The European Antitrust Review 2014 • Section 3: Country chapters
Lithuania: Competition Council
The Competition Council of the Republic of Lithuania (KT) is the country’s only competition enforcement authority. The authority’s mission is to safeguard effective competition for the benefit of consumers. The KT does so by taking proportionate enforcement measures against the anti-competitive conduct of private undertakings as well as public administrative bodies in accordance with the provisions of the laws within its remit.
The year 2012 witnessed significant developments in Lithuania’s competition law and policy. The most prominent one was the enactment of the amendments to the Law on Competition in March 2012 with the aim of increasing effectiveness of the KT through prioritisation, improving the enforcement process and stepping up advocacy and preventive efforts.
In July 2012, exercising its newly acquired prioritisation powers, the KT adopted a Notice on Agency’s Enforcement Priorities. As its single enforcement priority, the KT identifies those market interventions that significantly contribute to the protection of effective competition with the purpose of maximising consumer welfare. The priority enables the KT to better allocate its resources for achieving higher positive impact on consumers. In order to decide whether a matter falls within the enforcement priority, the KT assesses:
- the potential impact of an investigation on effective competition and consumer welfare;
- the strategic importance of such an investigation; and
- the rational use of resources.
The principles have already been successfully applied in several cases and have not been challenged in courts so far.
Beyond prioritisation, other regulatory changes sought to make improvements to the antitrust enforcement process. First, a new methodology of setting fines was approved by the Cabinet of Ministers in January 2012, making the calculation of fines more transparent and allowing the KT to achieve better individualisation of fines. In particular, the methodology sets the basic amount of the fine as a proportion of the value of sales to which the infringement relates (instead of the overall turnover, as was the case earlier) multiplied by the number of years of infringement. Second, the newly amended Law on Competition allows for full immunity from fines for those involved in resale price maintenance practices. Finally, the statutory amendments have raised the jurisdictional turnover thresholds for controlling mergers.
In 2012, the KT adopted decisions in two major antitrust cases. The KT’s intervention in the cash handling services market encouraged the investigated service provider and three largest banks to terminate – even prior to issuing an infringement decision – exclusivity arrangements foreclosing the market to competing service providers. Another KT intervention into the online sale of package tours prevented travel agents from coordinating maximum discounts available to consumers.
On the merger control front, the KT recently investigated several complex mergers in the TV broadcasting, cosmetics and perfumery, and cement and concrete sectors. In the latter two cases, the merger notifications were withdrawn after the notifying parties had received the KT’s preliminary assessment that the proposed transactions were to significantly weaken competition in the relevant markets.
The KT continues to take a principled stance towards non-compliance cases. For instance, in April 2013, the KT imposed a fine of €341,057 on Lukoil Baltija, operator of one of the largest chains of petrol stations, for implementing mergers without the KT’s clearance. Within the last year, the KT has also successfully defended its two earlier issued non-compliance infringement decisions in the Supreme Administrative Court.
Judicial review of the KT’s decisions
On the topic of judicial review of the authority’s decisions, the KT continues to win the majority of its cases on substance, even though its fines are sometimes reduced by courts. In January 2013, the KT received the Supreme Administrative Court’s backing for its infringement decision in Orlen Lietuva, one of the largest cases in recent years. The court approved the KT findings that Orlen Lietuva, the oil refinery operating in Lithuania, had abused its dominant position by restricting the import of petrol and diesel fuels into the territory of Lithuania. The court did, however, reduce the fine by 5 per cent – from the original, imposed in 2010, of nearly €2,300,000 down to €2,261,133 – on the grounds of the KT failing to prove one of the episodes of the infringement.
Strengthening of the competition culture remains one of the biggest challenges for the authority. In response to the expectations of the business community, the KT has raised its advocacy efforts.
In June 2012, the KT introduced the Guide for Competition Impact Assessment of Draft Decisions. The Guide is addressed at the public administrative bodies, with the view of becoming a helpful tool for the prevention of unnecessary restrictions of competition by state regulation.
Looking at the private side, the KT continues to run a series of seminars for trade associations. In addition, the KT recently published the memo ‘How to Comply with Competition Laws’, which gives an overview of the main antitrust infringements and sanctions, and presents some practical antitrust compliance tips relevant to the operations of trade associations.
Looking to the future, the strategic goals of the KT remain the same: intervening into markets to maximise consumer welfare, strengthening competition culture and building up the authority’s administrative capability. To achieve them, the KT will focus on the ongoing investigations of the suspected cartel activities in public tenders and suspected infringements in the energy, food retail and transport sectors. This will be combined with the targeted use of advocacy tools to prevent competition restrictions by state agencies or businesses. Finally, with investigations becoming increasingly complex, the KT will seek to retain and develop its staff, because it is our people whom the authority’s success depends upon. The KT will need their big contribution not only to deal with the authority’s routine activities, but also to play our role in the Lithuanian Presidency of the Council of the EU in the second half of 2013.
Next Chapter: Lithuania: Overview