On June 9, the Parliament (Saeima) made amendments to the Competition Law aimed at strengthening the Competition Council (CC), providing the necessary guarantees of independence, resources and enforcement powers for the investigation and prevention of effective competition law violations.
The purpose of the amendments to the Law is to transpose Directive 2019/1 / EU of the European Parliament and of the Council into national regulation, i.e. the ECN + Directive, which states that the powers of competition authorities to effectively investigate and detect antitrust infringements need to be harmonized at the level of the Member States of the European Union.
The CC Chairman Juris Gaiķis: “Although the institution has always been an externally independent institution in its decision-making, the new amendments to the Law are very important for us, by clearly defining the institution's independence and strengthening its capacity to deal with significant distortions of competition in the future. For example, the institution's fight against the involvement of entrepreneurs in cartels and the abuse of a dominant position, which hinders the development of the economic environment in Latvia. The amendments will also motivate the undertakings, which have been involved in the infringements, to cooperate more closely with the Competition Council under the Leniency Program and will establish common rules for mutual cooperation with other competition authorities of other Member States in the decision-making and enforcement process. "
Independence of the Competition Council
The amendments envisage that the CC will be under the supervision of the Cabinet of Ministers in the future and not Ministry of Economics like before. Furthermore, the operational independence of the CC will be strengthened by providing the institution with complete independence in resolving the internal organizational issues of the institution.
Among other things, the amendments also stipulate that the selection of candidates for the position of the chairman of the Council and members of the Council in an open competition will be organized by the Cabinet of Ministers, entrusting the functions of the secretariat to the State Chancellery. The Cabinet of Ministers will also decide on the dismissal of the chairman and a member of the Council.
Changes in the maximum amounts of fines
The amendments also have a positive effect on the institution's investigation processes and decision-making, including changes to the fines applicable to market participants, by setting changes to the applicable maximum fine thresholds and the procedure for calculating them.
The deterrent effect of fines varies considerably across the European Union, which significantly reduces deterrence. Thus, it is particularly important to unify the minimum amount of fines within the EU for infringements of European Union competition law (infringements provided for in the first paragraph of Article 101 and Article 102 of the Treaty on the Functioning of the European Union). In particular, in cases of prohibited agreements between undertakings and abuse of a dominant position in cases where the infringement has affected trade between the Member States of the European Union or its effect extends beyond the borders of Latvia. Accordingly, the amendments clarifies the legal norms of the Competition Law that apply to the criteria for calculating fines. They provide that the infringer's liability for infringements of European Union competition law will henceforth be determined by its worldwide turnover and that the maximum fine imposed on operators for infringements of the prohibition on agreements and abuses of a dominant position will be 10 % of their net turnover in the last financial year worldwide. At the same time, the maximum penalties for violations of competition law that do not exceed the territory of Latvia remain the same. For cartels, the maximum penalty will be 10%, and for prohibited vertical agreements or abuses of a dominant position, 5% of turnover.
Wider powers during proceedings
The amendments to the Law also provide for changes in the procedural actions, i.e. dawn-raids or unannounced visits to market participant's premises. The changes envisage the CC increasing the time allowed for sealing the market participant's premises in order to obtain and preserve evidence. Also, the right to receive support from other law enforcement institutions within the framework of procedural activities (inspection) has also been clarified, incl. the right of the CC to authorize the officials of the competition authorities of other Member States to actively assist in the implementation of proceedings, if the CC conducts proceedings in the name and on behalf of the competition authority of another Member State.
The amendments to the Law also clarifies the responsibility of market participants, their associations, and other persons if incomplete explanations are provided and the obligation of persons involved in the case under investigation to provide access to information (data) available to them.
Expands the use of the Leniency Program
At the same time, the amendments envisage expanding the scope of the Leniency Program, incl. to expand cooperation with market participants in the disclosure of prohibited vertical agreements on resale price maintenance or passive sales restriction. Previously, only companies that had participated in the cartel could benefit from the Leniency Program.
The Leniency Program is an important tool that helps to detect competition law infringements in cooperation with the CC and facilitates more effective prosecution of market participants involved in an infringement, while enabling the market participant to obtain immunity from a fine or significantly reducing fines.
Cross-border infringements investigated more effectively
Finally, the new Law is supplemented with the procedure and regulations for mutual co-operation between competition authorities. This will ensure a more efficient exchange of information between institutions in the case of international cooperation in decision-making and enforcement processes.