Lithuanian Competition Council is one of the few EU agencies with the right to investigate anticompetitive decisions by public bodies (e.g. municipalities, ministries) and to request to amend or repeal the legal acts or other decisions restricting competition. Furthermore, since January, 2017 the Council was empowered to impose sanctions to public bodies for distorting competition, for granting privileges to or discriminating against any individual undertakings or their groups. Whereas the vast majority of competition agencies in regard to public bodies has a right to use only a soft tool – competition advocacy. Slide presentation gives a brief insight into the legal background and practice of enforcement of competition rules to public bodies in Lithuania.

1. MISSION POSSIBLE:
APPLICATION OF COMPETITION RULES TO PUBLIC BODIES
JŪRATĖ ŠOVIENĖ, DEPUTY CHAIR OF THE LITHUANIAN COMPETITION COUNCIL

2. Since 1992
assess & apply
About ¼ CC capacities
devoted to activities of public bodies
Infringements of public bodies
from obvious to sophisticated
LITHUANIAN EXPERIENCE: competition rules to public bodies

3. Constitution of Lithuania
• protects private ownership, private initiative, freedom of economic activity, freedom of
fair competition
Law on Competition
• duty on all policy makers to ensure freedom of fair competition
• prohibition of privileges and discrimination
• fines for infringements of the Law
Government resolution on methodology of impact assessment of draft
regulations
• all government bodies have a duty to:
assess the impact of legislative acts on competition
consult CC if draft law may have an impact on competition
• refer to CC guidelines for assessing impact of draft decisions on competition
CC guidelines for assessing impact of draft decisions to competition
GROUNDS FOR ASSESSMENT

4. CASE LAW OF THE CONSTITUTIONAL COURT
The freedom of economic activity may be restricted only if:
• by law (adopted by parliament)
• other constitutional values can only be achieved by restricting economic freedom
• restrictions do not deny the nature and essence of constitutional rights and freedoms
• restrictions are proportioned

5. LAW on COMPETITION
In carrying out the assigned tasks related to the regulation of economic activities
<…>, public bodies must ensure freedom of fair competition
Public bodies shall be prohibited from adopting legal acts or other decisions which
grant privileges to or discriminate against any individual undertakings or their groups
<…> except where the difference in the conditions of competition may not be
avoided when meeting the requirements of the laws of the Republic of Lithuania.
Fines (since 1 January 2017) up to 0,5% of the budget, but not exceeding 60 000 €
DUTY OF PUBLIC BODIES to ensure freedom of fair competition

6. Would the proposal..
• directly limit the number or range of
undertakings?
• indirectly limit the number or range of
undertakings?
• limit the ability of undertakings to compete?
• reduce undertakings‘ incentives to compete
vigorously?
CHECKLIST

7. WHEN? WHO? WHAT?
EX ANTE
ASSESSMENT
• self assessment
• by third parties
• by CC
EX POST
ASSESSMENT
• self assessment
• by third parties
• by CC
ADVOCACY
• by third parties
• by CC
ENFORCEMENT
• by CC
• by court

8. MOST COMMON COMPETITION RESTRICTIVE PRACTICES
• exclusive rights granted without competitive procedure
• public v. private
• former public v. private
• local undertakings v. national/foreign
• conditions more favourable to certain undertakings

9. PUBLIC SECTOR V. PRIVATE SECTOR
• In 2012-2016 the Council passed 25 resolutions regarding the anticompetitive
decisions by public bodies and 20 resolutions related to breaches by private
undertakings.
• Municipalities lead the list of infringers. Most often municipalities breach the law in
transport and household waste areas.
25 20

10. DRAFT REGULATIONS REVIEWED BY CC
from
250
to
400
anualy
„might restrict
competition”
50%

11. PHARMACY SPACE
If too small
– must be
CLOSED! Ministry of Health:
for the sake of conformity and privacy of
patients the size of each city pharmacy
should not be below 60 m2.
CC:
• barrier to enter/operate
• no objective justification
• may restrict competition

12. “POLICE BEACONS” CASE
Personal and property security services market players
• private undertakings
• Security Divisions of the Lithunian Police
Competition problem
• Order of the Commissar-General of the Lithuanian Police:
Security Divisions of the Police maintain all special rights granted by the Law on
Police Activities:
to use the special police vehicles
to enter residential and non-residential premises owned by natural and legal
persons
to stop the vehicles and have access to them, etc.
• private undertakings did not enjoy such extended rights
• licence to operate on the market was issued by the Lithuanian Police
CC: decision restricted competition, must be changed/revoked

13. MWM IN VILNIUS
Market players: undertakings providing municipal waste management (MWM)
services in Vilnius (collection, transportation for use or disposal)
Competition problem
• Terms and conditions for provider selection:
requirement to hold licence on management of hazardous waste
The investigation
• laws: no requirement to hold licence on processing of hazardous waste for a
municipal waste manager
• prior to the tender: waste was managed by firms with no licence on hazardous
waste
• foreign firms: opportunity to obtain licence on managing hazardous waste lafter
the tender
• subcontracting: no possibility to manage hazardous waste with subcontractor
CC: competition restriction, discrimination of firms without licence for
hazardous waste

14. MWM IN KAUNAS
Market players: Kauno švara (municipal company), private undertakings
Competition problem
• Kaunas municipality granted exclusive rights to Kauno švara to operate on
waste management services market in Kaunas city.
• Other companies were excluded from the market.
CC: Kaunas municipality discriminated other undertakings, decision must be
changed/revoked

15. FISHING IN THE BALTIC SEA
Market players
>100 firms fishing in the Baltic Sea by way of selective fishing
Competition problem
• Regulations of the Ministry of Agriculture:
new firms may receive fishing quotas in the Baltic Sea or the coastal areas only
subject to the approval by >1/2 of all fishing firms
prohibition upon small vessels to fish beyond the 20 m isobath even where their
technical capacities allow
segmented fishing areas into fishing sections: firms were allowed to fish only in the
areas specifically dedicated to them
CC: the Ministry discriminated fishing firms

16. “VILNIUS VEŽA” CASE

17. MISSION POSSIBLE:
APPLICATION OF COMPETITION RULES TO PUBLIC BODIES
JŪRATĖ ŠOVIENĖ, DEPUTY CHAIR OF THE LITHUANIAN COMPETITION COUNCIL