The Competition Council of Latvia (the CC) adopted in total 26 decisions in the last year, where infringements of the Competition Law were detected in five cases, thus imposing fines on eight companies.
Previously imposed fines in the amount of EUR 445 613 were paid into the state budget in 2018.
Bid-rigging – one of the main problems in the competition environment
Last year, the CC detected two forbidden agreements, and both cases were related to forbidden coordination of activities by companies participating in public procurements.
The authority detected, that three amelioration system construction companies – SIA LIMBAŽU MELIO, SIA Bauskas meliorācija and SIA Meliorācijas ekspert” – have acted unlawfully in four tenders within project procurements of a fund administered by the Rural Support Service (RSS). In other case – providers of office equipment maintenance and supply services SIA TOMEGA and SIA BTK.LV distorted competition in several procurement procedures, including tenders announced by the public administrative bodies – Ministry of Culture and SIA Rīgas satiksme which is transport service provider owned by the Riga City Council. Companies of both sectors used a similar scheme – they mutually coordinated the information to be submitted intenders, agreed on the conditions of participation and on the winner of procedure.
Procurement organizers are frequently the first ones, who can detect suspicious similarities in tenders of candidates. Last year, the authority received nine applications concerning alleged bid-rigging. Also, for organizers of public procurements to be able to identify features of alleged bid-rigging the authority educated representatives of the Ministry of Culture, the Ministry of Defence, the Ministry of Welfare and the State Employment Agency in 2018. These sectors have been noticed by the CC already several time because of detected forbidden agreements.
The CC may also start a warning procedure to market participants, if the detected features of alleged prohibited agreement of companies do not suggest significant, repeated and extensive harm to competition. In 2018, in total 37 persons received a warning procedure, which is the highest number of warned persons per year.
Public administrative bodies impede development of entrepreneurship
The results of the public opinion survey, conducted by the authority in 2018, show that one of the most significant problems of the competition environment in Latvia is competition distortions caused by public administrative bodies. Most frequently, such distortions manifest themselves as groundless involvement of public administrative bodies in entrepreneurship, thus creating unequal competition conditions on the market.
The CC received in total 63 applications in relation to activities of public administrative bodies, including competition distortion.
Last year the CC also detected one case of abuse of dominant position, when the company SIA ZAAO, which is owned by public administrative body – 28 local governments – groundlessly prevented its cooperation partners from concluding contracts only regarding waste separate collection areas necessary for them, forcing to use all such areas owned by the enterprise. SIA ZAAO also imposed an infrastructure maintenance fee, which was not based on economically justified calculations; moreover, a different fee was applied to different packaging managers during a specific period of time.
The CC set an obligation to SIA ZAAO to eliminate the detected irregularities and imposed a fine in amount of EUR 36 665.
The desire of companies to merge increases
The desire of companies to merge and strengthen their market power has significantly increased in 2018. Compared to the year 2017, the number of merger notifications assessed in 2018 has increased by 60%, constituting in total 20 decisions. In 19 decisions a positive conclusion was given – the merger was allowed; however, in one case the merger was forbidden.
In another case of merger, the CC initiated a case of infringement regarding non-reported merger, where Lithuanian company UAB Vaizga submitted a merger notification to the competition authority already after the actual merging with SIA Petrol Property. According to the Competition Law, a fine up to 3% of the net turnover in the last financial year may be imposed on companies. UAB Vaizga, having admitted the infringement, proposed to the CC to conclude an administrative agreement, thus, enterprise needed to pay a fine of EUR 57 419.
Merger transactions assessed by the CC in 2018 have affected at least 25 sectors of the national economy of Latvia.