The Competition Council of Latvia (the CC) has calculated that the average public benefit from implementation of the competition policy in Latvia during the period from 2017 to 2019 exceeds 24.8 million euros a year. Considering the Authority's budget in this period, each euro allocated to the Authority generates average benefit of 19.32 euros.
The calculation is based on the assumption that by precluding or preventing specific infringements of the competition law the CC protects the public from potential loss, for example restricted competition and groundlessly increasing prices as a result of an infringement. Such precluded or prevented loss represents the public benefit.
To calculate the generated benefit, the Authority analysed its adopted decisions from 2017 to 2019, the price increase characteristic of the specific type of infringement, as well as the possible duration of existence of infringement. In addition, the positive effect of preventive measures implemented by the Authority were taken into consideration, for example, warnings and negotiations, which were implemented towards specific companies that had committed less severe infringements of prohibited agreements or abuse of dominant position.
It has to be emphasized that the calculation of public benefit does not include fines imposed by the CC as their primary purpose is prevention and mitigation of harm caused by an infringement.
The CC used an internationally recognised methodology for the calculation of public benefit, which was recommended by the OECD. The CC adjusted these recommendations to characteristics of the Latvian national economy, supplementing them with suggestions of the European Commission and external experts, as well as practical conclusions made by other competition authorities of the EU Member States.
Skaidrīte Ābrama, the Chairwoman of the CC: “This calculation, made according to the OECD methodology, shows the high operational efficiency of the Authority, and it is one of the highest among countries, where such calculations are made. Unfortunately, the budget of the Competition Council of Latvia is the most pitiful among all 37 competition authorities listed in the Global Competition Review Rating Enforcement, and we are forced to work on the verge of exhaustion.”
Following recommendations by the OECD, in order to mitigate variability of the public benefit indicator, which is caused by the different number and volume of identified infringements each year, the public benefit is calculated as an average indicator in a period of three years. The analysed 3-year period corresponds to the period of the CC operational strategy.