Annual Report on Competition Policy Developments in Lithuania
Annual Report on Competition Policy Developments in Lithuania
Annual Report on Competition Policy Developments in Lithuania
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
DAF/COMP(2006)11<br />
Unclassified<br />
English text <strong>on</strong>ly<br />
Unclassified DAF/COMP(2006)11<br />
Organisati<strong>on</strong> de Coopérati<strong>on</strong> et de Développement Ec<strong>on</strong>omiques<br />
Organisati<strong>on</strong> for Ec<strong>on</strong>omic Co-operati<strong>on</strong> and Development 09-May-2006<br />
___________________________________________________________________________________________<br />
English text <strong>on</strong>ly<br />
DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS<br />
COMPETITION COMMITTEE<br />
ANNUAL REPORT ON COMPETITION POLICY DEVELOPMENTS IN LITHUANIA<br />
-- 2005 --<br />
This report is submitted by the <strong>Lithuania</strong>n Delegati<strong>on</strong> to the Competiti<strong>on</strong> Committee FOR DISCUSSION at its<br />
forthcom<strong>in</strong>g meet<strong>in</strong>g to be held <strong>on</strong> 8 and 9 June 2006.<br />
JT03208579<br />
Document complet disp<strong>on</strong>ible sur OLIS dans s<strong>on</strong> format d'orig<strong>in</strong>e<br />
Complete document available <strong>on</strong> OLIS <strong>in</strong> its orig<strong>in</strong>al format
DAF/COMP(2006)11<br />
1. Executive Summary<br />
1. In 2005, the Competiti<strong>on</strong> Council of the Republic of <strong>Lithuania</strong> (here<strong>in</strong>after – CC) effectively<br />
enforced not <strong>on</strong>ly the <strong>Lithuania</strong>n Law <strong>on</strong> Competiti<strong>on</strong> (further – LC), but for the first time <strong>in</strong> its practice<br />
while pass<strong>in</strong>g a decisi<strong>on</strong> <strong>in</strong> a case of abuse of a dom<strong>in</strong>ant positi<strong>on</strong> applied Article 82 of the EC Treaty.<br />
2. While perform<strong>in</strong>g the obligati<strong>on</strong>s assigned to it – to protect the freedom of fair competiti<strong>on</strong>, - the<br />
CC gave a great attenti<strong>on</strong> not <strong>on</strong>ly to the establishment of severe <strong>in</strong>fr<strong>in</strong>gements of the LC and the<br />
strengthen<strong>in</strong>g of competiti<strong>on</strong>, but also to the preventi<strong>on</strong> of competiti<strong>on</strong> <strong>in</strong>fr<strong>in</strong>gements by way of enhanc<strong>in</strong>g<br />
the public awareness <strong>on</strong> issues related to the practical enforcement of the <strong>Lithuania</strong>n and the EU<br />
competiti<strong>on</strong> rules.<br />
3. An important event <strong>in</strong> 2005 was the renewal of the observer’s status of <strong>Lithuania</strong> <strong>in</strong> OECD<br />
Competiti<strong>on</strong> Committee for another two years period (until the end of 2007).<br />
2. Enforcement of Competiti<strong>on</strong> laws and policies<br />
2.1 Acti<strong>on</strong> aga<strong>in</strong>st anticompetitive practices, <strong>in</strong>clud<strong>in</strong>g agreements and abuses of dom<strong>in</strong>ant<br />
positi<strong>on</strong>s<br />
a) Summary of activities of:<br />
• Competiti<strong>on</strong> authority<br />
4. Act<strong>in</strong>g <strong>in</strong> accordance with the LC the CC <strong>in</strong>itiated 79 <strong>in</strong>vestigati<strong>on</strong>s <strong>in</strong>clud<strong>in</strong>g those started ex<br />
officio and others <strong>on</strong> the basis of compla<strong>in</strong>ts filed by undertak<strong>in</strong>gs. Total 81 resoluti<strong>on</strong>s were passed <strong>on</strong> the<br />
basis of the LC, <strong>in</strong>clud<strong>in</strong>g those <strong>in</strong> respect of <strong>in</strong>vestigati<strong>on</strong>s started <strong>in</strong> 2004. The Table below presents the<br />
summary data <strong>on</strong> the scope of the tasks performed by the CC while enforc<strong>in</strong>g competiti<strong>on</strong> laws <strong>in</strong> 2005.<br />
Decisi<strong>on</strong>s New cases<br />
reached opened<br />
Total number of cases 81 79<br />
Prohibited agreements 7 3<br />
Abuse of a dom<strong>in</strong>ant positi<strong>on</strong> 6 2<br />
C<strong>on</strong>centrati<strong>on</strong> 59 64<br />
Restrictive acti<strong>on</strong>s of public and local authorities 7 10<br />
Unfair competiti<strong>on</strong> 2<br />
PROHIBITED AGREEMENTS<br />
Horiz<strong>on</strong>tal Vertical<br />
agreements agreements<br />
New cases opened 2 1<br />
New <strong>in</strong>vestigati<strong>on</strong>s ex officio 1<br />
New compla<strong>in</strong>ts 1 1<br />
Decisi<strong>on</strong>s reached 3 4<br />
Compla<strong>in</strong>ts rejected 2 4<br />
Prohibiti<strong>on</strong>s with f<strong>in</strong>es 1<br />
2
Decisi<strong>on</strong>s<br />
reached<br />
ABUSE OF DOMINANT POSITION<br />
New cases opened<br />
New <strong>in</strong>vestigati<strong>on</strong>s ex officio<br />
2<br />
New compla<strong>in</strong>ts 2<br />
Decisi<strong>on</strong>s reached 6<br />
Compla<strong>in</strong>ts rejected 5<br />
Prohibiti<strong>on</strong>s with f<strong>in</strong>es 1<br />
CONCENTRATION<br />
Decisi<strong>on</strong>s reached 59<br />
Approvals 57<br />
C<strong>on</strong>diti<strong>on</strong>al approvals 2<br />
3<br />
DAF/COMP(2006)11<br />
New cases<br />
opened<br />
5. In 2005 the CC imposed f<strong>in</strong>es total<strong>in</strong>g EUR 9.30 milli<strong>on</strong> up<strong>on</strong> undertak<strong>in</strong>gs – the LC offenders,<br />
of which – EUR 28.96 for prohibited agreements, and EUR 9.27 milli<strong>on</strong> for the abuse of a dom<strong>in</strong>ant<br />
positi<strong>on</strong>.<br />
• Courts<br />
6. The nati<strong>on</strong>al courts received first claims <strong>in</strong> respect of which the claimants requested the EU<br />
competiti<strong>on</strong> rules to be applied. UAB Tew Baltija appealed to the Vilnius Regi<strong>on</strong>al Court c<strong>on</strong>cern<strong>in</strong>g the<br />
vitiati<strong>on</strong> of the terms of the public tender <strong>on</strong> grant<strong>in</strong>g of c<strong>on</strong>cessi<strong>on</strong> launched by Kaunas municipality. The<br />
claimant referred to the provisi<strong>on</strong>s of the EC Treaty c<strong>on</strong>solidat<strong>in</strong>g the fundamentals of free and undistorted<br />
competiti<strong>on</strong>, and stated that the c<strong>on</strong>cessi<strong>on</strong> grants exclusive rights to operate <strong>in</strong> the market for the waste<br />
management services by enabl<strong>in</strong>g the c<strong>on</strong>cessi<strong>on</strong>aire to abuse its positi<strong>on</strong> <strong>in</strong> the breach of the said Article<br />
82 of the EC Treaty. The case is still pend<strong>in</strong>g <strong>in</strong> the Court.<br />
b) Descripti<strong>on</strong> of significant cases, <strong>in</strong>clud<strong>in</strong>g those with <strong>in</strong>ternati<strong>on</strong>al implicati<strong>on</strong>s:<br />
Prohibited agreements<br />
Cartel agreement <strong>in</strong> the taxi service market<br />
7. In 2005, the CC completed the <strong>in</strong>vestigati<strong>on</strong> c<strong>on</strong>cern<strong>in</strong>g the compliance of acti<strong>on</strong>s of the entities<br />
provid<strong>in</strong>g taxi services <strong>in</strong> Vilnius and the Taxi Services Provider Associati<strong>on</strong> (here<strong>in</strong>after – the<br />
Associati<strong>on</strong>) with the requirements of Article 5 of the LC.<br />
8. The <strong>in</strong>vestigati<strong>on</strong> established that entities provid<strong>in</strong>g taxi services <strong>in</strong> Vilnius, hav<strong>in</strong>g c<strong>on</strong>certed<br />
their acti<strong>on</strong>s, c<strong>on</strong>cluded the prohibited agreement under the provisi<strong>on</strong>s of LC.<br />
9. The c<strong>on</strong>tents and the chr<strong>on</strong>ology of the m<strong>in</strong>utes of the meet<strong>in</strong>gs of the Associati<strong>on</strong> allowed a<br />
c<strong>on</strong>clusi<strong>on</strong> of the persistent preparatory arrangements with a view to <strong>in</strong>crease the tariffs. Furthermore,<br />
several members of the Associati<strong>on</strong> while giv<strong>in</strong>g explanati<strong>on</strong>s acknowledged that dur<strong>in</strong>g the meet<strong>in</strong>gs of<br />
the Associati<strong>on</strong> the issues of tariff <strong>in</strong>crease had been discussed. Some members of taxi companies not<br />
members of the Associati<strong>on</strong> <strong>in</strong>dicated <strong>in</strong> their explanati<strong>on</strong>s that they had been urged by some members of<br />
the Associati<strong>on</strong> to jo<strong>in</strong> the <strong>in</strong>itiative of the Associati<strong>on</strong> and also to <strong>in</strong>troduce the m<strong>in</strong>imum tariff proposed<br />
by the Associati<strong>on</strong>.
