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Annual Report 2014

 

Dear readers!
 

I am delighted for the opportunity to present you the latest Competition Authority Yearbook.

Our efforts are targeted at two areas, one is ensuring free competition and the other – exercising regulatory control over economic sectors. We are hoping for the number of regulated sectors and undertakings to continue to decline and the number of undertakings operating in the free competition environment to increase. Estonia can boast with some good examples in this area. While as recently as ten years ago the entire postal services sector was monopolistic, and Eesti Post inevitably had to carry such reputation, Omniva today is an undertaking oriented towards free competition and the highest level of customer service. Customers can choose between several different service providers to send their postal parcels and letters, and the last activity of Omniva that still remains regulated is the obligation to provide universal postal service. In the same way as in the postal sector, restrictions on monopolies were enacted in the electronic communication sector some 10–15 years ago. Today the monopoly service has been replaced by competition on free market. For two and a half years the country has lived under the free electricity market conditions, where the Competition Authority does not need to regulate oil shale or electric energy prices, let alone the sales margins added to prices charged to end consumers.

While in the energy sector the developments towards free market have been positive, there are regrettably still certain sectors where introducing of free market principles is facing considerable difficulties. For instance, on the medicinal products market restrictions on establishment of pharmacies have indeed been abolished, but there is still a number of problems yet to resolve. The matter of restrictions on ownership of pharmacies, that certainly hamper free competition, is still raising questions. It is completely understandable, that in a pharmacy customer service should be provided by employees with the respective education, but establishing restrictions on ownership is definitely over the top. This is like stipulating that shareholders of a power network must be electricians or that only bus drivers are allowed to own bus companies. Developments in public transport are not very satisfying either. This sector too could benefit from free market conditions, where regulations apply to quality, i.e. traffic safety, and not the market. It means that any bus operator who observes traffic rules, operates a fleet of buses compliant with the law, and generally ensures safe commuting, could carry passengers between Tallinn and Tartu.

The year 2014 will be remembered for a heated debate on the topic on whether or not cartel conduct should be regarded as criminal offence. Another issue is whether a participant in a cartel should be considered a criminal, but it is obvious that such complicated matters cannot be detected in a misdemeanour procedure. In a free market economy it is essential to comply with underlying rules, one of the most important of which is refraining from prohibited agreements, and therefore the means of combating cartels efficiently should remain in place. It is also appropriate to point out once again that it is easier to prevent a monopoly rather than to fight against abuse of the monopoly status. In this respect it is important, inter alia, to continue exercising uncompromising control over concentrations.

Wishing everyone creative ideas promoting free competition,

Märt Ots
Director General