In 2024, competition law advisors should pay close attention to the evolving landscape of digital markets, which are increasingly influenced by digitalization. Key points include:

1. **Multi-Sided Markets**: Major players are online platforms that connect different user groups, such as sellers and buyers on e-commerce sites or content creators and consumers on digital content platforms. Advisors should consider how these platforms operate and their impact on competition.

2. **Network Effects**: The attractiveness of a platform can grow as more users join, creating direct and indirect network effects. This can lead to market dominance, which may raise antitrust concerns.

3. **Economies of Scale**: Digital markets often have high fixed costs and low variable costs, allowing companies to grow rapidly. Advisors should assess how this affects competition and market entry for new players.

4. **Data Utilization**: The extensive processing and use of user data can create barriers to entry for competitors. Advisors need to evaluate how data practices may lead to anti-competitive behavior.

5. **Switching Costs**: Users may face significant non-price switching costs, such as the effort invested in building profiles on social media. This can lock users into platforms, affecting competition.

6. **Intellectual Property**: Companies holding patents can monopolize new technologies, impacting market dynamics. Advisors should monitor how IP rights are leveraged in digital markets.

7. **Low Operating Costs**: Many digital businesses generate revenue through data collection or advertising, which can lead to aggressive competitive strategies. Advisors should be aware of how these practices might violate competition laws.

8. **Vertical Integration and Conglomerates**: Companies that offer a range of services through innovation can gain substantial market power. Advisors should analyze the implications of such integrations on competition.

Overall, competition law advisors must closely monitor these factors to ensure compliance and address potential anti-competitive practices in the rapidly changing digital marketplace. Digital markets present unique challenges for competition law advisors, particularly due to rapid market changes and unclear boundaries. In 2024, the focus of the Competition Council (KP) in Latvia has shifted towards monitoring smaller digital companies, while the European Commission continues to oversee larger tech firms. The KP has prioritized promoting competitive digital markets, allocating significant resources to investigate competition conditions and enhance international cooperation.

A new Chief Expert for Digital Markets has been appointed to support research and strengthen the council's capacity in this area. Elīza Roshofa, the Chief Expert, emphasized the importance of participating in international projects to tackle complex issues that the council cannot address alone. She urged consumers and market participants to report any concerns to the KP, as even minor violations could indicate larger problems.

For competition law advisors, this means they should closely monitor developments in digital market regulations and be prepared to assist clients in navigating potential compliance issues. They should also encourage clients to engage with the KP proactively, as early reporting of concerns can help mitigate risks associated with competition law violations. In September 2024, a project called "Market Study on Competition in Digital Markets" was launched in collaboration with the European Commission, OECD, and competition authorities from Lithuania and Poland. This project focuses on analyzing major digital platforms in Latvia, Lithuania, and Poland to understand the impact of the Digital Markets Act (DMA) in these countries. The main goal is to identify gaps in legal regulations and suggest improvements at both national and EU levels.

The Latvian Competition Council (KP) is actively participating by providing information to the OECD and sharing insights from its own research. After the study concludes, KP will inform the public about the findings and evaluate the OECD's recommendations to enhance competition in digital markets.

Additionally, on May 16, 2024, KP hosted EU General Court judge Pēteris Zilgalvis to discuss key issues in digital market research and the development of a national report for the International Federation for European Law (FIDE). FIDE plays a crucial role in EU law research and organizes a congress every two years, focusing this year on digital market regulations. KP experts are examining the implementation of the Digital Services Act (DSA) and DMA in national regulations, with results to be presented at the FIDE congress in May 2025 in Katowice, Poland.

For competition law advisors, this project highlights the importance of staying informed about regulatory developments in digital markets and the potential for new legal frameworks that could affect major digital platforms. Engaging with ongoing research and understanding the implications of the DMA and DSA will be crucial for advising businesses in this evolving landscape. In 2024, the Competition Council of Latvia (KP) shared its expertise on digital market regulations with other countries, particularly during an experience exchange event in Poland. KP's involvement in international groups, such as the European Competition Network (ECN) and the Digital Markets Act (DTA) working groups, enhances its knowledge and fosters cooperation, which is crucial given the cross-border nature of digital platform violations.

Domestically, KP strengthened its collaboration with the Consumer Rights Protection Centre (PTAC) to improve oversight in digital markets, culminating in a memorandum to effectively implement the DTA in Latvia by the end of 2024.

The DTA, effective from November 1, 2022, aims to ensure fair competition in the EU's digital markets by establishing clear rules for major digital platforms, referred to as "gatekeepers." These gatekeepers have significant influence over competition and can engage in practices harmful to users, including both commercial entities and consumers. Importantly, the DTA complements existing competition laws without altering KP's authority to penalize gatekeepers for abuse of dominance.