DAF/COMP(2006)11<br />
10. Also the course of the <strong>in</strong>vestigati<strong>on</strong> produced the c<strong>on</strong>clusi<strong>on</strong> that some of the participants of the<br />
cartel agreement (8 companies members of the Associati<strong>on</strong>) nearly at the same time (end of September,<br />
2004) applied to a company, which adjusts and <strong>in</strong>stalls the taxi meters with a request to set new taxi tariffs<br />
<strong>in</strong> the taxi meters (prior to <strong>in</strong>troduc<strong>in</strong>g the new tariffs taxi companies have to adjust their taxi meters).<br />
11. The taxi companies also notified the Vilnius Municipality of the adjusted and equalised taxi<br />
tariffs. This meant the obligati<strong>on</strong> of the companies to apply the tariffs, as they could be c<strong>on</strong>sidered<br />
committ<strong>in</strong>g a violati<strong>on</strong> if a competitor files a compla<strong>in</strong>t to the Vilnius Municipality.<br />
12. The CC f<strong>in</strong>ed the taxi companies a total of LTL 100 000 for the <strong>in</strong>fr<strong>in</strong>gement of Article 5 of the<br />
LC. Up<strong>on</strong> assessment of the ec<strong>on</strong>omic positi<strong>on</strong> of the taxi companies the actual f<strong>in</strong>es imposed were rather<br />
moderate (LTL 5 000), with an excepti<strong>on</strong> of the <strong>in</strong>itiator of the <strong>in</strong>fr<strong>in</strong>gement UAB Mart<strong>on</strong>as that was f<strong>in</strong>ed<br />
LTL 50 000. The Associati<strong>on</strong> appealed the Resoluti<strong>on</strong> of the CC to court.<br />
Investigati<strong>on</strong> <strong>in</strong> the paper market<br />
13. Dur<strong>in</strong>g 2005, the CC c<strong>on</strong>t<strong>in</strong>ued the earlier started <strong>in</strong>vestigati<strong>on</strong> <strong>in</strong> the paper market. The<br />
<strong>in</strong>vestigati<strong>on</strong> was <strong>in</strong>itiated by the CC <strong>on</strong> ex officio basis hav<strong>in</strong>g suspected, <strong>in</strong> the view of the ris<strong>in</strong>g prices<br />
<strong>in</strong> the paper market, that major players <strong>in</strong> the market are form<strong>in</strong>g and dictat<strong>in</strong>g the prices of different k<strong>in</strong>ds<br />
of papers. The <strong>in</strong>vestigati<strong>on</strong> was <strong>in</strong>itially commenced <strong>in</strong> accordance with Article 5 of the LC. However, <strong>in</strong><br />
the course of the <strong>in</strong>vestigati<strong>on</strong> certa<strong>in</strong> <strong>in</strong>dicati<strong>on</strong>s were obta<strong>in</strong>ed prov<strong>in</strong>g a possible effect by acti<strong>on</strong>s of<br />
entities operat<strong>in</strong>g <strong>in</strong> the relevant market <strong>on</strong> trade between the EU Member States, – <strong>Lithuania</strong>, Latvia and<br />
Est<strong>on</strong>ia, therefore a decisi<strong>on</strong> was passed to supplement the <strong>in</strong>vestigati<strong>on</strong> by provisi<strong>on</strong>s of Article 81 of the<br />
EC Treaty. Dur<strong>in</strong>g the course of <strong>in</strong>vestigati<strong>on</strong> certa<strong>in</strong> <strong>in</strong>vestigative acti<strong>on</strong>s were c<strong>on</strong>ducted not <strong>on</strong>ly <strong>in</strong><br />
<strong>Lithuania</strong> but also <strong>in</strong> the territory of Latvia, where the Associati<strong>on</strong> of paper trad<strong>in</strong>g companies is<br />
established. Be<strong>in</strong>g extensive <strong>in</strong> scope and complex <strong>in</strong> its nature the <strong>in</strong>vestigati<strong>on</strong> is be<strong>in</strong>g c<strong>on</strong>t<strong>in</strong>ued.<br />
Investigati<strong>on</strong> <strong>in</strong> the music albums‘ distributi<strong>on</strong> market<br />
14. The CC refused to <strong>in</strong>itiate an <strong>in</strong>vestigati<strong>on</strong> c<strong>on</strong>cern<strong>in</strong>g the compliance of acti<strong>on</strong>s of UAB Intervid<br />
plius and UAB VP Market with the provisi<strong>on</strong>s of the LC hav<strong>in</strong>g c<strong>on</strong>cluded that distributi<strong>on</strong> of the first<br />
editi<strong>on</strong> of the album Padovanosiu Tau recorded by a popular <strong>Lithuania</strong>n s<strong>in</strong>ger Rytis Cic<strong>in</strong>as could not<br />
<strong>in</strong>fr<strong>in</strong>ge the LC. Efforts were made to clarify the grounds for the <strong>in</strong>itiati<strong>on</strong> of the <strong>in</strong>vestigati<strong>on</strong> <strong>on</strong> possible<br />
agreement between UAB Intervid plius and UAB VP Market whereby until 15 September 2005 the latter is<br />
given an exclusive right to distribute the new album of Rytis Cic<strong>in</strong>as (CD and audiotapes).<br />
15. Hav<strong>in</strong>g established that the terms for the sale of the first editi<strong>on</strong> of the album were announced<br />
publicly, and the sale process could not be qualified as exclusive as <strong>in</strong>cluded <strong>on</strong>ly the sale of the first<br />
editi<strong>on</strong>, furthermore, it was a <strong>on</strong>etime and short-term acti<strong>on</strong>, the CC c<strong>on</strong>cluded that such <strong>on</strong>etime sale <strong>in</strong><br />
the view of its <strong>in</strong>significant impact cannot be c<strong>on</strong>sidered as substantially restrict<strong>in</strong>g competiti<strong>on</strong>.<br />
16. Based <strong>on</strong> the evidence collected dur<strong>in</strong>g the <strong>in</strong>vestigati<strong>on</strong> the vertical distributi<strong>on</strong> agreements of<br />
the type (exclusive distributi<strong>on</strong> and exclusive supply) are c<strong>on</strong>sidered compliant with the provisi<strong>on</strong>s of<br />
Article 6(1) of the LC provided they meet the requirements of the Commissi<strong>on</strong> Regulati<strong>on</strong> (EC) No.<br />
2790/1999 of 22 December 1999 <strong>on</strong> the applicati<strong>on</strong> of Article 81(3) of the Treaty to categories of vertical<br />
agreements and c<strong>on</strong>certed practices.<br />
4
Abuse of a dom<strong>in</strong>ant positi<strong>on</strong><br />
Investigati<strong>on</strong> of abuse of a dom<strong>in</strong>ant positi<strong>on</strong> by AB Mažeikių nafta<br />
5<br />
DAF/COMP(2006)11<br />
17. The <strong>in</strong>vestigati<strong>on</strong> c<strong>on</strong>cern<strong>in</strong>g the compliance of acti<strong>on</strong>s <strong>in</strong> the period from 2002 to 2004 of AB<br />
