Competition watchdog to look into municipal transport ad deal

The Competition Council has started a case about possible violations in the deal between the municipality-owned Rīgas Satiksme transport company and two advertising providers - Pilsētas līnijas and JCDecaux, reported LETA newswire on Tuesday. 

The case was started due to a complaint by Clear Channel Latvia

An announcement by Clear Channel Latvia reads that Rīgas Satiksme and two its business partners are possibly crippling competition by making a deal and not letting other companies to place advertisements in the bus, tram and trolley stops in Rīga.

Despite opening the case, the Competition Council asks refraining from premature judgement about whether the competition law has been broken.

The JCDecaux Latvija company has the right to place advertisements free of charge in public transportation stops in Rīga. In exchange, the company has to install 800 new transportation stops across Rīga, while the Pilsētas Līnijas company acted as a go-between in the deal.

Clear Channel, on the other hand, said that as building 800 stops doesn't cost €4m (which is the predicted income of the company from the deal), the Rīga Municipality has actually lost money because of the deal, as JCDecaux doesn't pay a cent for using the stops.

According to the competitors, the company is investing rather in its own business than in the infrastructure of the city as the contract with the municipal transport provider took place without a contest, and it'll be bringing the same amount of money each year for 12 to 20 years, while the Rīga Municipality will lose about €150 to 200 thousand in lost rental fees.

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