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The Competition Council of Latvia will be able to prevent competition distortions caused by public administrative bodies



On 28 March, the Saeima adopted in the final reading amendments to the Competition Law, which grant the Competition Council of Latvia (the CC) the powers to address competition distortions caused by public administrative bodies, local governments and their undertakings.

Skaidrīte Ābrama, the Chairwoman of the CC: “Competition distortions caused by public administrative bodies present a severe problem in Latvia, concerning which we have raised alarm already for seven years. I do not know any other provision of law, adoption of which has been so difficult as with this one. Now we can say, that it is a historical event, because calls for help of entrepreneurs have been finally heard.”

The amendments to the Competition Law stipulate, that public administrative bodies will be prohibited a) to discriminate market participants, b) create advantages to undertakings controlled by public administrative bodies, and c) carry out any other activities, which exclude new market participants from the market or prevent them from entering the market.

To prevent competition distortions caused by the state and local governments, the CC will be able to carry out negotiations with the particular public administrative body or its undertaking. If competition distortions will not be eliminated through mutual negotiatons, the authority will be entitled to impose on undertaking controlled by the state or local government a legal obligation to change its conduct, and impose a fine up to three per cent of the net turnover of the company in the last financial year, but not less than 250 euros.

Competition distortions committed by the state and local governments is one of the most significant problems of the competition environment in Latvia. During the public opinion survey conducted by the CC last year, 80% of entrepreneurs and 76% of associations indicated, that public administrative bodies should not discriminate the private sector and create groundless competition advantages to their capital companies. The authority also receives several dozen applications from entrepreneurs annually, indicating groundless restriction of activities of the private sector by the state or local government. 

The Amendments to the Competition Law will enter into force on 1 January, 2020.