Lithuania: economist perspective

In the past year, the Lithuanian Competition Council (LCC) has adopted decisions on a variety of competition cases, including mergers, anticompetitive agreements, and abuse of dominance.

In line with previous years, the LCC has continued its increasing focus on economic analysis, which has mainly been applied in larger cases. Economic analysis played an especially important role in the mergers between Bitė Lietuva and Mezon (telco industry), Linas Agro Group and Kauno Grūdai Group (agriculture), and an alleged excessive pricing investigation in the online real estate classifieds market.

In this article, we focus on the most notable cases of the past year. We discuss some observed and expected trends identified in a sequence of interviews with the LCC and the most prominent Lithuanian competition lawyers. The interviews were conducted between June and September 2021. They included competition lawyers from the following law firms: COBALT, Ellex, Motieka & Audzevičius, Sorainen, TGS Baltic and WALLESS, and with the legal and the economist team of the LCC.

The trend of increasing use of economic analysis in merger cases continues

The number of merger filings in Lithuania has picked up again after a temporary decrease during the first half of 2020, caused by the uncertainty related to the covid-19 pandemic. In 2020, the LCC reviewed 24 mergers, three of which entered Phase II. Twenty-three mergers were unconditionally cleared, and one was cleared subject to conditions (Bite/Mezon). In the first half of 2021, the LCC started four Phase II investigations (an increase compared to last year), accepted six mergers unconditionally and blocked one merger (Cgates/Splius).

The competition lawyers we interviewed confirm that mergers and acquisitions activity has generally been strong, with many transactions pursued after being on hold during the first months of the covid-19 outbreak. Some believe that the investigation periods could have been shorter, highlighting that the pre-notification phase is typically prolonged by the LCC. Overall, a relatively complex merger clearance process may take up to nine months. Moreover, amendments to the competition law, introduced on 1 November 2020, give the parties the possibility to extend the proceedings even more, for example, if more time is needed to respond to the LCC’s requests for information.

The LCC cleared a merger after one of the largest merger investigations in its history

In 2021, the LCC cleared the merger between Linas Agro Group and Kauno Grūdai. Both parties are active in the agricultural and food industries (ie, the production of chicken products). Owing to the scope of the activities and horizontal, vertical and conglomerate overlaps, this was one of the largest merger investigations in the recent history of the LCC.

Economic consultants of the merging parties were involved during the pre-notification and investigation stages. The economic analyses provided by the parties focused on the parties’ overlap in the production of chicken meat and consequent sales to the retail sector. The competitive assessment included analyses such as critical loss analysis, price rise tests and bidding analysis. An econometric model based on the almost ideal demand system (AIDS) was used to support the relevant geographic market.

Behavioural remedies were imposed to alleviate post-merger competition concerns

In 2020 the LCC cleared a merger between Bitė Lietuva and Mezon with commitments. Taking Bitė Lietuva's cooperation agreement with TELE2 on infrastructure sharing and the radio resources owned by the merging companies into account, the LCC concluded that the merger would significantly restrict competition in the provision of retail mobile services in Lithuania.

During the investigation, the LCC conducted a diversion ratios analysis regarding retail internet access services, using mobile technologies without the provision of voice and SMS services.

Eventually, the LCC approved the merger with the condition that Bitė Lietuva, inter alia, will not provide access to the acquired Mezon radio frequencies (channels) to the joint venture established between Bitė Lietuva and TELE2 in the Centuria project, nor use them for the provision of mobile internet access services. The findings of the diversion ratio analysis did not indicate any competition problems and was thus not the reason for the commitments offered.

Prohibition of a merger with the lowest-price competitor and rejection of a structural remedy

In 2021, the LCC blocked the acquisition of Splius by Cgates. The same merger had previously been withdrawn by the parties in 2019, following the preliminary negative conclusions of the LCC. Both undertakings provide fixed internet access services, and paid television services and fixed telephony services.

The LCC based its decision on the finding that Splius is the lowest-price operator in the market and the closest competitor of Cgates. The LCC concluded that if this competitor was eliminated, Cgates would face lower competitive pressure in the local market.

Although Cgates proposed commitments with an upfront buyer (Balticum TV) for its business in the relevant local market in the second attempt to clear the merger, the LCC concluded that the commitments offered would not eliminate the competition concerns identified in its decision.

Abuse of dominance investigation in the online market terminated based on robust economic analysis

The LCC terminated its investigation into alleged excessive pricing by Diginet LTU, a company operating online advertising websites. The investigation was initiated in 2018, based on a complaint that provided grounds for the LCC to suspect that Diginet LTU's pricing of classified real estate advertisements had infringed competition law.

The main focus of the LCC’s economic analysis was to estimate the economic value of the services to assess whether the prices were excessive. A direct comparison of prices between different alternatives in Lithuania and abroad was not possible since portals generate different traffic and offer advertisement services of different composition, which implies that the value of the services differed. Therefore, the LCC relied on analytical methods such as cross-country price benchmarking analysis and analysis of online traffic.

The results obtained by the LCC during the investigation did not support that Diginet LTU’s prices for business clients (real estate brokers) and private clients (consumers) are unfair.

The complainant (Ober-House) challenged the LCC’s decision in court, but the court upheld the decision and Ober-House did not appeal.

The number of abuse of dominance investigations remains low, but higher priority is expected in the future following organisational changes at the LCC

The competition lawyers we interviewed indicate that the LCC does not prioritise abuse of dominance investigations and the result is few follow-on damage claims in Lithuania.

The LCC reported that, since 1 January 2021, it has separated abuse of dominance investigations from the unit for merger investigations. By separating merger assessments and investigation of abuse of dominance cases, the LCC hopes that each of these functions will be prioritised in the relevant groups and that this will result in more effective case handling.


Copenhagen Economics has acted as an economic advisor to a party in two of the cases mentioned in this article, namely: the Linas Agro Group/Kauno Grūdai merger, and the Cgates/Splius initial merger investigation in 2019.

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