In front of you is the yearbook summarising the activities of the Estonian Competition Authority in 2022. Without hesitation, 2022 was once again an extraordinary year – the global economy had not yet fully recovered from the aftershocks of the COVID-19 pandemic, when Europe was hit by a security and energy crisis, leading to massive global inflation and price increase. This has raised many questions, including whether and how, if any, the European competition authorities should intervene in such a situation. But is the price of an energy carrier, which is the result of demand and supply on the market, a competition law problem? Probably not, if it appears not to be based on anti-competitive agreements or other anti-competitive practices. Central banks are trying to contain inflation by raising interest rates. This has sparked debate over whether banks' business practices, which involve collecting deposits, lending them out, and then making extraordinary profits only as a result of central banks' attempts to reduce demand and contain inflation by raising interest rates, are incorrect and in violation of competition law.
Estonia considers itself as a country with an open liberal market economy. A well-functioning market economy means that the state intervenes in the functioning of the market when it is necessary to address market failures or conditions for the free functioning of markets so that competition in the market is fair and, as a result, prices are fair. A liberal market does not in any way imply lawlessness or arbitrariness on the part of merchants. Economists consider markets to be free and prices fair when bidders and buyers are free to make their decisions and there is trust between market participants that one does not deceive the other. Also, the state itself can act as an entrepreneur, but it must also follow the rules of the market economy and not take advantage of its ability to intervene in the functioning of the market. But even in a country with an open liberal market economy, especially if it is a small country, there are areas where the market does not function and there are market failures. In those circumstances, national economic regulation must be ensured, where the state controls the prices of entrepreneurs in order to protect the consumer from unfairly high prices, while ensuring the sustainability of businesses.
As can be inferred from the above, in 2022 the focus of the agency was on energy-related topics. The world, like us here in Estonia, was actually aware that energy could be used as a weapon, and yet we were not ready for it when this happened. Energy prices have been rising steadily since 2021. At the same time, for example, natural gas was at a record low level, paying 7 euros/MWh on the Dutch TTF stock exchange in 2020. By August 2022, the price of natural gas on the same exchange had risen to a record 339.20 euros/MWh – a fifty-fold spread. Today, writing this introduction, the price of natural gas on the Dutch TTF exchange has stabilized at about 43 euros per MWh. We also saw a price peak in the motor fuel markets, where in the first half of 2022 the price of motor fuel increased by an average of 50%. It may be asked whether, in the face of such volatility and instability, the Competition Authority is at all able to react, as well as whether and to what extent the state should intervene in the activities of the market. Also, why and what kind of competition supervision and economic regulation do we really need in such turbulent times. The answer to this can only be that, in these times of instability, it is particularly important that national economic regulation and competition supervision are effective in order to ensure the stability of the markets and thus contribute to the economy.
I am convinced that the agency's work in previous years will be the foundation for future activities. The Estonian Competition Authority deals with both competition supervision and economic regulation, and as such is an expert organisation whose mission is clearly aimed at ensuring open markets and fair prices in Estonia.
Here is a summary of our main activities in 2022. Happy reading!