ECN Brief

Latvia | The Competition Council proposes to open the vehicle technical condition control market for competition

Latvia | The Competition Council proposes to open the vehicle technical condition control market for competition

During sector inquiry into the market of state technical inspection of vehicles, the Competition Council of Latvia (the CC) detected, that the state groundlessly restricts possibilities of the private sector to provide control of technical condition of vehicles. The CC has warned the state, that by groundless restriction of the market development Latvia may infringe legislation of the European Union (the EU).

Implementation of the control of technical condition of vehicles in Latvia is entrusted to state joint stock company “Road Traffic Safety Directorate” (RTSD). It has accredited four companies for provision of these services at the same time owning capital shares in them. Considering the double role of the RTSD, there is a great risk of failing act neutrally. The CC has detected, that these companies hold a collective dominant position together with the RTSD.

The CC indicates, that operation of the RTSD is based on guidelines adopted by the Ministry of Transport. The conditions included in guidelines are not proportionate and make it rather impossible for new market players to involve in the market. If establishment of new inspection stations would be considered, advantages are guaranteed particularly to the RTSD and its accredited companies, instead of equal possibilities to all market participants. The competition is negatively affected also by the fact, that the accredited companies do not mutually compete for customers, because each of them is assigned in a particular territory. It is equivalent to a market allocation. At the same time, the accredited companies are protected from competition pressure, because of guaranteed automatic extension of agreement with the RTSD.

To eliminate groundless intervention by the state in the technical condition control market, prevent competition restrictions and negative impact on consumers, the CC calls to open this market. The CC recommends, that the state preserves function of accreditation and supervision of companies, while private sector – service stations and repair workshops – provides technical condition control by simultaneously identifying and eliminating defects and carrying out technical control.

The CC indicates, that the operational policy applied by the RTSD, is in conflict with EU legislation and contains features of violation of the Treaty on the Functioning of the European Union – abuse of a dominant position. The CC has sent a letter to the Ministry of Transport with a request to submit the necessary action and measures plan until 1st October, 2018.  In case of failure to fulfil this request, the CC is entitled to initiate a formal case investigation.

Posted on