In 2017, the Competition Council of Latvia (the CC) detected four prohibited agreements in activities of 20 companies and imposed fines in the total amount of 10.1 million euros. The CC issued five warnings to 15 persons for involvement in infringements concerning prohibited agreements of a smaller scale, whereas non-conformities of several companies to the principles of fair competition were solved through six negotiation procedures.
Harsh fines for severe competition infringements
In 2017, the CC adopted four infringement decisions, and all of them concerned involvement of companies in prohibited agreements. Although one of the main problems of competition environment in Latvia is bid-rigging in public procurements, and also such infringements were detected by the authority, two conceptually complicated decisions regarding vertical prohibited agreements should be highlighted. Namely, the CC detected, that companies had prohibited their cooperation partners to take individual decisions on prices of goods and services, thereby illegally retaining a coordinated level of prices and forcing consumers to unreasonably overpay.
Regarding the vertical prohibited agreements – implementation of unified fare rates among passenger carriers in Riga and competition restricting loyalty rebates systems among suppliers of construction materials and retailers – the CC imposed fines on companies in the total amount of 9.7 million euros.
The companies that were previously fined for competition infringements, including after the end of court proceedings, paid 3.9 million euros into the state budget. The CC reminds, that since 2017 consumers, companies and other injured parties have simplified possibility to request compensation for damages incurred as a result of competition infringements. Compensation for damages can be claimed by addressing Riga City Latgale Suburb Court.
Infringements of a smaller scale are not left unnoticed
In the last year, the authority prevented 11 small amount and significance competition infringements by using alternative methods. The CC issued five warnings to 15 persons for alleged coordination of activities in public procurements. The authority also implemented the largest number of negotiation procedures within one year so far – six, in five cases preventing abuse of market power by dominant companies.
Active year in the field of mergers
In 2017, the CC adopted 13 decisions concerning planned mergers, which were particularly frequent in retail sales in non-specialised grocery stores and in fuel retail sales. Since the CC did not detect alleged harm to competition in 11 mergers, the authority decided to allow these transactions. In order to help companies to prepare merger notifications, the CC provided a record number of pre-merger consultations – 50.
For the first time in eight years the CC prohibited a planned transaction. Namely, after conducting an in-depth economic analysis in determining the specific market, the authority detected significant harm for competition in the plans of SIA RIMI LATVIA to use retail sales premises in the multifunctional shopping centre DOMINA SHOPPING” deciding to prohibit this transaction.
Further information on topicalities of the competition law is available in the CC’s annual report for 2017.