committing infringements –, and for detection of infringements:
- we will continue ruthless turning against the most severe infringements of the Competition Law, bid-rigging, vertical trade limitations, exploitative, discriminatory and competitors excluding and abusive action by dominant companies, as well as non-reported mergers of companies;
- we will continue improvement of the legal framework of competition, establishing protection of individual reporters – whistleblowers, determining personal responsibility of officials for committed competition infringements;
- we will continue assessment of competition impeding activities, which arise from conduct of public administrative bodies or regulatory enactments, and will actively advocate, that the CC should at last have not only recommendatory tools of advocacy, but also actual powers to turn against competition distortions caused by public administrative bodies;
- we will conduct market surveillance in the sectors, which are significant for the public and economic development, in order to timely identify administrative obstacles and alleged infringements, which impede the development of sectors. In 2019, we have set as priority sectors: food retail sales (manufacturers/suppliers and merchants), finances and insurance, public utilities, pharmacy, wood industry, digital economics and cultural events.
Competition culture has to become the basic value of the public
The CC covers all sectors of economics, so the field of activity is extensive. Therefore, no competition supervisory authority, disregarding its size, will be able to change the competition culture and competition environment and make it really beneficial for entrepreneurship without the support of the public and, first of all, entrepreneurs themselves. The CC needs an extensive circle of allies, also among other state administration and law enforcement authorities.
Therefore, in the year 2019:
- we will invest in various informative events, informing and educating various target groups about the basic principles of fair competition and prohibited activities, incl. using modern communication tools and platforms;
- we will develop in-depth communication with entrepreneurship organizations and supervisory authorities of sectors, where competition problems have already been detected. These sectors also involve construction, trade of construction materials, pharmacy, energy;
- we will promote the Leniency Programme, protection options for whistleblowers, will encourage use of options offered by the Competition Law concerning compensation of loss caused by competition infringements.
We will work regionally and internationally
Already for the fourth year in a row we retain our high position – three stars in a scale of five – in the prestigious Global Competition Review (GCR) Rating Enforcement rating of the leading competition authorities in the world. This status puts on us huge responsibility for our work not only on a national, but also international scale.
In addition, starting from 2019 the CC is represented at the Office of Competition Committee of the Organization of Economic Cooperation and Development. The Head of the CC is elected as one of Vice-Presidents of the Office. This grants wider options to the authority because it is first of the new EU Member States will influence the agenda of OECD competition protection and will call to pay more attention also to trends characteristic of the Baltic region.
Therefore, in the year 2019:
- we will continue making a significant contribution to accumulation of the competition idea and practice on an international scale through cooperating with international organizations and networks (the European Competition Network, the International Competition Network, OECD, the UN Conference on Trade and Development (UNCTAD));
- we will strengthen cooperation with competition authorities of the Baltic states and Nordic countries;
- we will provide support to competition authorities in the countries, which are on the way to market economy and free competition (Ukraine, Georgia, Armenia, Moldova a.o.).
The year 2019 will be special for the CC with the fact, that the European Parliament and the Council Directive 2019/1 on ensuring sufficient resources and powers to competition authorities of Member States will come into force, so that these authorities could implement efficient competition surveillance and protection on the national and, consequently, the entire EU internal market (so called ECN+ Directive). This Directive will be transposed into the national regulatory enactments on the Competition Law in all EU Member States.
This means, that also Latvia will have to take over the basic requirement of the Directive – to provide the competition supervisory authority with the necessary resources and strengthen its independence, so that it could implement market surveillance efficiently and supervise and address all types of competition distortions. It is extremely important, because so far the CC, compared to other law enforcement and market surveillance authorities in Latvia, was undeservedly neglected in terms of resources, remuneration and independence status.
In the GCR rating of the best competition authorities in 36 countries around the world, the budget and salaries of employees of the CC of Latvia are the lowest, whereas the last issue of GCR has particularly appreciated, that the CC achieves considerable results by working according to the principle “doing more with less”. It is not a long-term solution; therefore, we hope, that we will be finally heard in Latvia.
Also in 2019, disregarding what action on the part of the government of Latvia will be caused by ECN+ Directive, the CC will remain faithful to its basic value – acting lawfully, professionally and independently to shape environment of fair entrepreneurship in the interests of the entire public.
As always, we call entrepreneurs, their associations and each resident of Latvia to cooperation, support and communication. We will be glad to meet you and receive constructive critics and suggestions for improvement of our work, and to provide explanations about competition issues of your interest.