During the sector inquiry on the market of grave pit excavation services, the Competition Council of Latvia (hereinafter – the CC) detected that several local governments, which ensure this service, restrict or even exclude rights of private merchants to operate on this market. To prevent possible infringements of the principle of competition neutrality, the CC concluded negotiation procedures with local governments of Daugavpils and Ventspils cities, which resulted in the local governments making amendments to their binding regulations.
The CC commenced the sector inquiry after receiving a complaint on an alleged infringement of competition neutrality in activities of a public administrative body – Liepāja City Municipality –, granting to its authority, Liepāja Cemetery Board, exclusive rights to provide grave pit excavation services in Liepāja. Within the framework of the sector inquiry, the CC obtained information from 10 national cities and local governments of six regions with large population, and concluded that the grave pit excavation service in Riga, Liepāja, Ventspils, Daugavpils and Talsi is provided by the local government or its capital company. In addition, capital companies of several local governments have not only obtained exclusive rights to provide the grave pit excavation service, but also actively engage in provision of other funeral services.
The CC concluded that advantages of capital companies of local governments could be observed against other providers of funeral services that operate in territories of the respective local governments. The CC indicates that during the assessment of the advantages, the specific nature of the service was taken into consideration, which forces consumers to make a decision about the choice of the provider of funeral service in a limited period of time, as well as encourages consumers to receive all funeral services from one market participant, instead of making a research, comparing various providers of funeral services and prices offered by them.
To prevent infringements of competition neutrality, the CC carried out negotiations with local governments of Daugavpils and Ventspils cities, taking into account that their capital companies, SIA “Labiekārtošana-D” and SIA “Ventspils labiekārtošanas kombināts”, held exclusive rights to provide the grave pit excavation service. These advantages were established in the binding regulations of the local governments, and the capital companies also provided other funeral services. As a result of negotiations, the local governments made a decision to amend the procedure stipulated in the regulatory enactments, allowing private market participants to commence provision of grave pit excavation services in the territories of Ventspils and Daugavpils cities.
Considering that in Riga and Liepāja the grave pit excavation service is ensured by authorities that provide only the grave pit excavation service, there is no basis to establish that it creates any advantages for any market participant. The CC indicates that these local governments should consider, whether there is any way to allow private market participants to provide the grave pit excavation service, considering that private market participants, which would be capable to provide the said service, already operate on the market and market deficiency is not observed.
Public administrative bodies – state and local government authorities, as well as capital companies owned by them – are prohibited from hindering, restricting or deforming the competition. This prohibition came into effect on 1 January 2020 and it is stipulated in Section 141 of the Competition Law.