For competition law advisors, this means they should closely monitor the implementation of the DTA and its implications for businesses operating in digital markets, particularly those classified as gatekeepers. They should also be aware of the strengthened cooperation between KP and PTAC, which may lead to more rigorous enforcement actions and compliance requirements for digital platforms in Latvia. On February 29, 2024, amendments to the Competition Law (KL) were made, granting the Competition Council (KP) additional responsibilities to monitor the implementation of the Digital Markets Act (DTA) in collaboration with the European Commission (EC). The DTA aims to create fair competition conditions for major digital platforms like Alphabet, Amazon, and Apple. The EC is the sole authority for enforcing the DTA, while national competition authorities, including KP in Latvia, must support the EC by conducting necessary inspections and gathering information.

KP is also required to assist in market studies and monitor compliance with DTA obligations, addressing any complaints about potential violations by forwarding them to the EC. Importantly, individuals harmed by DTA violations can seek compensation in court.

Additionally, KP is expanding its powers to monitor economic dependencies that affect competition, allowing for quicker intervention in various sectors compared to traditional dominance abuse regulations. This new framework will help address anti-competitive behavior from companies with significant market power, even if they do not meet the strict criteria for dominance.

In 2024, KP is collaborating with other EU countries, such as Belgium and Germany, to develop best practices for this legal framework. Stakeholders have been consulted, and ongoing discussions will continue with the Ministry of Economics and the KP Advisory Council regarding these amendments.

For competition law advisors, these developments imply a need to closely monitor the activities of major digital platforms and prepare for potential legal actions related to DTA violations. Advisors should also be aware of the expanded powers of KP to address economic dependencies, which may affect their clients' competitive strategies. In 2024, the Competition Council (KP) of Latvia is focusing on the implementation of the Data Act, which aims to promote fairness in the digital economy by making data more accessible and usable. Businesses that can gather and maintain exclusive control over data can gain significant advantages over competitors, enhancing their market power. The Data Act addresses issues of data access and fair compensation for data holders, particularly concerning unfair contract terms between data holders and small to medium-sized enterprises (SMEs). 

Competition law advisors should note that certain behaviors, such as a dominant company's failure to provide data access, could be seen as violations of competition law. Additionally, the P2B Regulation aims to ensure fair competition in digital markets, protecting the interests of businesses, although its enforcement in Latvia falls under the Consumer Rights Protection Centre (PTAC).

To enhance understanding of competition in digital markets, the KP organized a webinar in 2024 to educate businesses about recognizing competition restrictions in the digital space. This included discussions on how digital platforms might abuse their dominant positions and the implications of the Data Act for businesses in Latvia. The KP plans to continue these educational initiatives, encouraging stakeholders to stay informed through their event calendar. In 2024, the Competition Council (KP) provided guidance to businesses regarding existing cooperation agreements among websites, focusing on market definitions and initial assessments of these agreements. The KP received and evaluated 18 submissions related to digital service provision, including ride-sharing apps, online freight brokerage, payment apps for food services, and advertising platform behaviors. Most submissions raised concerns about the misuse of dominant market positions, but the KP found no violations in most cases.

The investigations highlighted the importance of assessing the availability of alternative services in digital markets, as a lack of alternatives can indicate market power. The geographical definition of markets was also emphasized, with local boundaries for some services (like food delivery) and broader, multi-country boundaries for international transport.

The KP noted that many digital platforms offer services for free, which is a common business model but does not automatically imply illegality. Looking ahead, the KP plans to further investigate digital sector issues in 2025, including examining experiences and regulations from other EU countries regarding ride-sharing services.

For competition law advisors, this indicates a need to closely monitor market definitions and the presence of alternatives in digital services, as well as to understand the implications of free service models in the context of market power. Starting March 7, 2024, major tech companies like Alphabet, Amazon, Apple, ByteDance (TikTok), Meta, and Microsoft must comply with the Digital Markets Act (DTA). The European Commission (EC) has given these companies six months to meet the DTA requirements. Notably, the EC has decided that Booking and Apple’s iPadOS will also be classified as gatekeepers, while X (formerly Twitter) and ByteDance's advertising services will not receive this status.

The EC has initiated several non-compliance procedures against Alphabet, Apple, and Meta for failing to meet DTA obligations. For Apple and Alphabet, concerns arise from their app stores (App Store and Google Play) not allowing users to freely switch to other app stores. Alphabet is also under scrutiny for potentially favoring its own services, like Google Shopping, over competitors. Apple faces issues with its browser's choice screen limiting user options and new fees for third-party app developers that may violate DTA rules. Meta is being investigated for its "Pay or Consent" model, which may not align with DTA requirements for user consent regarding data sharing.

The EC must make decisions on these non-compliance cases within 12 months. Additionally, the EC is examining whether Amazon's practices regarding its own products on its e-commerce platform violate DTA rules. Competition law advisors should closely monitor these developments, as they could significantly impact the operations and compliance strategies of these major tech firms. In 2024, the European Commission (EC) made significant rulings on competition law, impacting major companies like Meta, Apple, Microsoft, Delivery Hero, and Glovo. Meta was fined for tying Facebook to its Marketplace, hindering other ad platforms. Apple faced penalties for restricting app developers from informing iOS users about cheaper music subscription options, a practice known as anti-steering. Microsoft is under investigation for bundling its Teams software with Office 365, potentially stifling competition in the video conferencing market.

