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COMPETITION COUNCIL: THE VILNIUS CITY MUNICIPALITY WAS GRANTING PRIVILEGES TO VILNIAUS VYSTYMO KOMPANIJA

10 06 2010

Having considered the findings of the investigation completed the Competition Council passed the Resolution concerning the compliance of actions of the Vilnius City Municipality with the requirements of Article 4 of the Law on Competition.  The Council concluded that the Vilnius City Municipality in passing the relevant decisions and concluding on the basis thereof the contract authorizing UAB Vilniaus vystymo kompanija (formerly UAB Vilniaus kapitalinÄ— statyba) to provide building design management and construction management, as well as other construction-related services, was granting privileges to the company in respect of other undertakings operating in the relevant market by creating different competition conditions to competing undertakings operating in the same relevant market.

The investigation was conducted in response to the application of UAB Contestus projektai to investigate whether or not by its relevant resolutions the Vilnius City Municipality was favouring UAB Vilniaus vystymo kompanija, also the letters received from the Government representative in Vilnius County and the Public Procurement Service expressing concerns regarding resolutions passed by the Council of the Vilnius Municipality in respect of UAB Vilniaus vystymo kompanija.

As established by the investigation the Vilnius City Municipality, having without any tender authorized UAB Vilniaus vystymo kompanija, its wholly- controlled company to provide building design management and construction management, as well as other construction-related services, created different competition conditions in respect of undertakings operating in the relevant market. UAB Vilniaus vystymo kompanija was not the only company in the market able to provide the relevant services; there were other companies capable of providing the same services and competing with UAB Vilniaus vystymo kompanija concerning the provision of the services to the Vilnius City Municipality.  Participation in public procurement tenders is designed as one of the principal facilities for companies to maintain their position in the market and successfully compete – in this particular case in the building design and construction management services market.

When passing its relevant resolution the Competition Council also took into consideration the new version of the Law on Public Procurement that came into effect on 2 March 2010.  The amendment of the Law provided that after 2 March 2010 Municipalities are entitled to purchase works and services directly from companies owned thereby, without undergoing a tender procedure only in the cases where the Municipality is the sole founder or shareholder of the companies concerned, and where the companies generate the bulk of their income (over 90 percent) from activities related to the needs and functions of the Municipality.  Having assessed all circumstances concerned the Competition Council concluded that the resolutions and contracts examined in the investigation could not be considered to represent an internal transaction exempted from the requirements of the Law on Public Procurement, since the Municipality failed to produce any reliable evidence in that respect.

The Competition Council obligated the Vilnius City Municipality, within one month, to repeal the resolutions specified in the Resolution of the Competition Council, and terminate the contract or bring them into compliance of the requirements of Article 4 of the Law on Competition.

Competition Council Spokesperson