The Ministry of Economics of Latvia (EM) urges the Legal Commission of the Saeima to critically reassess the idea of introducing criminal liability for individuals for prohibited agreements in public procurement. According to the ministry, such changes could lead to serious procedural, institutional, and practical problems.
EM notes that the EU competition law system is primarily based on administrative procedures, and criminal liability is applied only in exceptional cases. In Latvia, the proposed model will lead to a situation where the same violation will be examined in two parallel processes — administrative and criminal, with different standards of proof, which may undermine legal certainty.
The ministry also emphasizes that participation in the criminal process will complicate the handling of evidence. Competition cases involve a large amount of confidential information, including data obtained through cooperation programs. The risk of criminal prosecution may reduce companies' willingness to cooperate with the Competition Council and hinder the detection of cartels.
Moreover, investigations in two systems will lead to duplication of work and unnecessary resource expenditures, as different institutions will reanalyze the same evidence. The criminal process may also complicate obtaining information from company employees, as the risk of criminal liability arises even at an early stage.
The document emphasizes that in competition cases, violations are often established based on a combination of evidence and economic logic, while in criminal law, guilt must be proven "beyond a reasonable doubt," which may render some cases practically unprovable.
EM points out that criminal processes are longer, more expensive, and resource-intensive, so their implementation will affect both the state budget and companies' ability to participate in procurement.
At the same time, the ministry supports the application of criminal liability in certain cases — for example, when it is impossible to hold the company itself accountable (e.g., due to its liquidation).
Additionally, EM proposes to support the initiative from March 9 to amend the public procurement law to allow the use of artificial intelligence systems to detect signs of cartel agreements already at the procurement stage.
It was previously reported that the Saeima began considering amendments to the Criminal Code proposed by "New Unity," which provide for criminal liability for individuals participating in cartels in procurement. Currently, only legal entities are held accountable, but the changes will allow for the prosecution of specific individuals who agree on prices or coordinate bids.
Criminal liability will be applied if the contract amount exceeds 100,000 euros and may involve a penalty of up to five years in prison or alternative measures.
The amendments have already received support in the first reading, although the voting was ambiguous. Supporters believe they are necessary to protect fair competition, while critics point to potential risks and shortcomings of the proposed approach.
Separate changes also clarify the criteria for "large-scale" violations and complement the work of the Competition Council, which will continue to examine cases administratively.
Earlier, the Supreme Court pointed out problems with the use of evidence in such cases, overturning a decision in a construction cartel case and noting that operational materials should not be used.
The cartel in the construction sector was identified in 2021 using materials from the Bureau for Prevention and Combating Corruption, and companies were fined more than 16 million euros, but the decision is still being challenged in court.
