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THE COMPETITION COUNCIL IMPOSED FINES UPON THREE COMPANIES FOR CONCLUDING A PROHIBITED AGREEMENT WHILE PARTICIPATING IN THE TENDER UNDER THE PHARE PROGRAM

15 07 2003

The Competition Council of the Republic of Lithuania has concluded the investigation and having in today’s meeting heard the explanations of the parties concerned, passed the decision recognizing that three undertakings while biding for PHARE tender have concluded a prohibited agreement, i.e., performed actions prohibited by Article 5 of the Law on Competition of the Republic of Lithuania. For said actions the three companies were subject to appropriate fines.

The investigation on the initiative of the Competition Council was commenced in March, 2003, upon receipt of the information on certain actions performed by undertakings participating in the PHARE tender in the year 2002 concerning the supply of information technologies equipment. The PHARE tender called for bids for the acquisition of IT equipment to facilitate the administrative and managerial capacities of the Ministry of Agriculture and associated institutions in the area of the European Union agricultural and regional development acquis. The contractor for the IT equipment was the Ministry of Agriculture, and SE “Central project management agency“ was designated responsible for the organization of the tender. Four companies participated in the tender, - UAB “Blue Bridge”, UAB “Techna Orbis”, UAB “Aideta” and UAB “CompServis”. The tender was arranged in accordance with the European Union procedures for procurement, and the funds for the implementation of the tender were allocated under the PHARE national financing program for Lithuania, partly co-financed by Lithuania. The tender considered to be a large-scale tender was awarded to UAB “Blue Bridge”, which offered a price of EUR 499 094.

The investigation was initiated after the Competition Council received information that bids furnished by three tendering undertakings - UAB “Aideta”, UAB “Blue Bridge” and UAB “Techna Orbis” were very similar and that UAB “Blue Bridge” allegedly had developed the tender bids also for its competitors - “Techna Orbis” and “Aideta”. The investigation concluded that specifications submitted as bids for the tender by three competing companies UAB “Blue Bridge”, UAB “Aideta” and UAB “Techna Orbis” were very close. The facts discovered in the course of the investigation allowed a conclusion to be drawn by the Competition Council that UAB “Blue Bridge”, UAB “Aideta” and UAB “Techna Orbis” have concluded an agreement prohibited by the Law on Competition. The companies involved have agreed to submit concerted offers to the tender, have also agreed that the tender would be awarded to UAB “Blue Bridge” and acted as instructed by the company while preparing their tender bids. Upon agreement by the three companies UAB “Blue Bridge” performed the price calculations and the companies agreed that UAB “Blue Bridge” would offer the lowest price. As such agreement was effected UAB “Blue Bridge” in fact did not compete with UAB “Aideta” and UAB “Techna Orbis”, as the actions of the two companies created conditions for UAB “Blue Bridge” to become the winner of the PHARE tender for the procurement of information technologies equipment.

In the course of the investigation conducted by the Competition Council the companies concerned admitted having concluded a prohibited agreement. The companies acknowledged that for the purpose of implementation of the said agreement UAB “Blue Bridge” have drafted the tender bids for UAB “Aideta” and UAB “Techna Orbis”, have completed the specification tables and prepared the price calculations. Such actions of the companies constituted an infringement of Article 5 of the Law on Competition as par. 6 of the Article prohibits agreements between competitors to participate or not to participate, or to submit co-ordinated bids for public procurement contract, for tender or other procurement of a similar type.

In the entire experience of the Competition Council this acknowledgement by the companies was the first legal instance to have ever occurred in the investigation of prohibited agreements. However, the European Commission records acknowledgements of undertakings as common and comparatively frequently occurring instances of the competition law in the investigation of prohibited agreements. During 2002, the European Commission has received in the region of 30 acknowledgements, as an acknowledgement by the an undertaking infringing the Law on Competition entitles the company concerned to remission of sanctions imposed in relation to the infringement committed.

Article 43 of the Law on Competition of the Republic of Lithuania also provides for a possibility for undertakings parties to a prohibited agreement to avoid fines or expect the fines to be less severe provided they timely notify the Competition Council of the prohibited agreement. According to the Law on Competition a fine from LTL 3.000 to LTL 100.000 may be imposed upon an undertaking for the conclusion of prohibited agreement, and a fine of a larger amount may be imposed upon the undertakings in case the infringement was committed in aggravating circumstances, although not exceeding 10 percent of the infringing company’s gross annual income.

In its meeting the Competition Council passed the decision recognising the companies “Blue Bridge”, “Aideta” and “Techna Orbis” having committed an infringement of Article 5 of the Law on Competition, and imposed fines upon the companies concerned. For the purposed of establishing the amounts of the fines the Competition Council took into consideration the acknowledgements by the companies of the committed infringement of the Law on Competition, also their subsequent cooperation in the course of the investigation by providing the required information and explanations, also the fact that the gross market share accounted for by the companies was insignificant (merely 16 percent). Having regard to the fact that UAB “Blue Bridge” was the initiator and executor of the prohibited agreement, and its increased contribution to the infringement, the Competition Council decided to subject UAB “Blue Bridge” to a fine of LTL 50.000. As the other two companies’ role in committing the infringement of the Law on Competition was by far less significant, fines of LTL 20.000 and LTL 10.000 were imposed upon UAB “Aideta” and UAB “Techna Orbis” respectively.

Competition Council Spokesperson