New rules on fair competition in force in Latvia

On 1 January 2020, amendments to the Competition Law of the Republic of Latvia entered into force prohibiting public administrative bodies – including the state, local government and capital companies owned by them – to violate the principle of equal competition by unduly restricting or denying the private sector an opportunity to operate on the market, the national Competition Council said in a news release.

Skaidrīte Ābrama, the Chairwoman of the Competition Council of Latvia said:

“Competitive neutrality or equal rules of the game for all – it is the Alpha and Omega for any industry policy maker, any official who cares about a fair business environment. I therefore call on entrepreneurs who have encountered competition distortions caused or promoted by public administrative bodies to report them to the Competition Council so that we can balance the scales of competition as soon as possible.”

The amendments to the Competition Law prohibit public administrative bodies from discriminating among market participants, creating an advantage for their own capital companies and implementing activities that force entrepreneurs to leave the market. If the Competition Council sees a possible violation of the norm of the Law, it will first initiate negotiations with the relevant state institution, local government, or capital company. In case of unsuccessful negotiations, the authority may impose disciplinary sanctions on capital companies including a fine of up to 3% of the turnover of the previous year.

"The Competition Council will actively follow the actions of public administrative bodies in the competition environment, and, in the first year of amendments to the Competition Law, it will focus on education and consultation. In order to help public administrative bodies to adapt to the new norm of the Law, the Competition Council has published guidelines on the assessment of competitive neutrality," the release said.

Distortions of competition caused by public administrative bodies are "one of the most significant problems of the competitive environment in Latvia," the Competition Council said, adding that "The results of the public opinion study organised by the authority every two years confirm that distortions of competition caused by public administrative bodies significantly affect the fair business environment in Latvia."

 

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