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Information about the Amendments to the Competition Law



1. New provision in Competition Law: dominant position in retail trade

Amendments to the Competition Law, Article 13

Such market participant or several market participants who, considering its (their) buying power and suppliers dependence in relevant market, is able directly or indirectly apply or impose unfair and unjustified provisions, conditions or payments upon suppliers and can hinder, restrict or distort competition in any relevant market in the territory of Latvia during sufficiently long period of time, has dominant position in retail trade. Any market participant having dominant position in retail trade is prohibited to abuse it in the territory of Latvia.

Abuse of dominant position in retail trade may occur as:

  • application or imposition of unfair and unjustified provisions concerning return of goods, unless low-quality goods are returned or goods, also unknown to consumers, new goods, are returned, delivery or increase of delivery of which is initiated by supplier;
  • application or imposition of unfair and unjustified payments for goods location in retail trade area, unless these payments are justified with promotion of unknown to the consumers, new goods in the market;
  • application or imposition of unfair and unjustified payments for entering into agreement, unless these payment terms are justified with entering into agreement with new supplier which therefore has to be especially evaluated;
  • application or imposition of unfair and unjustified payments for supply of goods for newly opened retail trade area;
  • application or imposition of unfair and unduly long payment terms for supplied goods;
  • application or imposition of unfair and unjustified sanctions for violation of provisions of transaction."

The differentiated (i.e. graduated) amount of fines is introduced now for abuse of general and special (in retail trade) dominant position: it is lesser for abuse of dominant position in retail trade – until 0,05 per cent of annual turnover (for first violation of Article 13, part two) and until 0,2 per cent of annual turnover (for each further violation of Article 13, part two), while amount of fines in case of the general abuse of dominant position can be until 5 per cent of annual turnover.

2. Other important changes in the Amendments:

  • the threshold of market share (40%) is not longer applicable for identification of dominant position;
  • the Competition Council is authorized to conclude an administrative agreement as a settlement in order to terminate a legal dispute in court;
  • the Competition Council, if it is useful, can adopt decision on dismissing (finishing) of case if market participant accepts legal obligations (commitments) that preclude hindrance, restriction or distortion of competition;
  • in case of judicial appeal we have derogated from the first instance court (i.e. the administrative district court), by prescribing appeal procedure for decisions of Competition Council directly in the regional court and after it to the cassation instance in the Supreme court;
  • the Competition Council has obtained larger powers not only for case investigation but also for market supervision. Without prior warning case handlers can enter inside premises, means of transport, flats and in other objects for searching, inspection and withdrawal of items and documents located there in order to perform operative investigation activities;
  • It is not now obliged for market participants to notify any agreement to Competition Council and evaluation whether agreement is not prohibited by Competition Law may be done also by parties of agreement. However they are still entitled before conclusion of agreement or entering into force of the agreement to notify it to the Competition Council that then will evaluate it and decide on it;
  • merger conditions are changed by declining from 40 % market share criteria and by remaining only the applicable turnover criteria – not less than 25 million LVL or 35 million EUR. The merger notification procedure is simplified if: 1) merger participants are not acting in the same relevant market or market vertically related to it or 2) the joint market share of market participants in the relevant market does not exceed 15 per cent. In this case short form notification can be submitted. Merger notification has not to be submitted if the turnover of one of two participants in the merger for the previous financial year has not exceeded 1.5 million lats or 2 million EUR;
  • the Competition Council will not be longer forced to waste its resources by examining cases of unfair competition which are not seriously damaging competition. Only cases on dissemination of untrue, incomplete or deformed information about market participant or about its employees or goods; or cases on obtaining, using and distribution of information containing commercial secret of another market participant are remaining for the competence of Competition Council. Other violations of unfair competition investigated until now by Competition Council (for example imitation of market participant's name or name of its goods, or identification signs) has been transmitted to the competence of court;
  • according to the judgement of ECJ in Manfredi case (Joined Cases C-295/04 to C-298/04) Article 21 of Competition Law has been amended to determine that every person is entitled to claim compensation of losses plus interest, as before this article gave rights for recovery of losses only for market participant or a party of a contract. Also according to the amendments court under plaintiffs request may decide on compensation of losses in courts own discretion (i.e. in accordance with a sense of justice and the general principles of law);
  • the Competition Council is authorized not to initiate a case for every complaint, if the possible violation is insignificant – serious harm is not caused to the competition;
  • the Amendments provides that appealing of the Council's decision is not suspending its enforcement excepting its part of imposing a fine.