Mažeikių nafta – the s<strong>in</strong>gle oil ref<strong>in</strong>ery of high capacity <strong>in</strong> the Baltic States, – with the requirements of the<br />
LC was <strong>in</strong>itiated ex officio by the CC. The purpose of the <strong>in</strong>vestigati<strong>on</strong> was to establish whether the<br />
activity of the company could have possibly had an impact up<strong>on</strong> the c<strong>on</strong>stant rise <strong>in</strong> gasol<strong>in</strong>e and diesel<br />
fuel price levels <strong>in</strong> <strong>Lithuania</strong> as compared to those <strong>in</strong> other Baltic States, also whether the last<strong>in</strong>g price<br />
differences could have resulted from the acti<strong>on</strong>s of AB Mažeikių nafta <strong>in</strong> the gasol<strong>in</strong>e and diesel markets<br />
through the abuse of its dom<strong>in</strong>ant positi<strong>on</strong> <strong>in</strong> <strong>Lithuania</strong>. When <strong>in</strong>itiat<strong>in</strong>g the <strong>in</strong>vestigati<strong>on</strong> the CC also was<br />
bas<strong>in</strong>g itself up<strong>on</strong> the <strong>in</strong>formati<strong>on</strong> furnished by other companies and compla<strong>in</strong>s c<strong>on</strong>cern<strong>in</strong>g acti<strong>on</strong>s of AB<br />
Mažeikių nafta <strong>in</strong> the gasol<strong>in</strong>e and diesel fuel markets.<br />
18. Although <strong>in</strong>itially the <strong>in</strong>vestigati<strong>on</strong> was started <strong>in</strong> accordance with Article 9 of the LC, suspici<strong>on</strong>s<br />
hav<strong>in</strong>g arisen <strong>in</strong> the course of the <strong>in</strong>vestigati<strong>on</strong> that acti<strong>on</strong>s of AB Mažeikių nafta also could affect the trade<br />
between the EU Member States – <strong>Lithuania</strong>, Latvia and Est<strong>on</strong>ia, the CC decided to supplement the<br />
<strong>in</strong>vestigati<strong>on</strong> with the provisi<strong>on</strong>s of Article 82 of the EC Treaty.<br />
19. For the purpose of the draw<strong>in</strong>g up of f<strong>in</strong>d<strong>in</strong>gs of the <strong>in</strong>vestigati<strong>on</strong> the CC c<strong>on</strong>ducted an <strong>in</strong>-depth<br />
analysis of the documents of AB Mažeikių nafta and other entities engaged <strong>in</strong> trade <strong>in</strong> oil products, and<br />
collected all possible explanati<strong>on</strong>s from parties c<strong>on</strong>cerned. Also the CC analysed the <strong>in</strong>formati<strong>on</strong> received<br />
from Latvian and Est<strong>on</strong>ian competiti<strong>on</strong> authorities and other <strong>in</strong>stituti<strong>on</strong>s which turned very <strong>in</strong>strumental<br />
for the assessment of acti<strong>on</strong>s of AB Mažeikių nafta and UAB Mažeikių naftos prekybos namai when<br />
c<strong>on</strong>clud<strong>in</strong>g agreements with entities trad<strong>in</strong>g <strong>in</strong> oil products <strong>in</strong> those States.<br />
20. The <strong>in</strong>vestigati<strong>on</strong> allowed a c<strong>on</strong>clusi<strong>on</strong> that higher prices of fuels <strong>in</strong> <strong>Lithuania</strong> as compared to<br />
those <strong>in</strong> Latvia and Est<strong>on</strong>ia have resulted from a number of reas<strong>on</strong>s stemm<strong>in</strong>g both from the different<br />
c<strong>on</strong>diti<strong>on</strong>s <strong>in</strong> <strong>in</strong>dividual areas of the Baltic markets, as well as acti<strong>on</strong>s restrict<strong>in</strong>g competiti<strong>on</strong> exercised by<br />
AB Mažeikių nafta. To a degree the price differences might have resulted due to differences <strong>in</strong> the excise<br />
duty c<strong>on</strong>versi<strong>on</strong>, also due to the requirements operati<strong>on</strong>al <strong>in</strong> <strong>Lithuania</strong> to accumulate the reserves of fuel,<br />
which <strong>in</strong> turn results <strong>in</strong> freez<strong>in</strong>g part of the funds thus <strong>in</strong>creas<strong>in</strong>g the fuel prices, etc. The CC has been for<br />
several years <strong>in</strong>sistently seek<strong>in</strong>g reducti<strong>on</strong> of the previous 15 % customs duties <strong>on</strong> fuels (currently – 4.7 %<br />
for gasol<strong>in</strong>e imported from third countries), and open<strong>in</strong>g imports of less expensive fuels from neighbour<strong>in</strong>g<br />
countries vital for the enhancement of competiti<strong>on</strong> <strong>in</strong> this sector. In 2002 – 2004, <strong>in</strong> Latvia and Est<strong>on</strong>ia oil<br />
product import was exempted from customs duties, and after the accessi<strong>on</strong> to the EU <strong>in</strong> May 2004, all the<br />
three Baltic States set uniform customs duties for oil products.<br />
21. The <strong>in</strong>vestigati<strong>on</strong> established a number of facts and circumstances c<strong>on</strong>stitut<strong>in</strong>g a proof of the<br />
abuse of dom<strong>in</strong>ant positi<strong>on</strong> by AB Mažeikių nafta and UAB Mažeikių naftos prekybos namai by apply<strong>in</strong>g<br />
different strategies and ec<strong>on</strong>omically groundless and discrim<strong>in</strong>ative pric<strong>in</strong>g policy for <strong>Lithuania</strong>n, Latvian<br />
and Est<strong>on</strong>ian buyers, as well as the annul loyalty and n<strong>on</strong>-compet<strong>in</strong>g obligati<strong>on</strong>s, as well as other<br />
restrictive practices which resulted <strong>in</strong> dissimilar c<strong>on</strong>diti<strong>on</strong>s for the entities operat<strong>in</strong>g <strong>in</strong> the market and<br />
allowed discrim<strong>in</strong>ati<strong>on</strong> of <strong>in</strong>dividual companies. Therefore the companies were forced to sell fuels to<br />
<strong>Lithuania</strong>n c<strong>on</strong>sumers at higher prices than <strong>in</strong> Latvia and Est<strong>on</strong>ia. Certa<strong>in</strong> acti<strong>on</strong>s impos<strong>in</strong>g discrim<strong>in</strong>ative<br />
prices and purchase c<strong>on</strong>diti<strong>on</strong>s <strong>in</strong>curred damage to c<strong>on</strong>sumers.<br />
22. Facts of the abuse of the dom<strong>in</strong>ant positi<strong>on</strong> by AB Mažeikių nafta provided sufficient grounds for<br />
the c<strong>on</strong>clusi<strong>on</strong> of the <strong>in</strong>fr<strong>in</strong>gement of Article 9 of LC <strong>in</strong> the fuel market of <strong>Lithuania</strong>, and, <strong>in</strong> accordance<br />
with the provisi<strong>on</strong>s of Article 82 of the EC Treaty, – <strong>in</strong> the fuel markets of <strong>Lithuania</strong>, Latvia and Est<strong>on</strong>ia.<br />
