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Competition Law amended

The Latvian government has considered draft amendments to the Competition Law of 2001.

The amendments aim to strengthen the effectiveness of competition policy by extending the definition of dominant position. The existing definition establishes dominant position if a company hinders, restricts or distorts competition, and has at least a 40% market share in the relevant market. If a company has less than 40%, it is not considered to hold a dominant position, despite its activities against competition. So the existing definition does not cover all market participants whose activities affect honest competition.

It is planned that, notwithstanding the amount of market share, any company could be recognized as being in a dominant position if it has the capacity to substantially hinder, restrict or distort competition in any relevant market for a sufficient period by acting fully or partially independently from competitors, suppliers or consumers.

In practice, it has been established that market participants that have at least 40% in the relevant market are in a dominant position. Therefore, the draft amendments create the presumption that any market participant that has at least a 40% market share in a market has a dominant position, unless the market participant has proved that it does not.

The existing M&A reporting procedure requires market participants to submit a voluminous report to the Latvian Competition Authority on any planned merger or acquisition if it corresponds to any of the reporting criteria (for example, the total annual turnover of involved participants exceeds Lats25,000 or total market share exceeds 40%), even if that merger or acquisition does not entail considerable market changes.

The draft amendments make two big changes. Firstly, if one of the parties involved in merger or acquisition has total turnover exceeding Lats25,000 and has a total market share below 15%, or if neither of the involved parties is acting in the same market or a market vertically related to the relevant market, the parties are entitled to submit a shortened report.

Secondly, one of the criteria for submitting the complete report has been strengthened: the report should be submitted if the participants' total market share exceeds 35% (previously 40%).

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