Chapter 6 Latvia

Chapter 6 Latvia TABLE OF CONTENTS A. Market definition in competition and media law in Latvia 4 I. Introduction 4 1. Relevant legislation 5 2. Relevant institutions 7 3. EC competition rules 9 II The general approach to market definition in Latvian competition law 9 1. Relevant product market 11 a) Demand-Side Substitutability 11 aa. Product characteristics 11 bb. Intended use 13 cc. Price 14 dd. SSNIP test; Views of market participants 15 b) Supply-Side Substitutability and Potential Competition 16 c) Other criteria 17 2. Relevant geographic market 19 a) Specific market conditions 19 b) Market entrance barriers, legislative and administrative requirements 21 c) Views of consumers and market participants 22 3. Concluding remarks on the definition of the relevant markets 22 B. Repertoire of relevant product and geographic market in the media sector in Latvia 24 I. Publishing 24 1. Newspapers, journals and TV-schedules 24 2. Market for the advertisements in newspapers 26 3. Books and other printed materials 27 4. Press delivery and subscription 28 II. Film sector 28 III. Broadcasting: TV 30 1. Cable-TV services 30 2. TV advertising 32 3. TV programmes 32 4. Digital TV 33 IV. Broadcasting: Radio 34 V. Internet 34 1. Internet access services 34 2. Online data bases 36 C. Comparative analysis of media market definitions adopted by the European Commission and those adopted under Latvian national competition law 42 I. General remarks 42 II. Comparative analysis 44 1. Publishing 44 a) Newspapers and journals 44 b) Market for the advertisements in newspapers 45 c) Books and printed materials 46 d) Press delivery and subscription 46 2. Film sector 46 3. Broadcasting: TV 48 a) Cable-TV services 48 b) TV advertising 48 c) TV programmes 49 d) Digital TV 50 4. Broadcasting: Radio 50 5. Internet 51 a) Internet access services 51 b) Online data bases 52 III. Reasons for divergent results 53 IV. Conclusions 53 D. Impact of different (media) regulatory frameworks on market definitions 54 I. Regulatory frameworks in the Republic of Latvia having an impact on the media sector 54 1. Constitutional provisions 54 2. Sector-specific regulations 55 a) Legal framework 55 aa. Law on press and other means of mass information (likums “Par presi un citiem masu LQIRUP FLMDVO G]HN LHP´DGRSWHGE\WKH6XSUHPH&RXQFLORIWKH5HSXEOLFRI/DWYLDRQ December 1990, amended in: 1997, 2001, and 2002) 55 bb. Law on Electronic Communications (“Elektronisko sakaru likums”, adopted by the Cabinet of Ministers of the Republic of Latvia on 15 April 2004) 55 cc. Radio and TelevisiRQ/DZ %URDGFDVWLQJ/DZ ³5DGLRXQWHOHY ]LMDVOLNXPV´ DGRSWHGE\WKH Saeima on 24 August 1995, amended in: 1996, 1997, 1997, 1998, 1999, 1999, 1999, 2001, 2002, 2002, 2002, 2003, 2003, 2004, 2004) 56 dd. Information PuEOLFLW\/DZ ³,QIRUP FLMDVDWNO W EDVOLNXPV´DGRSWHGE\WKH6DHLPDRQ October 1998, amended in: 2002, 2003, 2003, 2003, 2004) 56 ee. ,QIRUPDWLRQ6RFLHW\6HUYLFHV/DZ ³,QIRUP FLMDVVDELHGU EDVSDNDOSRMXPXOLNXPV´DGRSWed by the Saeima on 11 November 2004) 56 ff. &RS\ULJKW/DZ ³$XWRUWLHV EXOLNXPV´DGRSWHGE\WKH6DHLPDRQ$SULODPHQGHGLQ 2003, 2004) 57 gg. Official Language Law (“Valsts valodas likums”, adopted by the Saeima on 09 December 1999) 57 b) Administrative regulation/rules 58 aa. 5HJXODWLRQVRQXVLQJODQJXDJHVLQLQIRUPDWLRQ ³1RWHLNXPLSDUYDORGXOLHWRãDQXLQIRUP FLM ´ adopted by the Cabinet of Ministers on 22 August 2000) 58 3. Other provisions 58 a) &RGHRI&RQGXFWRI/DWYLDQ-RXUQDOLVW8QLRQ /DWYLMDVäXUQ OLVWXVDYLHQ EDV WLNDVNRGHNVV adopted by Latvian Journalist union in conference 28 April 1992) 58 b) Code of Conduct of Latvian Press, Radio and Television Journalists (Latvijas preses, radio un WHOHY ]LMDVåXUQ OLVWXSURIHVLRQ O V WLNDVNRGHNVVDGRSWHGRQ0D\E\WKHPDQDJHUVRI QHZVSDSHUV'LHQDVEL]QHVV1HDWNDU J 5 WD$Y ]H5 JDV%DOVV-DXQ $Y ]HýDV 5HVSXE LND6SRUWD$Y ]HDQG5DGLR.1= 58 II. Regulatory authorities in the Republic of Latvia having an impact on the media sector 58 1. 7KH1DWLRQDO5DGLRDQG7HOHYLVLRQ&RXQFLO 1DWLRQDO%URDGFDVWLQJ&RXQFLORI/DWYLD1DFLRQ O UDGLRXQWHOHY ]LMDVSDGRPH 58 a) Legal basis 59 b) Functions / competencies 59 c) Linkage with general competition authorities 59 2. Electronic Communications Office (“Elektronisko sakaru direkcija”) 60 a) Legal basis 60 b) Functions/competencies 60 c) Linkage with general competition authorities 61 3. National Cinematography centre of Latvia (Latvijas 1DFLRQ ODLV.LQHPDWRJU ILMDVFHQWUV 61 a) Legal basis 61 b) Functions/competencies 61 c) Linkage with general competition authorities 61 2 4. 