The CC resolved to impose up<strong>on</strong> AB Mažeikių nafta a f<strong>in</strong>e <strong>in</strong> the amount of LTL 32m for the committed
DAF/COMP(2006)11<br />
<strong>in</strong>fr<strong>in</strong>gements of the LC. The company was also obligated to disc<strong>on</strong>t<strong>in</strong>ue the acti<strong>on</strong>s restrict<strong>in</strong>g<br />
competiti<strong>on</strong>.<br />
AB Lietuvos telekomas – Internet access services market<br />
23. On 26 May 2005, the CC <strong>in</strong>itiated an <strong>in</strong>vestigati<strong>on</strong> <strong>on</strong> the basis of a request filed by<br />
UAB Microl<strong>in</strong>k Lietuva, UAB Baltnetos komunikacijos, UAB Tele2, UAB Penki k<strong>on</strong>t<strong>in</strong>entai, UAB Elneta,<br />
SE Infostruktūra to exam<strong>in</strong>e whether acti<strong>on</strong>s of AB Lietuvos telekomas comply with the requirements of<br />
the LC. The request was prompted by a suspici<strong>on</strong> of possible abuse of dom<strong>in</strong>ance by AB Lietuvos<br />
telekomas <strong>in</strong> the <strong>in</strong>ternet access provisi<strong>on</strong> market. The applicants noted that AB Lietuvos telekomas is the<br />
<strong>on</strong>ly operator of the fixed teleph<strong>on</strong>e communicati<strong>on</strong>s network with the widest retail coverage <strong>in</strong> the entire<br />
<strong>Lithuania</strong>. The network is also used to provide the broadband access services (<strong>in</strong> additi<strong>on</strong> to DSL – digital<br />
subscriber l<strong>in</strong>e). AB Lietuvos telekomas holds dom<strong>in</strong>ance <strong>in</strong> the retail and wholesale broadband access<br />
services market and the retail broadband access services market for household and bus<strong>in</strong>ess customers. The<br />
applicants claimed that AB Lietuvos telekomas had <strong>on</strong> more than a s<strong>in</strong>gle occasi<strong>on</strong> improved its retail DSL<br />
offers without modify<strong>in</strong>g the terms of the wholesale DSL services provisi<strong>on</strong>. This deprived the applicant of<br />
the possibility to compete with AB Lietuvos telekomas <strong>in</strong> a number of retail market segments, s<strong>in</strong>ce the<br />
difference between the retail and wholesale prices was <strong>in</strong>sufficient to enable the provisi<strong>on</strong> of the service at<br />
competitive prices. In the competiti<strong>on</strong> law practice such behaviour is known as “price squeez<strong>in</strong>g“. The<br />
<strong>in</strong>vestigati<strong>on</strong> is still <strong>in</strong> progress.<br />
2.2 Mergers and acquisiti<strong>on</strong>s<br />
a) Statistics <strong>on</strong> number, size and type of mergers notified and/or c<strong>on</strong>trolled under competiti<strong>on</strong> laws<br />
24. Dur<strong>in</strong>g 2005, the CC received 64 notificati<strong>on</strong>s apply<strong>in</strong>g for authorisati<strong>on</strong>s to implement the<br />
c<strong>on</strong>centrati<strong>on</strong> of market structures. In 59 cases the CC, by its Resoluti<strong>on</strong>s, authorised the <strong>in</strong>tended<br />
c<strong>on</strong>centrati<strong>on</strong>s.<br />
25. In four cases the Resoluti<strong>on</strong>s of the CC authorised the implementati<strong>on</strong> of the c<strong>on</strong>centrati<strong>on</strong><br />
subject to certa<strong>in</strong> c<strong>on</strong>diti<strong>on</strong>s and obligati<strong>on</strong>s, <strong>in</strong>clud<strong>in</strong>g 2 cases authorised under Article 14(2) of the LC,<br />
whereby the obligati<strong>on</strong>s and c<strong>on</strong>diti<strong>on</strong>s are imposed with a view to prevent<strong>in</strong>g the creati<strong>on</strong> of a dom<strong>in</strong>ant<br />
positi<strong>on</strong> or a significant lessen<strong>in</strong>g of competiti<strong>on</strong> <strong>in</strong> the relevant market. On six occasi<strong>on</strong>s seek<strong>in</strong>g to<br />
expediently handle the applicati<strong>on</strong>s of the entities to authorise the implementati<strong>on</strong> of c<strong>on</strong>centrati<strong>on</strong>, also<br />
hav<strong>in</strong>g c<strong>on</strong>cluded that the <strong>in</strong>tended c<strong>on</strong>centrati<strong>on</strong> deals will not result <strong>in</strong> the creati<strong>on</strong> of dom<strong>in</strong>ance or<br />
lessen<strong>in</strong>g of competiti<strong>on</strong>, act<strong>in</strong>g <strong>in</strong> accordance with Article 12(3) of the LC, the Resoluti<strong>on</strong>s of the CC<br />
authorised the implementati<strong>on</strong> of <strong>in</strong>dividual acti<strong>on</strong>s of the c<strong>on</strong>centrati<strong>on</strong> transacti<strong>on</strong>s pend<strong>in</strong>g the f<strong>in</strong>al<br />
decisi<strong>on</strong>.<br />
26. In 2005, more authorisati<strong>on</strong>s were granted to foreign entities as compared to the previous year<br />
(22 and 15 <strong>in</strong> 2004), which <strong>in</strong>cluded 6 cases of c<strong>on</strong>centrati<strong>on</strong> am<strong>on</strong>g entities registered <strong>in</strong> foreign States<br />
that were also operat<strong>in</strong>g <strong>in</strong> the <strong>Lithuania</strong>n commodity markets, therefore the <strong>in</strong>tended deals were <strong>in</strong>creas<strong>in</strong>g<br />
the degree of c<strong>on</strong>centrati<strong>on</strong> there<strong>in</strong>; and <strong>in</strong> 16 cases foreign entities acquired the undertak<strong>in</strong>gs registered <strong>in</strong><br />
<strong>Lithuania</strong>. Out of the 22 cases whereby authorisati<strong>on</strong>s were issued to foreign entities, <strong>in</strong> 9 cases these were<br />
granted to <strong>in</strong>vestment funds.<br />
27. The c<strong>on</strong>centrati<strong>on</strong> between the <strong>Lithuania</strong>-based undertak<strong>in</strong>gs was effected <strong>in</strong> the 37 cases<br />
c<strong>on</strong>sidered by the competiti<strong>on</strong> authority, which <strong>in</strong>cluded 10 authorisati<strong>on</strong>s issued to undertak<strong>in</strong>gs<br />
c<strong>on</strong>trolled by foreign capital, and <strong>on</strong> a s<strong>in</strong>gle occasi<strong>on</strong> – to the undertak<strong>in</strong>g jo<strong>in</strong>tly c<strong>on</strong>trolled by foreign<br />
and <strong>Lithuania</strong>n capital. In 23 cases the c<strong>on</strong>centrati<strong>on</strong> was assessed as horiz<strong>on</strong>tal. The latter category<br />
