In the first half of 2022, the Competition Council (the CC) received more than 40 complaints about the actions of public administrative bodies - the state, municipalities and their capital companies. In four cases, in order to prevent possible non-compliance with competitive neutrality, when a public administrative body has discriminated private market players or created advantages for it’s capital companies, the CC has implemented negotiation procedures. The implementation of the negotiation procedure is defined in Article 14.1 of the Competition Law, and its purpose is to timely eliminate deficiencies in the actions of municipal capital companies, municipal institutions, and other public administrative bodies.
State and local government institutions, as well as their owned capital companies, are prohibited from hindering, restricting or distorting competition. The ban came into force in January 1, 2020, and is defined in Article 14.1 of the Competition Law.
A national publication gives advantages to a self-published magazine
In the first half of 2022, the CC assessed a complaint regarding the actions of VSIA "Latvijas Vēstnesis", the official publisher of the Republic of Latvia, in connection with a possible non-compliance with competitive neutrality. The publication placed a commercial advertisement of its magazine "Jurista Vārds" on its managed websites www.likumi.lv and www.lvportals.lv, while other participants of the advertising market were not able to place advertisements on these websites. Thus, advantages were created for their magazine "Jurista Vārds" published by VSIA "Latvijas Vēstnesis".
As a result of the negotiations, an agreement was reached that VSIA "Latvijas Vēstnesis" will no longer post commercial advertisements of the magazine "Jurista Vārds" on its maintained websites www.likumi.lv and www.lvportals.lv. As a result, the non-compliance was eliminated and it was not necessary to further investigate the case in order to decide on the finding of an infringement, the imposition of a legal obligation and a fine.
Difficulty to refuse housing management services provided by the municipality
In the first half of 2022, the CC also received a complaint about the actions of Liepāja city owned Ltd. "Liepājas namu apsaimniekotājs", when the municipality's capital company in the residential house management contract, which forbids the adoption of a decision on the change of the residential house manager, stipulated stricter requirements than set in the Law on Residential Properties.
The CC found that the provisions included in the contract make it difficult for other market participants who provide housing management services in Liepāja to operate in the market, because the right of consumers to refuse the services provided by Ltd. "Liepājas namu apsaimniekotājs" in favor of other service providers is unreasonably hindered. In addition, the Consumer Rights Protection Centre expressed the opinion that the provisions included in the contract were considered unfair. Consequently, the CC concluded that the actions of Ltd. "Liepājas namu apsaimniekotājs" do not comply with Article 14.1 of the Competition Law, which, among other things, prohibits public administrative bodies from performing activities that make it difficult for other market participants to participate in the market.
Before the initiation of the case, at the initial stage of information gathering, Ltd. "Liepājas namu apsaimniekotājs" informed the CC that it will not to apply unfair provisions in the existing contracts, when it will be decided to change residential house managers, nor to include these norms in newly concluded management contracts. Thus, the neutrality of competition the discrepancy was resolved through negotiation.
The requirements in the regulations for the selection of applicants can be interpreted differently
The CC also evaluated the auction regulations for renting the premises of the Children's Town cafe "Pepija" developed by the Ventspils municipal authority "Ventspils komunālā pārvalde". The CC pointed out possible misunderstandings in the requirements for applicants' experience provided for in the auction rules, which applicants can interpret differently. As a result, the institution "Ventspils komunālā pārvalde" made a decision to organize a new auction for the rent of the premises of the Children's Town cafe "Pepija", clarifying the rules of the auction and its requirements for applicants.
Restrictions on the provision of catering services in Jūrmala
During the reporting period, the CC also evaluated the binding regulations of the Jūrmala’s municipality "On the procedure for obtaining a permit for street trading, organization of street trading and public catering services in the administrative territory of the city of Jūrmala", which provided for restrictions on the provision of catering services from a mobile commercial trailer, allowing them only outside the downtown area and no closer than 400 meters from any other catering establishment.
In the opinion of the CC, the municipality's intention to deny market participants the right to conduct business using commercial trailers closer than 400 meters from any other public catering company was a clear inconsistency with the principle of competitive neutrality contained in the first part of Article 14.1 of the Competition Law.
The administration of the city of Jūrmala, taking into account the proposals made in the framework of the negotiations of the CC, has developed a new binding regulation, which provides for the elimination of inconsistencies indicated by the CC. They are expected to be approved at the council meeting in the near future.
In order to ensure the observance of competitive neutrality, the CC conducts negotiations with the public administrative body or it’s the capital company. If, during the negotiations, compliance with the requirements of the law is not achieved, ensuring a favourable result for competition, the CC can continue the investigation of the violation in relation to capital companies owned by public administrative bodies, making a decision on establishing a violation, imposing a legal obligation and a fine.
A capital company owned by a public administrative body may be fined up to 3% of the net turnover of the last financial year, but not less than 250 euros.