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One entrepreneur out of ten in Latvia is ready to deliberate competition distortion for gaining illegal profit

The public opinion study, implemented by the Competition Council of Latvia (the CC) and presented on the World Competition Day,reveals a worrying trend: one surveyed entrepreneur out of ten in Latvia would be ready to deliberately agree with competitors or exercise any other competition distortion to gain illegal profit. Also 8 % of surveyed local governments expressed their readiness to support involvement of their owned capital company in competition distortion.

The public opinion study involved 317 respondents, who represent entrepreneurs, NGOs, local governments and law offices. The respondents mention bid-rigging in public procurements as the main obstacle of competition environment development in Latvia already for several years. The CC explains widespread expansion of this infringement – bid-rigging can be easy concealed from the public, and entrepreneurs become increasingly more educated, hiding evidence more carefully. Also tolerance of procurement organizers is observed, as they ignore signs of such infringements, which may be related both to limited knowledge and corruption.

Competition distortions created by the state and local governments was mentioned by respondents as another problem, which endangers the competition environment in Latvia. Majority – 80% of entrepreneurs and 76% of associations – hold a view, that the state and local governments should not discriminate entrepreneurs and create groundless competition advantages to their own capital companies, whereas only 15% of local governments consider, that the CC should address solving of this problem. To counter these competition distortions, the Saeima currently examines amendments to the Competition Law, which would grant broader powers to the authority.

Assessing the most efficient methods for discouraging entrepreneurs to engage in competition infringements, respondents mention education of entrepreneurs as a lower priority solution. Respondents mention particularly decisions on imposing of fines as the most disciplinary solution. Moreover, more than half (63%) of respondents hold a view, that the amount of fines is proportionate; however, they would also support raising of fines.

Compared to the study results in 2016, in this year the level of awareness of entrepreneurs on the Leniency Programme has increased – 43% know or rather know about facilities offered by the programme. 23% of entrepreneurs mention distrust in the state administration and fear to be identified as the most popular causes for not using the Leniency Programme.

In total 72% of respondents assess positively the impact of activities of the CC on the competition situation on markets. Easy communication and responsiveness of employees are most highly appreciated factors in the operation of the CC by respondents. Compared to studies conducted in previous years, from the point of view of law offices, trust in the authority has increased, entrusting commercial information of companies to the authority. The CC was recognised as a safe authority by 89% of respondents of this group, listing this aspect of operation of the CC among the most highly appreciated.

The CC public opinion study is carried out once every two years, and the results were published on the World Competition Day on 5 December. The information obtained during the study is taken into consideration in the process of annual planning of operational priorities of the authority.