<strong>in</strong>cluded 3 <strong>in</strong> the <strong>in</strong>dustry sector, 9 – <strong>in</strong> trade sector, <strong>in</strong>clud<strong>in</strong>g the retail pharmaceuticals market; 6 cases<br />
6
7<br />
DAF/COMP(2006)11<br />
were authorised <strong>in</strong> the services sector, 2 – <strong>in</strong> the <strong>in</strong>formati<strong>on</strong> technologies sector, and 3 <strong>in</strong> the c<strong>on</strong>structi<strong>on</strong><br />
and energy sector. In 8 cases c<strong>on</strong>centrati<strong>on</strong> transacti<strong>on</strong>s were bear<strong>in</strong>g the features of horiz<strong>on</strong>tal<br />
c<strong>on</strong>centrati<strong>on</strong>, and <strong>in</strong> 7 cases the transacti<strong>on</strong>s were assessed as vertical c<strong>on</strong>centrati<strong>on</strong>, <strong>in</strong> additi<strong>on</strong> to the 19<br />
cases of c<strong>on</strong>glomerate c<strong>on</strong>centrati<strong>on</strong>. On <strong>on</strong>e occasi<strong>on</strong>, the CC authorised the <strong>in</strong>corporati<strong>on</strong> of a new<br />
undertak<strong>in</strong>gs.<br />
28. The analysis of the trends of the c<strong>on</strong>centrati<strong>on</strong> processes showed that the number of<br />
c<strong>on</strong>centrati<strong>on</strong>s directly affect<strong>in</strong>g the c<strong>on</strong>centrati<strong>on</strong> of market structures, as compared to the previous years,<br />
have rema<strong>in</strong>ed nearly unchanged, however, the market has witnessed a sharp <strong>in</strong>crease <strong>in</strong> the number of<br />
c<strong>on</strong>glomerate c<strong>on</strong>centrati<strong>on</strong>s to the largest extent due to the activity of foreign <strong>in</strong>vestment funds.<br />
29. Intensive c<strong>on</strong>centrati<strong>on</strong> processes were observable <strong>in</strong> the <strong>in</strong>dustry, services, and <strong>in</strong>formati<strong>on</strong><br />
technologies sectors, also trade (<strong>in</strong>clud<strong>in</strong>g the retail market <strong>in</strong> pharmaceuticals). Not a s<strong>in</strong>gle major trade<br />
network operat<strong>in</strong>g <strong>in</strong> the retail market for food products and c<strong>on</strong>sumer goods has filed a notificati<strong>on</strong> <strong>on</strong><br />
c<strong>on</strong>centrati<strong>on</strong> <strong>in</strong> 2005, despite tangible expansi<strong>on</strong> of the networks both <strong>in</strong> <strong>Lithuania</strong>, and <strong>in</strong> foreign markets<br />
(Latvia, Est<strong>on</strong>ia, Bulgaria and Rumania). The networks were mostly expand<strong>in</strong>g their operati<strong>on</strong>s by<br />
build<strong>in</strong>g new modern trade centres and attract<strong>in</strong>g foreign <strong>in</strong>vestment.<br />
30. Out of 9 cases of c<strong>on</strong>centrati<strong>on</strong> <strong>in</strong> the trade sector, such transacti<strong>on</strong>s were effected <strong>in</strong> the<br />
c<strong>on</strong>structi<strong>on</strong> materials, metal items, domestic electric appliances, wholesale and retail trade <strong>in</strong> agricultural<br />
mach<strong>in</strong>ery, also the retail trade <strong>in</strong> pharmaceuticals.<br />
31. The year 2005 also was dist<strong>in</strong>guished for the c<strong>on</strong>centrati<strong>on</strong> of small commercial enterprises that<br />
<strong>in</strong> many cases are exempted from the notificati<strong>on</strong> obligati<strong>on</strong>, by virtue of Article 10(1) of the LC. For<br />
<strong>in</strong>stance, the Aibė trade network, <strong>on</strong> the c<strong>on</strong>tractual basis c<strong>on</strong>solidat<strong>in</strong>g small traders mostly operat<strong>in</strong>g <strong>in</strong><br />
regi<strong>on</strong>s, small towns and settlements, did not file a s<strong>in</strong>gle c<strong>on</strong>centrati<strong>on</strong> notificati<strong>on</strong> <strong>in</strong> the report<strong>in</strong>g period.<br />
Dur<strong>in</strong>g 2005, another trade network, UAB AVS prekyba comparable to the Aibė trade network was largely<br />
expand<strong>in</strong>g its operati<strong>on</strong>s. This trade network represents a comb<strong>in</strong>ati<strong>on</strong> of <strong>in</strong>dependent entities operat<strong>in</strong>g <strong>on</strong><br />
a c<strong>on</strong>tractual basis and benefit<strong>in</strong>g from centralised purchases.<br />
32. The trade networks were produc<strong>in</strong>g a tangible leverage effect <strong>in</strong> respect of entities operat<strong>in</strong>g <strong>in</strong><br />
other highly c<strong>on</strong>centrated sectors, such as milk process<strong>in</strong>g, beer, and others, prevent<strong>in</strong>g the latter from<br />
benefit<strong>in</strong>g from their advantageous positi<strong>on</strong> and <strong>in</strong>creas<strong>in</strong>g thus prices; eventually the actual beneficiary<br />
was the c<strong>on</strong>sumer.<br />
33. In certa<strong>in</strong> commodity markets the number of entities was decreas<strong>in</strong>g due to the requirements<br />
aris<strong>in</strong>g from the EU membership. For <strong>in</strong>stance, orig<strong>in</strong>ally some 300 entities were operat<strong>in</strong>g <strong>in</strong> the meat<br />
sector, however <strong>on</strong>ly a share of them proved compliance with the EU requirements, while others were<br />
forced to term<strong>in</strong>ate their operati<strong>on</strong>s.<br />
b) Summary of significant cases<br />
Telecommunicati<strong>on</strong>s and <strong>in</strong>formati<strong>on</strong> technologies market<br />
34. One of the cases where the authorisati<strong>on</strong> for c<strong>on</strong>centrati<strong>on</strong> was awarded subject to c<strong>on</strong>diti<strong>on</strong>s and<br />
obligati<strong>on</strong>s was accord<strong>in</strong>g to the applicati<strong>on</strong> by Eli<strong>on</strong> Ettevõtted AS for the authorisati<strong>on</strong> to implement<br />
c<strong>on</strong>centrati<strong>on</strong> by acquir<strong>in</strong>g. MicroL<strong>in</strong>k AS. Eli<strong>on</strong> Ettevõtted AS bel<strong>on</strong>gs to the group of enterprises<br />
c<strong>on</strong>trolled by Telia S<strong>on</strong>era AB, and <strong>in</strong> <strong>Lithuania</strong> Microl<strong>in</strong>k AS is c<strong>on</strong>trolled by UAB MicroL<strong>in</strong>k. Should this<br />
transacti<strong>on</strong> be effected <strong>in</strong> <strong>Lithuania</strong> AB Lietuvos telekomas would have acquired the subsidiaries of<br />
MicroL<strong>in</strong>k AS <strong>in</strong> <strong>Lithuania</strong>.
