Latvia

1) REFERENCES

Commission Opinion COM(97) 2005 final - Not published in the Official JournalCommission Report COM(98) 704 final - Not published in the Official JournalCommission Report COM(1999) 506 final - Not published in the Official JournalCommission Report COM(2000) 706 final - Not published in the Official JournalCommission Report COM (2001) 700 final - SEC(2001) 1749 - Not published in the Official JournalCommission Report COM (2002) 700 final - SEC(2002) 1405 - Not published in the Official JournalCommission Report [COM(2003) 675 final - SEC(2003) 1203 - Not published in the Official Journal]Treaty of Accession to the European Union [Official Journal L 236 of 23.09.2003]

2) SUMMARY

In its July 1997 Opinion the Commission considered that the approximation of legislation on cartels and State aid was progressing well. The new Competition Act and, if adopted, the two bills on State aid would represent a significant step towards satisfying the Community requirements in this area. In the field of State aid, the required transparency had not yet been achieved. A considerable effort would be needed over the medium term to meet the Community requirements in this area. Close cooperation with the Community would be necessary.

The November 1998 Report noted that some progress had been made in the area of anti-trust and State aid legislation, especially with the entry into force of the new Competition Act. In the field of State aid, it recommended that efforts should be made to create full transparency in the procedures for granting of State aid by establishing a comprehensive and updated State aid inventory.

In its October 1999 Report, the Commission stressed the progress made with regard to antitrust legislation, with the adoption of regulations on block exemptions and guidelines on the notification of agreements and statements of merger, and with regard to State aid, the annual report on which had been improved. The responsible authorities had greatly improved their functioning, which explained the increase in the number of anti-trust and State aid cases handled in the light of the Community acquis. As a result of this progress, the Commission concluded that the short and medium-term priorities of the Accession Partnership had to a large extent been met.

The November 2000 Report stated that Latvia had continued to align its legislation with the acquis with regard to restrictive agreements and State aid. The Competition Council and the State Aid Surveillance Commission ensured that the legislation was applied.

The October 2001 Report noted that a new Competition Law had been adopted and amendments made to the Law on special economic zones and free ports with regard to State aid, thereby aligning Latvia with the Community acquis to a significant extent.

The October 2002 Report found that Latvia had made further progress in this area. Nevertheless, it needed to make major efforts to strengthen its court and administrative systems if there were to be effective implementation in relation to restrictive agreements.

According to the November 2003 Report, Latvia is meeting the majority of its commitments in the areas of antitrust and State aid, although an additional effort is needed at the administrative level.

COMMUNITY ACQUIS

European Community rules on competition stem from Article 3(g) of the EC Treaty, which states that the activities of the Community shall include "a system ensuring that competition in the internal market is not distorted". The main areas of application are restrictive agreements and State aid.

The Europe Agreement with Latvia, signed on 12 June 1995, will come into force once it has been ratified by all the Member States of the European Community. It provides for a competition regime to be applied in trade relations between the Community and Latvia on the basis of the requirements set out in Articles 81, 82 and 87 (formerly Articles 85, 86 and 92) of the EC Treaty concerning agreements between undertakings, abuses of dominant position and State aid. It also provides for implementing rules in these fields to be adopted within three years of the entry into force of the Agreement.

Furthermore, the Agreement requires Latvia to make its rules on competition compatible with those of the Community.

The White Paper refers to the progressive application of the above provisions and of those contained in the Merger Regulation (4064/89) and Articles 31 (formerly Article 37) and 86 (formerly Article 90) of the EC Treaty concerning monopolies and special rights.

EVALUATION

Regarding antitrust law, Latvia has brought its legislation into line with the Community acquis. The first Competition and Restriction of Monopolies Law was passed in 1991 and superseded in 1997 by a second Law, which was amended in 2001. The latter Law, which entered into force in January 2002, sets out the main principles of Community antitrust rules with regard to restrictive agreements, abuse of dominant positions and mergers. Implementing provisions have still to be adopted for vertical and horizontal cooperation agreements.

The Competition Council, together with its executive body (the Competition Bureau), has acquired experience in implementing the new Law. A policy of dissuasive penalties with regard to restrictive agreements which seriously distort competition still need to be introduced. With this in mind, it is necessary to increase the Council's resources, including human resources.

A State Aid Law was adopted in 1998, incorporating the basic principles of European Union policy and introducing a proper system of State aid control. Latvian legislation on special economic zones and free ports, which was amended in January 2002, was a further step towards complete alignment with the acquis.

The State Aid Surveillance Commission, which regularly carries out ex ante checks on aid compatibility, supplemented its administrative capacities by setting up a State aid control division in 2002.

Negotiations on this chapter have been provisionally concluded (see the 2002 Report). Latvia has not asked to benefit from any transitional regime in this field. Nevertheless, it must make major efforts to strengthen its court and administrative systems if there is to be effective implementation in relation to restrictive agreements.

Last updated: 04.03.2004