ECA Annual Report 2013
We are glad to present another Annual Report of the Estonian Competition Authority. I share the view of those who believe that a strong economy and the well-being of the residents is one of the essential foundations of our country. The Competition Authority´s mission is to keep reminding that free competition is one of the main driving forces for the economy. Free competition does not necessarily depend on whether the Government has right, central or social orientation. Social orientation does not mean limiting free competition, hindering entrepreneurship or creating administrative monopolies. On the contrary, a social country may only benefit from good economic environment and instead of limiting the success of undertakings, it would be worth considering little higher taxes and then redirecting additional resources to strengthen the sociality.
In the light of activities of previous and this year, we can say that the Authority´s role of analysing various sectors and giving recommendations for improving the competitive situation is becoming increasingly important. The energy sector has always been in our focus, because the sector has a monopolistic image and it represents a relatively large share of consumer expenditure. It is rather common to say that oil shale is both our fortune as well as misfortune. Fortune, because it helps us to ensure our energy independence; misfortune, because the mining and processing of oil shale inevitably involves environmental impact. With regard to open electricity market and the completion of Estonian-Finnish connections we have been integrated into the Nordic electricity market since last year and also oil shale power industry has to compete with other resources of energy on equal terms. At the same time, however, the economic organisation of the oil shale sector has not considered these circumstances. Oil shale is a great challenge for our economy and the right organisation of the sector has enormous potential for achieving economic success. It is probably widely known that the majority of the liquid fuel resources are not in the form of oil, but in different types of solid oil such as tar sands, oil shale, etc. Estonia will certainly not strive for becoming a leading oil country, but we can surely contribute to the development of this sector. If so far the main use of oil shale has been electricity production, then in the conditions of high oil prices and open market, the economic trend is more on the oil production. Also, the sharing and direction of oil shale has to follow such trend. The resource must go there, where it will be the most beneficial and ensure the highest efficiency.
The Supreme Court´s decision on the abolition of limitations in connection with the establishment of pharmacies can also be considered as an important event last year. The Estonian Competition Authority and the Chancellor of Justice have been dealing with this issue for years. Of course, all the necessary services from medicine to public transportation need to be ensured for the residents of the rural areas. At the same time, it is not correct to restrict competition as a tool for achieving this. A large part of the price of prescription drugs is known to be funded by the State through the support of the Health Insurance Fund. Removing competition restrictions and designing more effective pharmaceuticals market would enable us to save costs and if necessary, support pharmacies in the rural areas at the expense of free resources. We can be absolutely sure that it would be more effective than the implementation of competition restrictions.
Important discussions are under way in the district heating sector. In Estonia, the local governments have the right to establish a region, where the only allowed type of heating is the district heating. The district heating sector is continuously over regulated and has too many administrative constraints. The Ministry of Economic Affairs and Communications has drawn up a draft act, which aims to implement free market rules more in the sector. Clearly, not all 200 district heating undertakings can be effective and free competition could be considered, when smaller undertakings are concerned.
With best wishes,