DAF/COMP(2006)11<br />
35. C<strong>on</strong>centrati<strong>on</strong> processes was produc<strong>in</strong>g an effect up<strong>on</strong> the wholesale and the retail broadband<br />
communicati<strong>on</strong>s access markets <strong>in</strong> <strong>Lithuania</strong>. In terms of the nature of services rendered these markets are<br />
vertically <strong>in</strong>ter-related. The c<strong>on</strong>centrati<strong>on</strong> under c<strong>on</strong>siderati<strong>on</strong> was qualified as vertical and horiz<strong>on</strong>tal<br />
c<strong>on</strong>centrati<strong>on</strong> <strong>in</strong> the retail broadband communicati<strong>on</strong>s access market. While c<strong>on</strong>sider<strong>in</strong>g the situati<strong>on</strong> due<br />
account was also taken of the fact that AB Lietuvos telekomas is the sole wholesale broadband access<br />
provider <strong>in</strong> <strong>Lithuania</strong> operat<strong>in</strong>g a well-developed fixed teleph<strong>on</strong>e communicati<strong>on</strong>s network and<br />
<strong>in</strong>frastructure cover<strong>in</strong>g the entire territory of <strong>Lithuania</strong>. The company, furthermore, dom<strong>in</strong>ates <strong>in</strong> the<br />
dedicated l<strong>in</strong>es services market, and <strong>in</strong> cooperati<strong>on</strong> with related entities is develop<strong>in</strong>g the alternative<br />
Internet access and data transmissi<strong>on</strong> technologies. Follow<strong>in</strong>g the acquisiti<strong>on</strong>, through the c<strong>on</strong>centrati<strong>on</strong><br />
deal, of its competitor which, although operates just a small share of the market, is <strong>on</strong>e of the most<br />
significant, AB Lietuvos telekomas <strong>in</strong> c<strong>on</strong>juncti<strong>on</strong> with the related companies would have strengthened its<br />
positi<strong>on</strong> <strong>in</strong> the market with a possible outcome of significantly lessened competiti<strong>on</strong> <strong>in</strong> the retail market of<br />
the broadband communicati<strong>on</strong>s access market <strong>in</strong> <strong>Lithuania</strong>. The competitors operat<strong>in</strong>g networks of much<br />
lower penetrati<strong>on</strong>, have notably poorer possibilities to <strong>in</strong>crease their share <strong>in</strong> the relevant market.<br />
36. Hav<strong>in</strong>g thoroughly assessed all circumstances the CC passed the decisi<strong>on</strong> to allow Eli<strong>on</strong><br />
Ettevõtted AS to implement c<strong>on</strong>centrati<strong>on</strong> by acquir<strong>in</strong>g a 100% hold<strong>in</strong>g of MicroL<strong>in</strong>k AS <strong>in</strong> accordance<br />
with the submitted notificati<strong>on</strong> hav<strong>in</strong>g imposed appropriate c<strong>on</strong>diti<strong>on</strong>s and obligati<strong>on</strong>s up<strong>on</strong> the applicant.<br />
The pr<strong>in</strong>cipal obligati<strong>on</strong> was for AB Lietuvos telekomas to sell UAB MicroL<strong>in</strong>k Lietuva with<strong>in</strong> an<br />
established time limit to an entity not related, with<strong>in</strong> the mean<strong>in</strong>g of the LC, with Eli<strong>on</strong> Ettevõtted AS, AB<br />
Lietuvos telekomas, MicroL<strong>in</strong>k AS.<br />
Publicati<strong>on</strong>s distributi<strong>on</strong> market<br />
37. In 2005, the CC exam<strong>in</strong>ed the applicati<strong>on</strong> filed by Rautakirja Oy for the authorisati<strong>on</strong> to<br />
implement c<strong>on</strong>centrati<strong>on</strong> by acquir<strong>in</strong>g shares of the Vilnius agency of UAB Lietuvos spauda.<br />
38. Hav<strong>in</strong>g c<strong>on</strong>ducted the <strong>in</strong>vestigati<strong>on</strong> the competiti<strong>on</strong> authority established that <strong>in</strong>tended<br />
c<strong>on</strong>centrati<strong>on</strong> should be assessed as horiz<strong>on</strong>tal and vertical c<strong>on</strong>centrati<strong>on</strong> <strong>in</strong> the relevant retail and<br />
wholesale market for distributi<strong>on</strong> of publicati<strong>on</strong>s. Both the acquir<strong>in</strong>g entity Rautakirja Oy and the entity<br />
be<strong>in</strong>g acquired operate <strong>in</strong> the retail and <strong>in</strong> the wholesale markets for distributi<strong>on</strong> of publicati<strong>on</strong>s. The<br />
degree of c<strong>on</strong>centrati<strong>on</strong> <strong>in</strong> the retail market for distributi<strong>on</strong> of publicati<strong>on</strong>s <strong>in</strong> the commodity market is<br />
affected just to a very slight extent. In the wholesale publicati<strong>on</strong>s distributi<strong>on</strong> market the degree of<br />
c<strong>on</strong>centrati<strong>on</strong> <strong>in</strong>creases up to 45–50%, while <strong>in</strong> selected regi<strong>on</strong>s the wholesale publicati<strong>on</strong> distributi<strong>on</strong><br />
market is operated exclusively by entities participat<strong>in</strong>g <strong>in</strong> the c<strong>on</strong>centrati<strong>on</strong>. About 600 publicati<strong>on</strong>s are<br />
distributed <strong>in</strong> <strong>Lithuania</strong>, some dailies generate the major share of their <strong>in</strong>come from subscripti<strong>on</strong>.<br />
39. Seek<strong>in</strong>g to ensure a transparent and n<strong>on</strong>-discrim<strong>in</strong>ative publicati<strong>on</strong>s distributi<strong>on</strong> system <strong>in</strong> the<br />
market and prevent the emergence of a dom<strong>in</strong>ant positi<strong>on</strong> the CC imposed appropriate obligati<strong>on</strong>s up<strong>on</strong><br />
Rautakirja Oy.<br />
40. S<strong>in</strong>ce the entry <strong>in</strong>to the wholesale publicati<strong>on</strong>s distributi<strong>on</strong> market is restricted, the vertical<br />
<strong>in</strong>tegrati<strong>on</strong> would enable Rautakirja Oy to acquire significant advantage <strong>in</strong> respect of its competitors as<br />
well a possibility to cross-subsidise its activities. The cross-subsidis<strong>in</strong>g <strong>in</strong>strument would have added to the<br />
advantage of Rautakirja Oy even aga<strong>in</strong>st the most efficient competitors, and would significantly encumber<br />
the entry <strong>in</strong>to the market for distributi<strong>on</strong> of publicati<strong>on</strong>s.<br />
41. Hav<strong>in</strong>g c<strong>on</strong>sidered that the undertak<strong>in</strong>gs proposed by Rautakirja Oy are meant to establish a<br />
transparent and n<strong>on</strong>-discrim<strong>in</strong>ative publicati<strong>on</strong> distributi<strong>on</strong> system, alleviate the market entry barriers,<br />
cross-subsidis<strong>in</strong>g possibilities, and would elim<strong>in</strong>ate the exclusive distributi<strong>on</strong> terms <strong>in</strong> c<strong>on</strong>tracts with<br />
retailers and publishers, which <strong>in</strong> its entirety would c<strong>on</strong>tribute to the preventi<strong>on</strong> of the emergence of a<br />
8
9<br />
DAF/COMP(2006)11<br />
dom<strong>in</strong>ant positi<strong>on</strong> and a significant restricti<strong>on</strong> of competiti<strong>on</strong>, the CC resolved to authorise Rautakirja Oy<br />
to implement c<strong>on</strong>centrati<strong>on</strong> by acquir<strong>in</strong>g a 100% share of the Vilnius agency of UAB Lietuvos spauda <strong>in</strong><br />
accordance with the submitted notificati<strong>on</strong> subject to appropriate c<strong>on</strong>diti<strong>on</strong>s and obligati<strong>on</strong>s, the most<br />
important of which was the arrangement under which the c<strong>on</strong>centrat<strong>in</strong>g entities are obligated organise the<br />
