To continue the recent newsflash series on forthcoming major changes to the Competition Law (Draft Law), this time we focus on expected changes to the internal procedures of the Competition Council (“the Authority”) including appointment of Authority members and public information aspects.
Under the present procedure, the chair and members of the Authority are elected for five years and can be re-elected again and again. The procedure regulating duration of powers remain the same under the Draft Law. However, significant changes are expected in the appointment procedure: the Draft Law sets a limitation, so that the chair and members of the decision-making body may be re-elected only once. Here, it is relevant that competition law is a comparatively new and complex field. The decision-making body of the Authority has powers not only to decide on violations of the Competition Law but also to plan state competition policy. Taking into account the specifics of this legal sector plus the fact that penalties may amount up to 10% of a company's turnover, Authority members bear weighty liability for the quality of their decisions. Quality assurance, in turn, requires experienced professionals who are constantly improving their competence. Thus it is clear that a limitation on re-election could increase the number of low-quality decisions, with an adverse effect on competition in general. This, in our opinion, calls for a re-assessment of whether the Draft Law really needs the limitation on re-electing members of the decision-making body.
To maximise the efficiency of Authority operations, the Draft Law is expected to change the structure by abolishing the positions of executive board and executive director and establishing a decision making body within the Authority that adopts decisions in the name of the Authority and reaches administrative agreements on competition issues, as well as structural units that ensure Authority operations by performing the functions of secretariat and experts. The task of the structural units will be to prepare case materials, documents and draft decisions to be reviewed by Authority decisions, to represent the Authority before the courts and to enforce decisions.
At present, the structure of the Council with an investigative body (executive board) separated from the decision making body ensures independent investigation within the executive board as well as objective decisions by the decision making body. But the wording of the Draft Law entitles the Authority's chair to give direct orders to any Authority employee; this situation in essence contradicts the principle of independent investigation, which in turn could raise doubts about the justice and impartiality of Authority decisions.
On a more positive note, the Draft Law also includes a range of praiseworthy amendments such as an obligation to inform the public about performance of the Authority's tasks as well as other issues on protecting, maintaining and developing competition. In this respect the Authority has always successfully managed to inform the public by organising and participating in seminars devoted to competition law, as well as by publishing information on its internet website.
As to informing the public, the Draft Law empowers the Authority to protect confidential information by limiting public access only to information that should be generally available, ie excluding confidential information. Thus the Authority would maximise precision in handling information of limited access, ensure confidentiality and exclude risks of disclosing trade secrets. This practice has already been successfully implemented at the European Commission.
The Draft Law introduces an obligation to inform the public about decisions on violations of Competition Law, mergers and agreements between market participants. However, this obligation does not include decisions on penalties for administrative violations that the Authority may impose for failure to provide information, providing false information or failure to perform lawful requests by Authority officials. Publication of these decisions is especially important in the context of the Draft Law changes affecting the penalty, in that for these violations the Authority may impose a fine of up to 1% of a market participant's net turnover for the previous financial year. At present the issue of penalties for administrative violations is regulated by the Latvian Code of Administrative Violations, with a maximum administrative penalty for a legal person's procedural violations set at EUR 14,000.