2009 ANNUAL REPORT 2 2009 ANNUAL REPORT FOREWORD TABLE OF Enforcement of competition policy under CONTENTS economic downturn conditions 2 I. COMPetITIon COUncIL IN 2009: actIVITIes and acHIEVEMents * Highlights * Activities – facts and figures 4 II. InVestIGatIons and OUtcoMes * Prohibited agreements * Abuse of a dominant position * Concentration control * Restrictive actions of public administration entities * Enforcement of the Law on Advertising 6 III. JUDICIal PractIce and PreVentIon * Legislative activities and enforcement of legislation * Judicial decisions 13 IV. CoordInatIon and consUltatIon * Coordination of State aid * Market research and price control 17 V. InternatIonal VI. COMPetITIon VII. StatIstICS CooPeratIon CUltUre and PUblICITY 20 22 23 2009 ANNUAL REPORT FOREWORD ENForCEMent OF COMpetITIon polICY unDer EConoMIC DOWnturn ConDITIonS Jonas Rasimas Chairman of the Competition Council “The ability of the Competition alleged prohibited agreements, as ongoing economic downturn, on the Council to ensure fair competition is agreements of this nature are the assumption that such actions will of vital importance to all residents of most detrimental to consumers. Each make it easier to stay in a market. The Lithuania. The Lithuanian competition revealed case of prohibited agreements difficult economic situation, however, authority is not only meant to detect is a step closer to ensuring efficient is no excuse for infringing the law. and sanction participants of cartel competition. In three resolved cases Long-term economic viability is agreements, but even more, to prevent of prohibited agreements (in the areas ensured by the drive to win the favour the very appearance of prohibited of waste management, advertising of buyers specifically by being a better agreements. The Competition Council and media services, and organization seller than others, which is exactly is to seek ways to involve itself at the of events) the Competition Council what fair competition is about. earliest possible stage in the deliberation identified infringements of Article 5 Businesses willing to be granted and discussion of legal acts being of the Law on Competition and immunity from sanctioning, which drafted. Laws are not meant to impede imposed upon the responsible definitely might hurt them under the competition.” These statements by companies fines amounting to a total crisis conditions, may have recourse Dalia Grybauskaitė, President of the of nearly LTL 4 m. to the leniency system. A participant Republic of Lithuania, summarize the The Competition Council, however, to a prohibited agreement, which first most important priorities and tasks acted not merely as a punitive authority. reveals the existence of the agreement faced by the Lithuanian Competition In response to allegations of prohibited to the Competition Council before the Council. And these are the tasks that agreement the vehicle traders repealed start of an investigation, and provides have to be fulfilled by our joint and the provisions in their agreements that weighty evidence and conscientiously efficient work and efforts. could have harmed consumers, and cooperates with the Competition In 2009, in carrying out its mission the Competition Council terminated Council during the investigation, is to protect the freedom of fair its investigation. As a result, drivers fully exempted from responsibility. competition and consumer welfare, will no longer be forced to undergo It is rather delightful to see some the Competition Council passed their warranty technical maintenance cartel members that summoned up in excess of 230 resolutions related in the network of authorized garages the courage to notify the Council to the application of both the Law only, and will be free to choose any of existing prohibited agreements on Competition and the Law on capable service provider. and submitted valuable evidence. In Advertising of the Republic of There may be more temptations the course of the accounting year Lithuania. In 2009, we had launched to seek ways to avoid competition, we performed one investigation on four new investigations concerning specifically under the conditions of the basis of notification filed by a 2 2009 ANNUAL REPORT cartel participant, and we will issue International Airport in the said uncompromising opponent of any a decision on this case in 2010. At the case, its rapid decision to terminate attempts to capture consumers with end of the year we received relevant the infringement and the Airport’s ungrounded promises especially at information from another cartel well-meant cooperation with the a time when most consumers have participant, and this case will be also Competition Council in the course experienced significant income investigated in 2010. of the investigation allow to hope reductions and any unreasonable Quite a number of markets in that in the aftermath of several purchasing decision has a significantly Lithuania have only few undertakings cases concerning the conduct of this more critical effect on their household of nearly equal capacities. Therefore, enterprise, Vilnius International budgets. such markets may be described as Airport changes its behaviour and Certain events that had taken place oligopolies that largely increase the seeks to ensure compliance with the in 2009 and in previous years force us threat not only of cartel agreements, Law on Competition. to reconsider the mistakes made then but also of tacit collusion sometimes The Competition Council also and to seek ways to avoid making referred to as parallel behaviour. An investigated 19 cases related to the duty the same in the future. We refer to event of special importance to the of entities of public administration to the judicial rulings obligating us to Competition Council was the ruling of protect the freedom of fair competition renew the investigations completed in the Supreme Administrative Court of in Lithuania. In the course of these preceding years concerning actions of Lithuania passed in 2009 after lengthy investigations the authority took AB Mažeikių nafta and the agreements litigation proceedings to the effect that interest into markets of public territory between several milk processing back in 2006 the Competition Council management, household waste companies. As a result of insufficiently correctly qualified and assessed an management, transport services, and thorough investigations, or our likely infringement committed in the office other similar markets. By its three inability to prove our truth in court, and chalky paper markets. The ruling resolutions the Competition Council we lost the chance to timely and stood as confirmation of the rule that a established infringements of Article 4 effectively defend the freedom of fair regular exchange of important market of the Law on Competition. competition in markets of specific information among competitors in In the period covered, we also importance. an oligopoly market may diminish investigated 46 cases of businesses Not only in view of the need to avoid incentives to compete, and owing to seeking to perform mergers. Although any past mistakes, but also of the these potential consequences, is illegal. most merger transactions, specifically necessity to become fully prepared The Competition Council will continue involving minor market participants, for any forthcoming challenges, in its efforts not only to disrupt the are most often beneficial both to the we will have to bring a number cartels actually in operation, but merged undertakings and buyers of of long-developing changes into also to eliminate the very conditions their products, however, the actual reality in 2010. We are determined that facilitate any attempts to avoid threat that mergers might significantly to make the energy, transport, and competition. restrict competition requires a very retail sectors central in our focus. In 2009, only one undertaking thorough examination of all mergers Therefore in 2010 the Competition was recognized having abused its between firms with annual income Council will reorganise the structure dominant position and having exceeding the statutory threshold. of its Administration with a view infringed the requirements of Article In the period reviewed the to increasing the efficiency of its 9 of the Law on Competition. The Competition Council passed 19 performance and its contribution to Competition Council, not for the Resolutions concerning infringements the revival of the national economy first time, had to investigate actions of the Law on Advertising. In many of and consumer welfare. of Vilnius International Airport the cases the ultimate outcome was We will cover in detail our success for refusing to provide access to the protected right of consumers to in attaining these and other goals in essential facilities managed by the be well informed and not mislead our next year’s report. Airport. The information at the concerning the developments on the disposal of the Competition Council, market. The Competition Council as well as the actions of Vilnius has always been and shall remain an 2009 ANNUAL REPORT COMPetITIon COUncIL IN Court upheld the Resolution passed by acquiring up to 100 percent of the shares the Competition Council that sought of TEO LT, AB. 2009: to equalise competition conditions for the security divisions of the Lithuanian actIVITIes and Police and private security services. END OF THE TERM OF OFFICE acHIEVEMents April 2 October 19 The Court confirmed the legitimacy Dr. Rimantas Stanikūnas completed