- Africa and the Middle East
- Asia Pacific
- Latin America
- North America
- GCR 100
- Rating Enforcement
Lithuania: Competition Council
Chairman of the Competition Council of the Republic of Lithuania
The Competition Council of the Republic of Lithuania (KT) is an independent entity and 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 enforcement and advocacy 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.
At the time of writing, the KT is already experiencing the first results of strategic choices it made in 2011 and 2012 – the two years marked by important legislative and organisational reforms.
Equipped, as of 2012, with the ability to prioritise its enforcement, the KT has become more pragmatic and flexible in pursuing its strategic goals of maximising consumer welfare, and strengthening the society’s competition culture and the agency’s administrative capabilities.
In 2013, according to the annual impact assessment report, our efforts translated in consumers getting around €11.9 million direct and €53.8 million indirect financial benefit resulting from our enforcement operations. This impact assessment exercise is a useful tool for external accountability, and the authority will carry on using it in the future.
In order to maximise consumer welfare, the KT focuses on high-impact cases, primarily defined by the size of the market and the number of consumers expected to benefit from the authority’s intervention. From this perspective, our investigations in the energy sector deserve particular mention.
In the first half of 2014, the KT issued two infringement decisions in the field; first, Lukoil Baltija, a major retailer of petroleum products, was fined €3.42 million for implementing unnotified mergers; then, a €35.65 million fine was imposed on Gazprom for failing to comply with merger conditions, which required Gazprom not to hinder Lithuanian buyers from purchasing gas from other suppliers. Two other investigations are still ongoing: one relating to a suspected cartel between suppliers of co-generation power plants; and the other examining alleged anti-competitive foreclosure of the biofuel supply market. Both are on schedule to be completed before the end of 2014.
In addition to dealing with the usual antitrust and merger control work, the KT targets anti-competitive measures of public bodies and considers this as an important part of its enforcement strategy. While some critics may portray the agency as being excessively tough on private firms, the figures tell another story: in the past few years, more investigations were opened and infringement decisions issued against public administrative bodies than against private actors. In 2013 and the first half of 2014, the KT intervened on several occasions against municipalities giving preferential treatment to municipal-owned firms in the public transport and waste management sectors. The latter remains particularly problematic, with several investigations still ongoing. Along with waste management and public transport, the agency is also dealing with measures taken by public administrative bodies in the fields of health care, heat supply and fishing.
Good enforcement and effective advocacy support each other. Indeed, the two can hardly be separated, as the infringement decision in the 2014 Strong Beer Cartel case has demonstrated. Here, the KT made it clear that it would not accept unsubstantiated claims, including those of ‘social responsibility’, to justify cartel behaviour.
Advocacy remains high on the authority’s agenda. In 2013, the KT issued guidelines – complemented by a series of seminars throughout the year – to trade associations helping them comply with antitrust rules, particularly in relation to exchanges of information. We continue our engagement with antitrust practitioners via round-table discussions on how the agency’s work could be improved. This has encouraged us to launch a review of the agency’s leniency, procedural and merger filing rules, all of which we expect to put forward for public consultation in 2014.
Taking part in and organising large-scale competition events is another way of advancing competition culture in our society. On the back of the successful European Competition Day, held in 2013 as part of the EU Presidency, we are looking forward to host the 11th Baltic Competition Conference on 10 September. In the meantime, our representatives have given presentations in several national antitrust conferences, including the first ever conference dedicated exclusively to the economics of antitrust.
2014 started with legislative changes in relation to the payment of fines. Following the amendments of the Law on Competition, a firm fined for antitrust violations and appealing the KT’s decision does not have an obligation to pay the fine for as long as the case remains in courts. However, if the court upholds the Council’s decision, the undertaking will have to pay both the fine and the 6 per cent annual interest. The interest is to be calculated for the entire period of the court proceedings, starting on the first day after the end of the three-month period from the publication of the agency’s decision.
Before the changes, the courts could, if requested by an appellant, suspend the obligation to pay the fine without the appellant carrying any financial risk of the postponed payment. Some firms took advantage of the situation and appealed the Council’s decisions in an attempt to delay the payment of fines. With the statutory amendment in force, firms are encouraged to decide whether they want to appeal the decision of the authority for reasons other than benefitting from a suspension of the payment.
What to expect
Looking at the year ahead, several things can be expected to happen:
- the authority will keep its focus on high-impact cases in order to maximise consumer welfare. To balance the case portfolio, the KT will also pick up smaller-scale investigations if they have a strategic significance;
- the authority will reinvigorate its efforts in fighting bid-rigging in public procurement;
- the energy and waste management sectors will remain high on the agency’s agenda;
- the increase in merger filings will continue, and a larger percentage of notified mergers may require an in-depth analysis;
- competition distortions by public administrative bodies are unlikely to subside, and will require both enforcement and advocacy actions; and
- the KT will take an active part in modernising the national state aid procedures.
Chairman of the Competition Council of the Republic of Lithuania
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