DECEMBER 2017

Dear Reader,

In this last 2017 issue of COBALT’s Baltic competition law newsletter, we address an issue of common concern in Estonia, Latvia and Lithuania: commercial activity of public authorities. All three jurisdictions have recently attempted to tackle distortions of competition arising, in particular, at municipal level.

With kind regards,and wishing you a competitive New Year,

COBALT Law offices

Estonian Competition Authority in support of competition neutrality

The Estonian Competition Authority was recently granted new powers to enforce competition law against public sector actors. It has been a well–established understanding under Estonian competition law that state and municipal undertakings are subject to competition rules when they engage in economic activities and compete with the private sector. Yet, the Competition Authority previously did not possess sufficient enforcement powers. In a situation of infringement, it only had the right to issue recommendations to state and municipality undertakings.

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Latvia struggles to tame municipal businesses

The Latvian Competition Council, supported by business organisations, has embarked on a collision course with municipalities in relation to their commercial activities. A draft amendment to the Competition Act, aimed at beefing up Competition Council’s powers of oversight, has been put on ice by the Government, supposedly to give stakeholders time until late 2017 "to agree what actions are needed to ensure that the involvement of public entities in commercial activity is in line with the public interest and promotes fair competition".

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Lithuania imposes restrictions on economic activities by municipalities

An amendment to the Law on Self–Governance came into force in July 2017 in Lithuania which requires municipalities to seek approval of the Lithuanian Competition Council before delegating any new economic activities to municipally–owned companies. Such approval may only be granted on condition that the municipality had held a public tender for a respective service provider not more than 6 months before applying to the Competition Council, and no private service operator had submitted a proposal. Essentially, the new amendment seeks to establish an ex ante check of whether there is a market failure and restrict any intervention by municipal companies to those circumstances.

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