Back to list Print 13. Mar. 2017

“Rīgas satiksme”: Competition Council’s decision lacks legal basis

Referring to the Competition Council’s decision “On establishing an infringement, imposing a legal duty and a fine”, “Rīgas satiksme” informs that the above decision lacks legal basis. The company disagrees with the decision and will appeal against it in court.

“Rīgas satiksme” informs that an EU regulation stating that a city is to have a single network of routes supervised by the local government took effect in 2012. Riga City Council has chosen “Rīgas satiksmе” as the carrier for the single network of routes. It has also decided that from now on the company will be responsible for higher level services and has included the network of minibus routes in the single network of public transport route. Considering the fact that historically minibus routes in Riga were operated by private companies, a procurement procedure was carried out in 2012–2013 to choose the company that will provide higher level services in Riga. Several essential requirements were set during the procurement as to age and livery of vehicles, ticket system etc., and “Rīgas mikroautobusu satiksme” has won the tender.

It is important to note that when implementing EU requirements as to providing a single route network and is supervision, the city of Riga did not spend funds form its budget or from the “Rīgas satiksme” budget, as all the requirements were fulfilled at the expense of a private company’s funds.

As proceeds from Cabinet regulations No. 435, payment for a higher level service is an addition to the payment for the basic service and cannot be lower.

The Competition Council sees the infringement in the fact that "Rīgas satiksme" sets for its subcontractor a condition that the tariff the subcontractor charges for the increased level service cannot be below the tariff for the basic service set by Riga City Council. Given the above regulation, it is clear that such a conclusion of the Competition Council lacks legal grounds. We should note that state-owned JSC "Autotransporta direkcija" includes in contracts signed with suppliers a condition that subcontractors have to comply with tariffs    set by "Autotransporta direkcija".

The right to oblige a subcontractor to observe the terms of service delivery as set by the customer ordering the public transport services (including the basic tariff and the terms of pricing the higher level service) also proceeds from public procurement regulation. When fulfilling a public service contract (including for public transport service), the subcontractor helps to fulfil the contract to the extent and on the same terms that are binding for "Rīgas satiksme". If "Rīgas satiksme" has to comply by the set tariff when providing the service, it has the same duty also when attracting a subcontractor. Therefore, "Rīgas satiksme" has to ensure in the contract that the subcontractor complies with the same requirements which are compulsory for "Rīgas satiksme".

The EU has acknowledged that considering social and environmental factors as well factors related to regional planning, public transport services guaranteeing safety, efficiency, high quality and transparency, and offering social tariff rates to different categories of passengers, cannot be delivered in the market, because in most countries these services will lack economic grounds. These services can be only delivered in the set volume and with the set quality by means of regulated competition, which includes, among the other, legal granting of exclusive rights and exemption of price competition. Not a single group of passengers using public transport of "Rīgas satiksme” pay the full price and the local government co-finances the price of tickets for all passengers. Thus a conclusion can be made that the price set by "Rīgas satiksme” is not a market price and cannot be subject to competition. If competition was allowed between "Rīgas satiksmе” and its subcontractor, it would be probably necessary to increase the co-funding by the local government or decrease/limit the existing criteria of accessibility and quality.

Thus a conclusion can be made that the Competition Council did not take into consideration the special legal framework of the public transport sector. We also note that setting the procedure of delivering public transport services is within the competence of the organizer of public transport services (Riga City Council) and the Competition Council has no powers to limit this activity. In accordance with the law, a public transport service provider has to fulfil the tasks set by the organizer of public transport services, also by allowing and implementing regulated competition on the market. As "Rīgas satiksme" does not violate its exclusive rights, the activities of "Rīgas satiksme" are not subject to control and restrictions set in the law „Оn Competition”.

You can find more information on „Rīgas satiksme” services, route schedules, types of tickets and other news at www.rigassatiksme.lv and also in social networks, such as Twitter, Facebook, and draugiem.lv . 

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