Amendments to the Latvian Competition Law target public bodies and introduce new data protection provisions

03.04.2019 Amendments to the Latvian Competition Law target public bodies and introduce new data protection provisions

Competition law framework for state and municipal bodies

The goal of the amendments is to implement the competitive neutrality principle and ensure a level playing field for all market participants, regardless of whether they are state or privately owned. To achieve this purpose, the amendments prohibit state bodies from distorting competition on the market.

State authorities may affect the way free market functions by setting discriminating measures aimed to benefit state-owned or controlled entities, for example, by treating them more favorably or granting them exclusive rights. This can be illustrated by water meter installation and replacement services, or waste management services, which municipalities tend to procure to their controlled entities, thus excluding privately owned companies.

State and municipal bodies are already covered by the existing competition law framework, e.g., rules on abuse of dominance and restrictive agreements. The aim of the amendments is thus to encompass other kinds of conduct of state institutions, that is, conduct which does not constitute abuse of dominance or a restrictive agreement, but is still restricting competition on the market.

In addition to the current regulatory framework, the Latvian Competition Council (LCC) may adopt the following measures in cases when state or municipal bodies restrict competition, e.g., by (i) discriminating between market participants; (ii) placing undue advantages to companies which are controlled by or related to state or municipal bodies; (iii) eliminating market participants from the market; (iv) foreclosing the market to new entrants:

  • In regard to state bodies which are not market participants –  conduct negotiations. If negotiations fail, the LCC is planning to try to resolve the matter at the ministry level. If the restriction to competition stems from a legal act, the LCC will ask the Minister of Economics to present the Cabinet of Ministers an action plan to resolve the matter. If the restriction to competition stems from a municipal act, the LCC will ask the Minister of Environmental Protection and Regional Development to adopt a decision to solve the issue. 

  • In regard to state-controlled and municipality-controlled companies – conduct negotiations, start an infringement procedure, enforce specific legal conduct or impose a monetary penalty in the amount of up to 3 % of the net turnover of the last financial year, but not less than 250 euro. An example of legal conduct which the LCC may enforce on a state or municipal company is a negative obligation to restrain from a certain activity (e.g., obligation to disregard internal procedures or decisions) or a positive obligation to make certain activity (amend a contract, renew cooperation with a market participant, publish information). However, the LCC may not impose such conduct which would make the fulfillment of municipal functions impossible (such functions are enlisted in Article 15 of the Law on Municipalities).

Personal data processing in the LCC’s operations 

The amendments introduce new provisions on personal data processing: 

  • A natural person has a right to make a request to the LCC in regard to the processing of its data and receive an answer in one month term. In the answer, the LCC must include information on whether and how the person’s data is being processed. The LCC may deny fulfilling the request of the person, if this would restrict its operations or if the rights of other persons would be affected.

  • The LCC may restrict a natural person’s access to its data and refuse to provide information on data processing during an ongoing investigation, in which case the LCC must inform the person thereof. The affected person may challenge such conduct of the LCC in courts or make a claim to the Latvian Data Protection Inspectorate.

  • A natural person may request that LCC supplements or rectifies data about this person, however, if the LCC refuses to comply with such request, the LCC is not obliged to provide a written explanation to the person.

  • The LCC must erase personal data stored in electronic devices within a month from a date when the final decision of the LCC becomes unchallengeable.