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THE MUNICIPALITIES OBLIGATED TO AMEND THE RESTRICTIVE PROVISIONS RELATED TO THE ACTIVITIES OF REGIONAL WASTE MANAGEMENT CENTRES

24 12 2008

Having examined and assessed the findings and conclusions of the completed investigation the Competition Council acknowledged that the provisions of some of the decisions passed by selected Municipalities and the agreements concluded on the basis thereof, to the extent related to the delegation of the municipal waste recovery and disposal functions to the regional waste management centres (RWMC) without ensuring equivalent competition conditions for other undertakings to provide the services contradict the requirements of Article 4 of the Law on Competition of the Republic of Lithuania.

The Competition Council concluded that Klaipėda city Municipality, Kretinga region Municipality, Neringa Municipality, Palanga Municipality, Skuodas region Municipality, Šilutė region Municipality, Akmenė region Municipality, Joniškis region Municipality, Kelmė region Municipality, Pakruojis region Municipality, Radviliškis region Municipality, Šiauliai city Municipality, Mažeikiai region Municipality, Plungė region Municipality, Rietavas Municipality and Telšiai region Municipality had passed the decisions and/or concluded the agreements on the basis of such decisions whereby the Municipalities, without having launched a tender or any other procedure facilitating competition, had delegated the provision of the municipal waste recovery and / or disposal services to, respectively, the regional waste management centres Klaipėdos regiono atliekų tvarkymo centras, UAB, Šiaulių regiono atliekų tvarkymo centras, PE and Telšių regiono atliekų tvarkymo centras, UAB on exclusive rights. Thus the Municipalities concerned granted privileges to the regional waste management centres and discriminated other undertakings capable of providing identical services thus creating dissimilar competition conditions in the relevant markets. These municipalities failed to ensure the conditions conducive to fair competition among the undertakings prior or following the granting of the exclusive rights to the RWMC, since the municipalities failed to provide to other undertakings a possibility to benefit from competition conditions identical to those available to the regional waste management centres and the possibilities ensured by fair competition in a relevant market.

By its resolution the Competition Council obligated the municipalities concerned to amend the provisions of their decisions and / or the agreements concluded on the basis of such decisions to bring them into line with the requirements of Article 4 of the Law on Competition of the Republic of Lithuania. The Municipalities were also proposed to revise all their decisions related to the municipal waste management (for example, the waste management rules) to the extent their provisions are related to the delegation of the waste recovery and disposal functions to the regional waste management centres, and in case of any contradictions between the provisions and Article 4 of the Law on Competition, to amend the provisions accordingly. The obligations of the Competition Council will have to be fulfilled by the Municipalities within 6 months.

The investigation was conducted on the basis of a request of the Lithuanian Association of Utility Services and Waste Managers guided by a suspicion that the decisions of the Municipalities whereby the RWMC were granted the rights not only to perform the administrative functions of the waste management systems but also to engage in the economic activity of waste management (waste recovery, delivery, utilisation and disposal) might infringe Article 4 of the Law on Competition.

Article 4 of the Law on Competition prevents public and local authorities from adopting legal acts or other decisions which grant privileges to or discriminate against any individual undertakings or their groups and which bring about or may bring about differences in the conditions of competition for competitors in the relevant market, except where the difference in the conditions of competition cannot be avoided when the requirements of the laws of the Republic of Lithuania are complied with.

Having assessed the findings of the investigation the Competition Council arrived at the conclusion that the municipalities, by passing their decisions without launching a tender procedure or other procedures facilitating competition to delegate the functions of municipal waste recovery and disposal to the RWMC failed to ensure freedom of competition to other undertakings capable of rendering identical services. The RWMC were granted exclusive rights to engage in the economic activity of recovery and disposal of municipal waste in the territories of respective regions. The granting exclusive rights to a single undertaking deprives the other undertakings of a possibility to enter a relevant market or such other undertakings are forced to withdraw from it, while the privileged undertakings face virtually no competition. Furthermore, the undertaking that has been granted the exclusive rights becomes privileged in relation to other undertakings and can enjoy exclusive rights to operate in the relevant market. In view of the entirety of the circumstances other undertakings were deprived of the possibility to enjoy the competition conditions identical to those available to the RWMC to provide the municipal waste recovery and disposal services in the relevant markets of Klaipėda, Šiauliai and Telšiai regions. The granting of the exclusive rights to the RWMC without a tender procedure not only failed to ensure fair competition for all undertakings providing or capable of providing identical services, but also prevented them from availing themselves of the possibilities ensured by fair competition in the future as the exclusive rights had been granted for an indefinite period of time.

By signing the RWMC establishment agreements the municipalities had undertaken to create the regional waste management system with the regional landfill as its operational centre. However, granting the RWMC, without launching a tender procedure, the exclusive rights to operate the landfills and render the waste management services created absolute barriers to the other undertakings operating in the market which constituted an infringement of Article 4 of the Law on Competition. The RWMC could be assigned as a mandatory task to perform the waste management functions only there being no other possibilities to ensure the continuity and the availability of the municipal waste management service there being no other undertakings operating in the market.

Competition Council Spokesperson