The Competition Council's of Latvia (CC) biennial public opinion survey reveals a consistent trend: although public awareness of competition infringements is growing, one in ten Latvian companies surveyed would be willing to deliberately collude with competitors on prices, markets or exercise other distortions of competition to make unlawful profits, thereby overcharging consumers for goods and services. Municipalities, on the other hand, have become more conscientious - only 3% of the municipalities surveyed would be willing to engage in infringements, down 7% from the previous period.
Key challenges for the competitive environment
The survey sought the views of the public and, in more depth, of entrepreneurs, local government representatives, non-governmental organisations, and law firms. For several years now, respondents have cited collusion or cartels in public procurement as the main obstacle to the development of Latvia's competitive environment. It was pointed out by 61% of the public. The second most pressing problem of the competitive environment in Latvia is the abuse of a dominant position by large companies (mentioned by 55% of respondents) and the third - decisions and actions taken by state and local authorities that unduly distort competition (indicated by 41% of the public).
When asked about the sectors that the CC should pay increased attention to, the most frequently mentioned sectors by the general public were medicine, construction, and energy.
Fines should be higher
The results of the study show that the experts generally consider the level of fines imposed by the CC to be sufficiently proportionate to deter market participants from committing competition law infringements at a preventive level. This is the opinion of half (52%) of the companies surveyed and three quarters (74%) of the local government representatives. However, in 2024, this indicator is set to decrease, while there is a growing view that fines for competition infringements should be higher. Overall, a third of businesses think fines should be higher, this is up by 10% in 2024, and a fifth of municipalities also believe fines should be increased. This is up by 13% from 2022.
Businesses' understanding of competition law is increasing
The Latvian public is generally well informed about the principles of fair competition in the market. Two thirds of the citizens surveyed are aware that market operators are prohibited from agreeing on prices, discounts, market division, and customer allocation. An equal share of the public knows that dominant companies must not abuse their market power and that national and local authorities must not discriminate against companies or create unjustified competitive advantages.
Naturally, among experts (especially in the samples of municipalities and associations), respondents are significantly better informed about competition law than the general public. Compared to previous periods, entrepreneurs' understanding of competition law is also increasing: the awareness of the surveyed entrepreneurs that market operators are prohibited from agreeing on market division or customer allocation has increased by 69% (overall, 85% of respondents know about it), and the awareness of businesses that they are prohibited from applying excessively low prices that do not cover cost or are significantly below the industry average has also increased by 21% (two thirds of surveyed businesses overall are informed about this).
Interest in claiming damages for competition infringements
Any person who has suffered damages as a result of an infringement of competition law is entitled under the Competition Law to claim compensation for those damages from the infringers. Over the last two years, respondents' interest in recovering damages resulting from competition law infringements has increased. This possibility has been most often considered by law firms that represent the interests of companies in courts – almost half of all respondents. Similarly, 7% of companies (+2% compared to 2022) and 18% of municipalities (+11% compared to 2022) have considered the recovery of damages.
Awareness among companies of the 'Leniency Programme', which provides immunity from fines and a ban on participating in procurements for the first cartel member to self-report an infringement, has also increased by 5% in 2024. Overall, one in five companies have heard of the benefits of the 'Leniency Programme', with fear of being identified as a whistleblower and distrust of the public authorities cited as the most significant barriers to admitting infringements.
Decisions taken have a positive impact on the market
The study reveals that the CC's decisions are mainly viewed positively. More than two thirds of respondents found the decisions to be generally of good quality, the legal reasoning and the application of competition law in the decisions to be clear and understandable. Representatives of municipalities and associations/NGOs were the most positive about the quality of the decisions taken by the CC.
Among representatives of municipalities and associations/NGOs, the view that the decisions taken by the CC have a positive impact on the market was almost unanimous (>80%). The surveyed entrepreneurs were slightly more reserved, nevertheless, positive assessments prevailed among this audience as well - 63% of the entrepreneurs were of the opinion that the decisions taken by the CC have a positive impact on the market.
The CC carries out a public opinion survey every two years to gauge public and, in more depth, entrepreneurs, associations, and municipalities awareness of competition law and the work of the CC, as well as to gain a broader insight into the respondents' expectations regarding the future activities of the institution. The survey data are taken into account in the development of the institution's strategy and in the assessment of the improvement of the institution's operation and communication with the public.
The survey was conducted by the research agency 'Latvijas Fakti' on behalf of the CC.