The Competition Council (CC) has estimated that the average public benefit from the implementation of competition policy in Latvia in the period 2022-2024 exceeds EUR 35.1 million per year. Taking the Authority’s budget in this period into account, each euro allocated to the Authority on average generates a public benefit of around EUR 10.01.
In order to calculate the public benefit of the CC, the decisions taken by the Authority in the years 2022-2024 were identified, determining the price increase specific to the type of infringement and the likely duration of the infringement. In addition, the positive effect of the Authority’s preventive actions, such as warnings and negotiation procedures, taken against certain undertakings or public entities that had committed minor infringements of competition law or competition neutrality was also taken into account.
It should be emphasised that fines imposed by the Authority and paid by undertakings are not included in the calculation of the public benefit, as their primary objective is to deter undertakings from committing similar infringements in the future.
Acting Chairwoman of the CC Ieva Šmite: “While the estimated direct public benefits are impressive, they only show the “tip of the iceberg” in terms of the positive impact of competition policy on society. The indirect benefits of the actions of the CC, such as advice to market participants, educational activities, and sectoral monitoring, are clearly a deterrent to market participants from engaging in infringements, thus contributing to the development of a legitimate and equal competition environment, which is a non-quantifiable quantity.”
Key indicators in the calculation of public benefit
The most important contribution to society in 2024 came from the elimination of cartels or prohibited agreements. In 2024, the CC detected three prohibited agreements in the wholesale and retail trade of lighting equipment, construction and repair, and food services. The contribution to society from the prohibited agreements combatted in 2024 amounted to EUR 3.5 million.
The Authority’s preventive work, through alerts to market participants and negotiation procedures, resulted in a public benefit of EUR 302 854.35 in 2024. In total, in cases of minor potential infringements, a total of 22 prevention procedures were implemented, warning legal persons of potential infringements of the Competition Law, thus CC implemented the “Advise First” principle.
To calculate the public benefit, the CC relies on the methodology recommended by the Organisation for Economic Co-operation and Development (OECD), the recommendations of the European Commission and the practical opinions of other highly-regarded competition authorities around the world, adapting them to the specific features of the Latvian economy.