publicati<strong>on</strong>s distributi<strong>on</strong> activity and the retail trade <strong>in</strong> news stands by channels of two separate and<br />
<strong>in</strong>dependent companies. The progress of the fulfilment of the obligati<strong>on</strong>s provided for <strong>in</strong> the relevant<br />
resoluti<strong>on</strong> will be m<strong>on</strong>itored by an <strong>in</strong>dependent observer whose candidature, comply<strong>in</strong>g with the<br />
established criteria, will be submitted for approval to the CC with<strong>in</strong> the established time limit.<br />
3. The role of competiti<strong>on</strong> authority <strong>in</strong> the formulati<strong>on</strong> and implementati<strong>on</strong> of other policies,<br />
e.g. regulatory reform, trade and <strong>in</strong>dustrial policies<br />
42. Article 4 of the LC empowers the CC to exam<strong>in</strong>e the c<strong>on</strong>formity of legal acts or other decisi<strong>on</strong>s<br />
adopted by public and local authorities with the requirements of the LC and to require public and local<br />
authorities to amend or revoke legal acts or other decisi<strong>on</strong>s restrict<strong>in</strong>g competiti<strong>on</strong>.<br />
43. Dur<strong>in</strong>g the year 2005 the CC passed 7 decisi<strong>on</strong>s <strong>in</strong> cases c<strong>on</strong>cern<strong>in</strong>g restrictive acti<strong>on</strong>s of public<br />
and local authorities. As an example whereof could be the case regard<strong>in</strong>g the decisi<strong>on</strong> of the Panevėžys<br />
M<strong>in</strong>icipality. The CC exam<strong>in</strong>ed the claim lodged by AB Lietuvos dujos regard<strong>in</strong>g the decisi<strong>on</strong> of the<br />
Panevėžys Municipality ˝On the approval of the special municipal heat<strong>in</strong>g plan“. In the process of the<br />
development of the special municipal heat<strong>in</strong>g sector plan, the plan approved by the above decisi<strong>on</strong> of the<br />
Municipality provided for the centralised supply of heat <strong>in</strong> nearly all areas of Penevėžys thus ensur<strong>in</strong>g an<br />
advantageous positi<strong>on</strong> for the heat supplier AB Panevėžio energija and discrim<strong>in</strong>at<strong>in</strong>g other energy<br />
suppliers, <strong>in</strong>clud<strong>in</strong>g the applicant AB Lietuvos dujos. The decisi<strong>on</strong> of the Council of the Municipality<br />
resulted <strong>in</strong> the differences of competiti<strong>on</strong> c<strong>on</strong>diti<strong>on</strong>s for <strong>in</strong>dividual entities compet<strong>in</strong>g <strong>in</strong> the heat energy<br />
source market. Up<strong>on</strong> the approval of the plan by the municipality AB Lietuvos dujos was deprived of its<br />
right to supply gas to the company‘s c<strong>on</strong>sumers despite the presence of physical facilities to supply gas <strong>in</strong><br />
this area of the town. This also was c<strong>on</strong>trary to the preferences of the c<strong>on</strong>sumers to opt for gas supply<br />
rather than the centrally generated heat energy.<br />
44. The build<strong>in</strong>gs and residential premises <strong>in</strong> the town are supplied with heat either from centralised<br />
heat generati<strong>on</strong> sources or with heat generated <strong>in</strong> <strong>in</strong>dividual gas boiler-houses us<strong>in</strong>g electric energy. For<br />
heat<strong>in</strong>g purposes c<strong>on</strong>sumers may use either heat supplied from centralised sources, or gas, – from the<br />
c<strong>on</strong>sumer‘s po<strong>in</strong>t of view these are the two <strong>in</strong>tersubstitutable sources of heat energy. This f<strong>in</strong>d<strong>in</strong>g has also<br />
been c<strong>on</strong>firmed by the practice of the Supreme Adm<strong>in</strong>istrative Court of <strong>Lithuania</strong>.<br />
45. Hav<strong>in</strong>g c<strong>on</strong>sidered that by virtue of the decisi<strong>on</strong> of the Panevėžys Municipality nearly the entire<br />
municipal territory was assigned to the supplier of centrally generated heat, the CC c<strong>on</strong>cluded that the said<br />
decisi<strong>on</strong> of the local authority privileged AB Panevėžio energija <strong>in</strong> respect of other alternative heat energy<br />
suppliers.<br />
46. The <strong>in</strong>formati<strong>on</strong> collected <strong>in</strong> the course of the <strong>in</strong>vestigati<strong>on</strong> also showed that n<strong>on</strong>e of the<br />
<strong>Lithuania</strong>n laws and regulati<strong>on</strong>s perta<strong>in</strong><strong>in</strong>g to the <strong>Lithuania</strong>n energy sector and territorial plann<strong>in</strong>g, c<strong>on</strong>ta<strong>in</strong><br />
any provisi<strong>on</strong>s grant<strong>in</strong>g privileges to an <strong>in</strong>dividual heat energy source, nor the provisi<strong>on</strong>s grant<strong>in</strong>g a right<br />
to restrict competiti<strong>on</strong> <strong>in</strong> <strong>in</strong>dividual energy sectors. One of the objectives of the Law <strong>on</strong> Heat of the RL is<br />
to establish and ensure competiti<strong>on</strong> <strong>in</strong> the heat sector.<br />
47. The CC resolved that decisi<strong>on</strong> to establish the centrally generated heat as source heat energy <strong>in</strong><br />
the special municipal plan is ungrounded and illegitimate. The established differences <strong>in</strong> the c<strong>on</strong>diti<strong>on</strong>s for<br />
competiti<strong>on</strong> have not been caused though the compliance of the requirements of laws. The decisi<strong>on</strong> of the
DAF/COMP(2006)11<br />
Panevėžys Municipality was passed <strong>in</strong> c<strong>on</strong>tradicti<strong>on</strong> to the provisi<strong>on</strong>s of the LC, therefore the Council of<br />
the Panevėžys Municipality was obligated to amend the decisi<strong>on</strong> as ungrounded and illegal.<br />
48. The CC, seek<strong>in</strong>g that the newly drafted legislati<strong>on</strong> should <strong>in</strong> no way restrict or weaken<br />
competiti<strong>on</strong>, but by all possible means liberalise the market entry possibilities, promote competiti<strong>on</strong> am<strong>on</strong>g<br />
ec<strong>on</strong>omic entities, <strong>in</strong>tensify competiti<strong>on</strong> thus ensur<strong>in</strong>g the maximum possible benefit to c<strong>on</strong>sumers, with<strong>in</strong><br />
its competence exam<strong>in</strong>es draft laws and other regulati<strong>on</strong>s drafted by m<strong>in</strong>istries and other authorities,<br />
submits comments and c<strong>on</strong>clusi<strong>on</strong>s to the Seimas and the Government of the Republic of <strong>Lithuania</strong> <strong>on</strong><br />
competiti<strong>on</strong> implicati<strong>on</strong>s of such legal acts and regulati<strong>on</strong>s. Dur<strong>in</strong>g 2005 the CC actively participated <strong>in</strong><br />
the legislati<strong>on</strong> process, hav<strong>in</strong>g analysed and assessed from the competiti<strong>on</strong> po<strong>in</strong>t of view 13 draft laws and<br />
29 drafts of other regulati<strong>on</strong>s.<br />
49. The CC issued comments and op<strong>in</strong>i<strong>on</strong>s c<strong>on</strong>cern<strong>in</strong>g the Amendments of the Law <strong>on</strong> Public<br />
Procurement, the draft Law <strong>on</strong> the C<strong>on</strong>cept of Prohibiti<strong>on</strong> of Unfair Acti<strong>on</strong>s by Retail Trade Enterprises,<br />
the draft Law <strong>on</strong> Pharmaceutical Activity and others.<br />
50. Certa<strong>in</strong> f<strong>in</strong>d<strong>in</strong>gs and c<strong>on</strong>clusi<strong>on</strong>s <strong>on</strong> the impact of legal acts and regulati<strong>on</strong>s up<strong>on</strong> competiti<strong>on</strong><br />
