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The CC imposes a fine on SIA “ZAAO” for abuse of market power



On 21 March, the Competition Council of Latvia (the CC), imposed a fine of EUR 36 665 on the waste management company SIA “ZAAO”, owned by several municipalities, for abuse of dominant position.  The CC detected, that the waste manager has imposed groundless cooperation conditions on its customers and has applied different fees for identical services.

During the case investigation, the CC assessed activities carried out by SIA “ZAAO” since 2010 towards its customers – managers of packaging and disposable tableware, which require using of waste separate collection areas, managed by SIA “ZAAO”. Considering, that this company, which is owned by 28 municipalities, has a dominant position in the Northern Vidzeme waste management region, and the facts established during the investigation, the CC concluded, that activities carried out by SIA “ZAAO” are considered as abuse of market power.

According to the legal framework, packaging managers shall ensure collection of used packaging and disposable tableware from households at least at three waste separate collection areas in each waste management region, ten regions in total in Latvia. Contrary to this, SIA “ZAAO” had imposed on its cooperation partners a requirement to use all waste separate collection areas managed by the company, in total 21 areas, groundlessly increasing the number of waste separate collection areas, for using of which contracts had to be concluded and a considerable fee had to be paid. Thereby, packaging managers were denied a possibility to agree on smaller number of waste collection areas necessary for their operation.

SIA “ZAAO” also imposed on its cooperation partners an infrastructure maintenance fee, which was not determined according to economically justified calculations. Moreover, a different fee was applied to different packaging managers during a specific period of time.

Considering the facts detected during investigation and readiness of SIA “ZAAO” to change the competition restrictive cooperation conditions, the CC accepted the willingness expressed by the company to conclude an administrative agreement. For competition distortion, SIA “ZAAO” is obligated to pay a fine of EUR 36 665.

The CC draws attention, that in the recent years the waste management market in Latvia has experienced changes, which are unfavourable for competition, closing of free market and extension of activities of municipality companies. During the study carried out in 2016, the authority detected, that efficient market development is also hindered by separate provisions of the regulatory framework of the sector.