This newsflash continues a series of news items on amendments to the Competition Law (Draft Law) that the Parliament plans to adopt this year. In this newsflash we will address the requirements included in the Draft Law in relation to case investigation proceedings. The most significant of these requirements, in our opinion, are related to the powers of the Competition Council to require information from electronic communication businesses and banks, as well as to hear participants in proceedings in person before adopting a final decision.

Right to information from electronic communication businesses and credit institutions

The Draft Law sets out the Competition Council's powers during an investigation of competition violations to require information needed for the investigation from electronic communication businesses and credit institutions.

Amendments have already been introduced to the Electronic Communications Law and the Credit Institution Law; these will come into force after adoption of the Draft Law. The Credit Institution Law will require credit institutions to provide classified data at their disposal to the Competition Council. The Competition Council will be allowed to require these data only within the scope of a case already initiated by producing the judge's order. In turn, the amendments to the Electronic Communications Law will require electronic communication businesses to provide their stored data at the Competition Council's request. The Competition Council may require these data when investigating violations of prohibited agreements.

Under the Draft Law, the Competition Council will need a judge's order to require information from credit institutions or electronic communication businesses. On the one hand, this regulation will help the Competition Council to investigate cases, ensuring collection of evidence from third parties that are not participants in proceedings. Nevertheless, it is likewise important to determine criteria for issue of a judge's order in these cases. Otherwise, the order may become a formality and, as in the case of inspection orders, would turn into a basis for so-called "fishing expeditions" when the competition authority obtains information that does not relate directly to the case under investigation. Thus a judge's order should indicate the particular product (service) and the period under investigation. Likewise, it would be important that the Competition Council should be required to provide grounds so that the court can verify that the information at the disposal of the credit institution or the electronic communication business cannot be obtained from other sources. This would help to avoid situations when the obligation imposed on credit institutions and electronic communication businesses in relation to processing an information request is not proportionate, while the Competition Council obtains bulky information unrelated to the case under investigation.

Hearing in person

The Draft Law adds a significant supplement to the investigation process in Latvian competition law in the shape of hearing participants in proceedings. The hearing will be organised on the basis of a reasoned request by the participants in proceedings after the Competition Council has provided a summary of facts and evidences obtained in the case. During the hearing the participants will have the opportunity to express opinions and provide additional information regarding facts detected in the case to the members of the Competition Council and case handlers before a final decision is adopted. Notably, in the European Commission investigators in a similar proceeding must verify information or evidence obtained during the hearing in order to adopt a final decision. The law sets a deadline for Competition Council investigations: a maximum of two years. Taking this into account, the risk is that the hearing might be only a formality if organised shortly before expiry of the term, while the Competition Council could not comprehensively and objectively assess information obtained during the hearing.

Summary and comments

The Draft Law expands the types of Competition Council investigations, allowing information to be obtained on the basis of a judge's order from electronic communication businesses and credit institutions. Moreover, the Draft Law is supplemented to allow hearing of participants in proceedings in person, allowing participants to give arguments and evidence before the Competition Council adopts a final decision.

In the context of the Draft Law, we ask market participants to assess the impact of the amendments on their business and to become involved in adoption of the Draft Law by expressing their opinion individually or via industry associations.