At the Saeima meeting on March 28, amendments to the Competition Law, which will contribute to ensuring fair competition in the activities of public persons (state and local governments) and capital companies founded by them, were supported in the final reading.
Consequently, in the future, the Competition Law will include a provision enabling the Competition Council to address distortions of competition by public persons more effectively. In order to avoid such restrictions of competition, the Competition Council will have to negotiate with the public person concerned. If distortions of competition are not eliminated by negotiation, the Competition Council will be entitled to take a decision imposing on the capital company, in which a public person exercises decisive influence, a legal obligation to rectify the prevention of competition. The Competition Council will also have the right to impose on a capital company, in which a public person has decisive influence, a fine of up to three per cent of the net turnover of the company in the last financial year, but no less than 250 euro.
“The business environment needs to encourage business rather than disrupt it! Ensuring fair competition in the market and creating tools to combat distortions of competition was the homework of the government and the Saeima, which had to be done long ago to ensure Latvia’s economic development and competitiveness. The decision adopted by the Saeima today will enable small and medium-sized enterprises to develop, particularly in regions,” says Ralfs Nemiro, the Minister of Economics.
As it was previously reported, the Competition Council repeatedly identified in its previous supervisory practice that public persons (both local government and state) often create restrictions for fair and equal competition with the private sector. The most common practice is to discriminate individual market participants by providing more favourable conditions to state or local government capital companies, thereby failing to respect the principles of fair competition and good governance. Moreover, such practices are increasingly observed in the economically active territories, where there is no reason to complain about lack of supply and demand.
Business organisations in Latvia have also mentioned as one of the problems of the business environment failure to observe the principle of competitive neutrality in the activities of public persons, which, for example, resulted in unjustified advantages to capital companies of public persons and private companies have no longer been able to compete on equal terms.