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RIGA - The state has no right to prevent private companies from providing vehicle inspection services, the Competition Council has concluded.
The Competition Council believes that automobile repair shops may also perform vehicle inspection services, not only the Road Traffic Safety Directorate.
Furthermore, Latvia may be violating the European Union's rules by imposing regulations that stall market development.
The Competition Council has concluded that the Road Traffic Safety Directorate, which has the right to perform vehicle inspection in Latvia, has accredited four more companies, which all fully or partly belong to the directorate, to provide vehicle inspection services. The Competition Council believes that these companies and the directorate have a dominant market position.
According to the Competition Council, which has also analyzed the situation in other countries, the vehicle inspection system in Latvia and restrictions imposed by the Road Traffic Safety Directorate are disproportionate, damaging to consumers, and preventing the private sector from entering the market.
The Road Traffic Safety Directorate's operations are based on the Transport Ministry's guidelines, which include disproportionate requirements and make it practically impossible for new players to enter the market. If a decision is made to open a new inspection station, the directorate and the companies it has accredited will have the advantage, and not all market players will have equal opportunities.
Furthermore, the accredited companies do not compete with one another as each operates in a specific region where they provide their services. This constitutes one of the worst violations of competition rules - market division, the Competition Council points out.
"Only free market competition ensures that consumers can receive competitive prices determined by the actual market situation. In Latvia's regulated market, vehicle inspection costs for consumers have increased 50 percent to 60 percent over the past ten years. These costs are among the highest in the EU, and the highest in the Baltics," explains the Competition Council.
The Competition Council proposes deregulating the vehicle inspection market. It believes that the state should continue to perform the accreditation and supervision function, while vehicle inspection services should be provided by the private sector - repair shops. Contrary to the popular belief that entrusting private repair shops with vehicle inspection could impair traffic safety, the Competition Council has concluded, based on other EU member countries' experience, that this is not so.
In order for Latvia to meet the relevant EU requirements and ensure fair competition, the Competition Council has sent a letter to the Transport Ministry, asking that the ministry by October 1 develop an action plan to solve the problems identified by the council.