The initiative included in the political programme of Harmony and Honour to Serve Riga on the creation of municipal pharmacies near municipal healthcare institutions to offer medicine to residents at lower prices is a populist promise, says member of the Competition Council Janis Racko.
He says CC is categorically against making such populist promises, adding that requirements of the Cabinet of Ministers for pharmacy placement criteria provide certain exceptions when a municipality can become involved in retail trade of medicine. It is only allowed in cases when businessmen do not form territorial coverage for provision of pharmacy services.
But such a problem does not apply to Riga, which has approximately 300 pharmacies. This a large number, and it serves to provide consumers with the necessary medicine and the freedom to choose which pharmacy to buy medicine from, Racko said.
According to him, promises to sell medicine at lower prices do not withstand criticism also, because the municipality is supposed to procure medicine the same way private businessmen do – from wholesale traders or retail traders.
«We also remind that the maximum price at which pharmacies are allowed to sell medicine has already been established in regulations. This only serves to question the possibility of offering medicine at lower prices and not cause losses for the municipality,» Racko comments.
Dins Smits, Director General of Mēness aptieka network’s owner holding Reparm, admits that there is not a single reason for Riga municipality to enter the pharmacy business. Smits says Riga municipality cannot complain about any lack of pharmacies.
Racko also reminds that Riga City Council is often noticed by CC. «Unfortunately, I have to admit that Riga City Council is brought up at CC often – with its planned and realized decisions and activities. This means active distortion of competition from the municipality’s side. There is no reason for the Competition Council to believe this is in some way related to a lack of understanding or information about compliance with principles of fair competition,» says the CC member.
Racko concluded that competition distortions caused by the state and municipality are steadily becoming a topical problem in competition. This is proven by the growing number of applications received by the institution in regards to competition restrictions. This is also confirmed by respondents of last year’s study. They said that one of the biggest problems for competition is the often distortions caused by the state and municipalities.
«It is also noteworthy that because of pressure from municipalities, the Cabinet of Minister will no longer carry amendments to the Law on Competition to provide Competition Council will more authority to address distortions caused by public persons. At the moment, CC can only provide recommendations and reports on the negative influence of planned decisions on competition,» Racko said.