Annual Report 2022


Dear reader,
The Competition Authority exercises state supervision over competition, electricity, natural gas, district heating, mail, public water supply and sewerage as well as railways, aviation and ports, and unfair trading practices. The office belongs to area of government of the Ministry of Justice.
2022 was a diverse year for international cooperation in the field of competition. The agency was highly involved in the work of the European Competition Network (ECN), actively participating in numerous virtual and on-site meetings of subgroups and working groups held in Brussels or Member States.
The primary task of the Supervisory Department of the Competition Authority is the investigation of anti-competitive agreements and undertakings in a dominant position on the market. In 2022, a large number of different cases were dealt with. The Annual Report describes in more detail the so-called dryer cartel case, which stands as one of the largest cases of its kind in the history of the Authority. The takeaway from this case under competition law is that competing undertakings cannot agree amongst themselves on non-competitive offers.
Control of concentrations as ex ante regulation plays an essential role in the functioning of competition. By controlling concentrations, it is possible to prevent anti-competitive concentrations and acquisitions, which in turn prevents the creation of a dominant (monopolistic) position.
The Regualtion Service exercises supervision and regulates prices in the areas of electricity, natural gas, district heating and water. The focus of the service is the supervision over energy and water sectors, as well as railway and postal services. In addition, the Competition Authority resolves disputes related to airport and port charges.
Estonia and the other Baltic States form a part of the European single electricity market. The European single electricity market means that there are several connections between different price areas and electricity is transferred from an area with lower prices (higher production) to an area with higher prices (higher consumption), in accordance with the connection capacity between different areas. The Estonian electricity sector is characterised by a very strong dependence on the power exchange, where bilateral contracts are not common.
Gas consumption in Estonia has decreased over the years, and due to the high price, one can predict a continued decrease in consumption and a transition to alternative energy sources. Unlike in Western Europe, in Estonia natural gas does not play such an important role in heating buildings. In Estonia, the most common type of heating is district heating, where the use of gas has decreased over the years and continues in the same direction at the current high price. The consumer price of natural gas comprises three components: natural gas, network service and excise duty.
Unlike the price of electricity and gas, the price of district heating is not formed in market conditions, but is approved by the Competition Authority. The district heating sector has undergone a very significant development during the last decade. For example, if in 2008 the Tallinn district heating network produced heat almost 100% from natural gas, now the share of gas in heat production has decreased to about 30%. Similarly, the consumption of gas and liquid fuel has also decreased in other district heating networks.
There is no competition in water supply services and the price is approved by the Competition Authority. A water undertaking is a company in a very strong monopoly position that owns important means. In terms of legislation, the water network is somewhat similar to the electricity network, where the construction of a parallel network is not reasonable and there are only very few examples of competing pipelines. In addition, the water undertaking is appointed by the local government in its territory.
In 2011 Directive 2009/12/EC of the European Parliament and of the Council on airport charges1 was incorporated into the Aviation Act, the aim of which was to establish a general framework regulating airport charges in the European Union.
The Competition Authority applies measures in the railway services market to eliminate discriminatory or otherwise unfair treatment. Another important task of the Competition Authority is to resolve complaints filed by railway operators.
The postal sector is characterised by changes related to digitisation, which have accelerated in recent years. Sending of traditional letters has decreased gradually yet significantly. The forwarding of postal items is accelerating due to the growth in e-commerce volumes.