were also submitted to <strong>Lithuania</strong>n courts. Dur<strong>in</strong>g 2005, the C<strong>on</strong>stituti<strong>on</strong>al Court of the Republic of<br />
<strong>Lithuania</strong> has <strong>on</strong> several occasi<strong>on</strong>s appealed to the CC with a request to submit an op<strong>in</strong>i<strong>on</strong> and the<br />
support<strong>in</strong>g arguments and motivati<strong>on</strong>s regard<strong>in</strong>g c<strong>on</strong>siderati<strong>on</strong>s submitted by the claimants. Up<strong>on</strong> a request<br />
of the members of the Seimas the CC presented its legally grounded arguments to the C<strong>on</strong>stituti<strong>on</strong>al Court<br />
c<strong>on</strong>cern<strong>in</strong>g the provisi<strong>on</strong>s of the Law <strong>on</strong> the <strong>Lithuania</strong>n Nati<strong>on</strong>al Radio and Televisi<strong>on</strong>. The comments<br />
were drawn up hav<strong>in</strong>g thoroughly assessed the requirements laid down <strong>in</strong> the Communicati<strong>on</strong> from the<br />
Commissi<strong>on</strong> <strong>on</strong> the applicati<strong>on</strong> of State aid rules to public service broadcast<strong>in</strong>g (2001/C 320/04).<br />
51. Dur<strong>in</strong>g 2005, the CC exam<strong>in</strong>ed 17 cases related to the use of mislead<strong>in</strong>g or comparative<br />
advertis<strong>in</strong>g. In 9 cases the CC c<strong>on</strong>cluded <strong>in</strong>fr<strong>in</strong>gements of the Law <strong>on</strong> Advertis<strong>in</strong>g (further – the LA), <strong>on</strong> 6<br />
occasi<strong>on</strong>s refused to <strong>in</strong>itiate an <strong>in</strong>vestigati<strong>on</strong> there be<strong>in</strong>g no sufficient grounds to assume an <strong>in</strong>fr<strong>in</strong>gement<br />
of the LA, 2 <strong>in</strong>vestigati<strong>on</strong>s were closed hav<strong>in</strong>g failed to collect sufficient proof of an <strong>in</strong>fr<strong>in</strong>gement of the<br />
LA. Hav<strong>in</strong>g exam<strong>in</strong>ed and assessed the advertis<strong>in</strong>g texts published <strong>in</strong> the mass media means <strong>in</strong> certa<strong>in</strong><br />
<strong>in</strong>stances <strong>on</strong>ly preventive measures were applied <strong>in</strong> the view of the small significance of the possible<br />
<strong>in</strong>fr<strong>in</strong>gements, – 12 advertis<strong>in</strong>g providers were issued written warn<strong>in</strong>gs, follow<strong>in</strong>g which they ceased the<br />
use of the mislead<strong>in</strong>g advertis<strong>in</strong>g. In the view of possible use of mislead<strong>in</strong>g or comparative advertis<strong>in</strong>g 93<br />
applicants were provided with explanati<strong>on</strong>s <strong>in</strong> writ<strong>in</strong>g <strong>on</strong> the applicable requirements and their applicati<strong>on</strong><br />
<strong>in</strong> practice, <strong>on</strong> the procedure for the provisi<strong>on</strong> of the data necessary for the <strong>in</strong>itiati<strong>on</strong> of an <strong>in</strong>vestigati<strong>on</strong><br />
and the liability for the failure to comply with the requirements of the Law.<br />
52. In 2005 the CC imposed f<strong>in</strong>es total<strong>in</strong>g EUR 9.32 milli<strong>on</strong> up<strong>on</strong> undertak<strong>in</strong>gs for the <strong>in</strong>fr<strong>in</strong>gements<br />
of the LA.<br />
53. After accessi<strong>on</strong> to the EU the m<strong>on</strong>itor<strong>in</strong>g of State aid has changed materially. Accord<strong>in</strong>g to<br />
Article 48 of the LC, the CC shall coord<strong>in</strong>ate issues of State aid to which EU State aid rules apply, perform<br />
the expert exam<strong>in</strong>ati<strong>on</strong> of State aid projects, submit c<strong>on</strong>clusi<strong>on</strong>s and recommendati<strong>on</strong>s to State aid<br />
providers, participate <strong>in</strong> submitt<strong>in</strong>g notificati<strong>on</strong>s <strong>on</strong> State aid to EC. Furthermore, the CC manages the<br />
Register of State aid and accumulates <strong>in</strong>formati<strong>on</strong> <strong>on</strong> State aid provided to undertak<strong>in</strong>gs, as well as<br />
forwards this <strong>in</strong>formati<strong>on</strong> to the EC and other <strong>in</strong>terested <strong>in</strong>stituti<strong>on</strong>s.<br />
54. With<strong>in</strong> the framework of its functi<strong>on</strong>s as an <strong>in</strong>stituti<strong>on</strong> coord<strong>in</strong>at<strong>in</strong>g the issues of State aid the CC<br />
closely cooperated with State aid providers <strong>in</strong> the process of draft<strong>in</strong>g State aid notificati<strong>on</strong>s to the EC, and<br />
provid<strong>in</strong>g other <strong>in</strong>formati<strong>on</strong> about the State aid. With<strong>in</strong> the account<strong>in</strong>g period, State aid providers<br />
10
11<br />
DAF/COMP(2006)11<br />
submitted total 21 notificati<strong>on</strong> <strong>on</strong> State aid, <strong>in</strong>clud<strong>in</strong>g 4 notificati<strong>on</strong>s <strong>on</strong> State aid under exempti<strong>on</strong>s, 4 ad<br />
hoc, i.e. <strong>in</strong>dividual aid to undertak<strong>in</strong>gs, and 13 – <strong>on</strong> State aid grated under aid schemes.<br />
55. Accord<strong>in</strong>g to the data available the total State aid provided <strong>in</strong> <strong>Lithuania</strong> dur<strong>in</strong>g the year amounted<br />
to LTL 446.43 milli<strong>on</strong> (EUR 129.29 milli<strong>on</strong>).<br />
56. In 2004, State aid to manufactur<strong>in</strong>g and services sector accounted for a larger share of the<br />
nati<strong>on</strong>al State aid, i.e., – 82.24 % (exclud<strong>in</strong>g aid to agricultural and fisheries sectors). In 2004, with<strong>in</strong> the<br />
manufactur<strong>in</strong>g and service sectors aid was granted to small and medium-sized enterprises, research,<br />
development and <strong>in</strong>novati<strong>on</strong>s, trade and aid for the rescue and restructur<strong>in</strong>g of enterprises. Over 55% of the<br />
aid to the manufactur<strong>in</strong>g and service sectors was granted as the rescue and restructur<strong>in</strong>g aid.<br />
4. Resources of competiti<strong>on</strong> authority<br />
4.1 Resources overall (current numbers and change over previous year)<br />
a) <str<strong>on</strong>g>Annual</str<strong>on</strong>g> budget (<strong>in</strong> your currency and USD):<br />
LTL 3.45 milli<strong>on</strong> (USD 1.21 milli<strong>on</strong>) <strong>in</strong> 2004<br />
LTL 3.6 milli<strong>on</strong> (USD 1.27 milli<strong>on</strong>) <strong>in</strong> 2005<br />
b) Number of employees (pers<strong>on</strong>-years):<br />
=> ec<strong>on</strong>omists - 28<br />
=> lawyers – 11<br />
=> other professi<strong>on</strong>als – 5<br />
=> support staff – 16<br />
=> all staff comb<strong>in</strong>ed - 60<br />
4.2 Human resources (pers<strong>on</strong>-years) applied to:<br />
a) enforcement aga<strong>in</strong>st anticompetitive practices - 22<br />
b) merger review and enforcement – 4<br />
c) advocacy efforts – 6<br />
4.3 Period covered by the above <strong>in</strong>formati<strong>on</strong> – 2005<br />
5. Summaries of or references to new reports and studies <strong>on</strong> competiti<strong>on</strong> policy issues<br />
Addresses of <str<strong>on</strong>g>Annual</str<strong>on</strong>g> <str<strong>on</strong>g>Report</str<strong>on</strong>g>s of the CC <strong>in</strong> the website –<br />
http://www.k<strong>on</strong>kuren.lt/english/annual/2004_eng.pdf and of press releases -<br />
http://www.k<strong>on</strong>kuren.lt/english/<strong>in</strong>formati<strong>on</strong>/press.htm