3XEOLF8WLOLWLHV&RPPLVVLRQ ³6DELHGULVNRSDNDOSRMXPXUHJXO ãDQDVNRPLVLMD´ 62 a) Legal basis 62 b) Functions/competencies 62 c) Linkage with general competition authorities 62 III. Market definitions and/or criteria upheld for market perception in the relevant sector focused legislation 62 1. Publishing 63 2. Music – copyright 64 a) Publishing 64 b) Music recording and distribution 64 3. Film 64 4. Broadcasting 65 5. Internet 66 IV. Market definitions and/or criteria for market perception in the media-sector, as upheld in sector specific practice of authorities and/or courts 67 1. Publishing 67 2. Music – copyright 68 3. Film 68 4. Broadcasting (radio and television) 68 5. Internet 69 V. Common factors and differences between these market definitions and the market definitions used in application of the national competition rules 69 VI. The impact of the non-competition framework and practice on the work of the competition regulator, in particular when defining the relevant markets 70 3 A. Market definition in competition and media law in Latvia I. Introduction The roots of the current Latvian competition policy can be traced back to the early 90’s. After 6.1 regaining its independence1, Latvia started a rapid transformation process of the former mechanisms of planned economy into the system governed by the rules of the free market. Taking into account that the competition policy instruments form an indispensable part of any market economy, the relevant legislative initiatives were early on on the agenda of the Latvian policy makers. On December 3, 1991, the Supreme Council of Latvia adopted a Law “On competition and on the restriction of monopolistic behaviour”2. One year later, the first autonomous institutional mechanism was created: on November 12, 1992 the Council of Ministers adopted the Decision Nr. 481 “On the establishment of the Committee for the supervision of the monopolistic activities in the Republic of Latvia”3. This new Committee, set up in the form of an administrative institution subordinated to the Council of Ministers, was created by transforming the Department for the supervision of the monopolistic activities and for the stipulation of competition of the Ministry of Economic Reforms. In 1993, the Committee was transferred under the supervision of the Ministry of Economics4. The main objectives of the Committee were the control and examination of the monopolistic undertakings in Latvia and the development of a competitive environment in all sectors of the economy. The Committee remained in charge of the competition field until January 1998, when the new version of the Competition Law (adopted on June 18, 1997) came into force. The new Law required the establishment of a new body responsible for the competition law matters in Latvia – the Competition Council. The Council was established by the Ordinance Nr. 18 of the Cabinet of Ministers of January 14, 19985. The Council is the main actor in the field of the control and enforcement of the competition rules in Latvia at the moment of conducting this study.6 1 The process of re-establishment of Latvia’s independence was officially completed on August 21, 1991 when the Supreme Council adopted “The Law On The Statehood of the Republic of Latvia” (Likums Par Latvijas Republikas valstisko statusu), published in =L RW MV 2IILFLDO *D]HWWH XQWLO RQ 24.10.1991. 2 Law “On competition and on the restriction of monopolistic behaviour” (Likums „Par konkurenci un PRQRSROGDUE EDVLHUREHåRãDQX³ SXEOLVKHGLQ=L RW MV 2IILFLDO*D]HWWHXQWLO RQ 24.12.1991. 3 Decision Nr. 481 of the Council of Ministers of 12.11.1992 “On the establishment of the Committee for the supervision of the monopolistic activities in the Republic of Latvia” (Ministru Padomes 12.11.1992 O PXPV Nr. 481 ”Par Latvijas Republikas Ministru Padomes 0RQRSROGDUE EDVX]UDXG] EDVkomitejas izveidošanu”), not published. 4 Latvijas 9 VWQHVLV 2IILFLDO*D]HWWH 5 Ordinance Nr. 18 of the Cabinet of Ministers of 14.01.1998 On the establishment of the Competition Council (Ministru Kabineta 14.01.1998. U NRMXPV Nr. 18 “Par Konkurences padomes izveidošanu”), published in Latvijas 9 VWQHVLV 2IILFLDO*D]HWWH RQ 6 All the decisions analysed in this study are the ones adopted by the Competition Council since 1998. No decisions of other (earlier) authorities dealing with competition matters were accessed. 4 The process of negotiations on Latvia’s accession to the EU has made a major impact on the 6.2 current shape of the competition policy instruments in this country. The Europe Agreement of 1995 (came in force in February 1998) contained provisions obliging Latvia to follow the EC pattern when dealing with the competition matters and to adjust its competition laws to the respective legislative enactments on the European level7. The Competition Law of 2001 was an apparent result of this approximation process of Latvia’s legislation to the acquis communautaire. Latvia did not face any major difficulties at the pre-accession stage regarding the competition policy, and the country’s fluent progress in this field was also repeatedly acknowledged by the European Commission8. 1. Relevant legislation The main piece of legislation currently governing the competition policy area in Latvia is the 6.3 Competition Law of October 4, 20019, which came into force on January 1, 2002. This law replaced an earlier law of June 18, 1997. Already the law of 1997 was closely aligned with the competition provisions of the EC, though with some inadequacies10. The law of 2001 made, however, another quality step forwards, by introducing important improvements of both substantial and procedural nature, e.g.

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