Additionally, the EC opened an investigation into Delivery Hero and Glovo for possible market division and sharing sensitive information before their merger, including a no-poach agreement. Amazon and iRobot withdrew their merger plans after the EC raised concerns about its impact on competition in the robotic vacuum market, despite the UK competition authority approving it. This highlights the EC's strict stance on mergers that could harm competition, especially in markets where Amazon plays a significant role.

Competition law advisors should note these developments as they indicate a growing scrutiny of market practices and mergers that could limit competition, particularly in tech and delivery sectors. Companies involved in similar practices or considering mergers should be cautious and seek legal guidance to navigate potential regulatory challenges. The article highlights key developments in competition law within the digital sector, particularly focusing on artificial intelligence (AI) and cloud services. Countries like Hungary and France are scrutinizing the concentrated market for AI services, which has high entry barriers and vertical integration. Competition regulators are concerned about mergers that could eliminate future competitors and restrict access to data and skilled workers. Similarly, Danish regulators have found that the cloud services market is also highly concentrated, with challenges in switching providers due to technical limitations and lack of transparency in pricing.

Additionally, the European Court of Justice upheld a ruling against Google regarding its Shopping service, reinforcing the conditions under which self-preferencing can be deemed an abuse of a dominant position. This ruling is significant for businesses involved in digital markets, as it clarifies the legal framework for assessing market dominance and mergers.

Moreover, the Data Act, effective from early 2024, aims to promote data sharing among companies, enhancing competition, especially in the aftermarket for smart devices and easing the transition between cloud service providers. 

For competition law advisors, these developments indicate a need for vigilance regarding mergers and acquisitions in the AI and cloud sectors, as well as compliance with new regulations that encourage data sharing and competition. Businesses should be prepared for increased scrutiny from regulators and adapt their strategies accordingly. The article discusses the impact of the Artificial Intelligence (AI) Act, which came into effect last year, aimed at regulating the development and use of AI to ensure its safe, ethical, and responsible application. Key provisions include requirements for AI system safety, transparency, and accountability, compelling businesses to provide clear information about their technologies. This regulation seeks to prevent unfair competition, such as the use of discriminatory algorithms or data that could harm consumers.

For competition law advisors, the implications are significant. The AI Act could foster a more competitive environment by allowing new and innovative companies to enter the market. However, it may also impose additional costs and compliance requirements on larger companies already utilizing AI, potentially limiting their market dominance.

Looking ahead to 2025, the Competition Authority (KP) plans to enhance its understanding of competition law in digital markets, responding to potential competition hindrances. They will monitor trends in digital market development and continue international collaboration, particularly with the OECD and the European Commission. Additionally, there are plans to amend competition laws to address economic dependency and promote fair competition in digital markets. A webinar is also scheduled to update businesses on competition law developments in this area. 

Competition law advisors should prepare for these changes and consider how the AI Act and upcoming regulations may affect their clients, particularly in terms of compliance and competitive strategy.

Latvian Competition Authority Focuses on Digital Market Regulations in 2024

The Latvian Competition Authority (KP) is prioritizing the regulation of digital markets in 2024, responding to the rapid changes brought about by digitalization. Key areas of focus include multi-sided markets, network effects, and the implications of data utilization on competition.

Major players in digital markets, such as e-commerce platforms and content providers, are under scrutiny for their operational impacts on competition. The KP is particularly concerned about how network effects can lead to market dominance, raising antitrust issues. Additionally, the authority is assessing the economies of scale that allow digital companies to grow quickly, potentially hindering market entry for new competitors.

The extensive use of user data by digital companies is another critical area of concern, as it can create barriers to entry and lead to anti-competitive behavior. Switching costs for users, particularly in social media, can lock them into platforms, further affecting competition.

Intellectual property rights are also being monitored, as companies with patents can monopolize technologies, impacting market dynamics. The KP is keen on understanding how low operating costs in digital businesses can lead to aggressive competitive strategies that may violate competition laws.

In 2024, the KP has appointed a Chief Expert for Digital Markets to enhance its research capabilities and international cooperation. The authority is actively engaging with the European Commission and other competition authorities to analyze the impact of the Digital Markets Act (DMA) and identify regulatory gaps.

Furthermore, the KP is collaborating with the Consumer Rights Protection Centre (PTAC) to improve oversight in digital markets, ensuring compliance with the DMA and addressing potential violations. The KP is also expanding its powers to monitor economic dependencies that affect competition, allowing for quicker interventions.

As the KP prepares for the implementation of the Data Act and continues to monitor major tech companies, competition law advisors must stay informed about these developments and assist clients in navigating compliance challenges in the evolving digital landscape.



Latvian Competition Authority Focuses on Digital Market Regulations in 2024

In 2024, the Latvian Competition Authority is intensifying its scrutiny of digital markets, emphasizing the need for compliance with evolving competition laws and the impact of major digital platforms.