Business competition in Latvia
Business competition in Latvia is regulated by the Competition Council (Konkurences padome). The agency is responsible for controlling the competition in Latvian business, enforcing law against those who violate the principles of fair competition, as well as for providing information regarding the topic.
In total, there are 249 745 active companies registered in the Latvian Register of Enterprises (November 2016, source: government-sanctioned Lursoft Business Database), of which the biggest number (76 918) is registered in the capital city of Riga. Other cities with a big number of registered enterprises are Daugavpils (3 492), Liepāja (3 434), Jurmala (3 351) and Jelgava (3 322).
High-competition sectors
Out of all the industries present in Latvia, the top 10 are the most competition-intensive:
- Real estate renting and management (>4500 companies)
- Accounting, audit and tax consultations (>2300 companies)
- Business management and consultations (>2000 companies)
- Road transportation and logistics (>1400 companies)
- Purchasing and selling real estate (>1380 companies)
- Construction works and building (>1380 companies)
- Real estate management services (>1200 companies)
- Computer programming (>1200 companies)
- Advertisement (>1200 companies)
- Legal services (>1200 companies)
It is worth noting that the data is provided for the whole country, and regional situation may be different. Besides that, not all the companies operate throughout the country, some specialize in a certain region or a city. If you need a detailed competition research for your business for the purposes of market entry in Latvia, please do not hesitate to contact us.
Advantageous industries
According to the Investment and Development Agency of Latvia (Latvijas investīciju un attīstības aģentūra), competition-wise, the most advantageous industries in Latvia are:
- Woodworking
- Metalworking and mechanical engineering
- Transport and storage
- Information technology
- Green technology
- Health care
- Life sciences
- Food processing
These industries are distinguished by a high level of development thanks to the maximum utilization of resources available in Latvia, whether it is an advantageous geographical placement (transport and storage), skilled and intellectual workforce (information technology) or something else. The majority of these industries is also actively supported by the government, which means that any business is very likely to find funding and potential workforce in the sectors.
It does mean however, that each of these industries is free of competition. Each of the sectors can be divided into smaller business areas, which means that some of them are less crowded with companies, but some are more challenging to enter into. For example, the transport and storage sector is especially competitive in terms of road vehicle transportation.
Fair competition violations
The main and the most severe form of fair competition violation in Latvia is the distortion, restriction or hindrance of the competition. This includes both intentional and unintentional actions, including, but not limited to:
- entering an unequal agreement with a third party with the aim of creating disadvantage to the third party
- acting (including the absence of action) in a way that forces a third party to act against its will and withdraw from a particular market and/or troubles a third party to enter a market (not develop or outcompete other companies, but perform an initial entry, the possibility of which is not directly affected by the market's business environment)
- abuse of one's dominant position on a market, such as refusal to enter agreements without proper justification, including a refusal to enter agreements for supplying products and/or services (knowing that this will result in hindering a third party because of one's dominant position)
Agreements that violate the fair competition rules have no legal power from the moment they are concluded. Same as with the intentions of companies, there is no difference between contracts designed to specifically alter the competition in an unfair way and contracts that do that by accident, chance and/or negligence - both are null and void from the very beginning.
Prevention of competition violations
To prevent such violations, the Competition Council monitors the business activity of companies registered in Latvia, carries out investigations and decides upon punishments for the violators. Another way of preventing the fraud is the so-called leniency programmes (iecietības programmas). These guarantee, that if a company that has entered an agreement that violates fair competition with an equal company (i.e. on the same level of production or distribution, e.g. a manufacturer and another manufacturer) voluntarily submits evidence of the violation, it is fully exempt of any fines or prohibitions regarding this matter. This only applies for companies that are the first to submit such an evidence, and do so willingly and voluntarily. If a company submits the evidence after an investigation has started and/or does so after another party, the fines and prohibitions are not removed entirely, but are significantly reduced.
