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THE SACL UPHELD THE DECISION OF THE COMPETITION COUNCIL TO IMPOSE SANCTIONS UPON THE LITHUANIAN ASSOCIATION OF COMMUNICATION AGENCIES AND ITS MEMBERS

29 03 2011

“I am assured that the Panel of Judges of the Supreme Administrative Court of Lithuania (SACL) by awarding the appeal lodged by the Competition Council sent a clear message to all undertakings emphasising that any infringements of the Law on Competition and, in particular, prohibited agreements whereby competitors agree to coordinate their product and service prices are to be assessed as an attempt to violate the freedom of economic activity in the Constitution, and therefore shall not be tolerated, and the sanctions imposed for such infringements shall be of the character able detering other undertakings of such infringements. This was specifically the provision that guided the Competition Council in passing the Resolution whereby the Lithuanian Association of Communication Agencies (KOMAA) and its members were subjected to severe sanctions for the prohibited agreement on service prices (total amount of the fine reached LTL 3.4 m).It is very satisfactory to see that the SACL supported the view of the Competition Council", says Elonas Šatas, Head of the Law and Competition Policy Division of the Competition Council.

On 4 June 2009, the Competition Council adopted the Resolution concerning the compliance with the requirements of Article 5 of the Law on Competition of actions by 25 private limited companies providing advertising and media planning services and their Association.The Competition Council in this relation acknowledged that KOMAA and members of the KOMAA had concluded a prohibited agreement to require from organisers of tenders for the procurement of the advertising and media planning services to pay a LTL 3,000 fee for the submission of a proposal to the tender. By adhering to such actions the undertakings concerned had agreed, by avoiding any competition, to establish part of the price for the service procured from tender organisers.

By its Decision of 21 January 2010, the Vilnius Regional Administrative Court upheld the appeals lodged by KOMAA and its members and recalled the Resolution of the Competition Council. The SACL, however, after considering the arguments of the Competition Council, acknowledged that the Decision of the Vilnius Regional Court was unfounded, annulled the Decision and passed the final and unappealable Judgement whereby the Court acknowledged the validity and legality of the Decision of the Competition Council.

Although some of the members of the KOMAA were claiming that they had not participated in the decision-making process of the Association, the SACL, following the case law of the Court of Justice of the EU supported the view of the Competition Council that the membership within the Association (joining thereof) by itself presumes consent to the rules and decisions of the Association irrespective of whether or not the undertaking concerned was involved in passing the decisions.The SACL also supported the position of the Competition Council that also the companies, members of the Association, that did not adhere to the agreed prices are being considered as participants of the prohibited agreement where they had not clearly expressed their disapproval of the prohibited agreements thus making their decision not to adhere to the agreement obvious and clear to other participants of the agreement.

Although KOMAA and its members claimed it had never been their intent to restrict competition, and the Competition Council seeking to prove the existence of the prohibited agreement was obliged to provide evidence of the negative effect upon competition, in its Decision the SACL, consistently adhering to its previous practice supported the conclusion of the Competition Council that the establishment of the existence of the price fixing agreement provides a sufficient basis for arising of the liability under the Law on Competition, while the specific negative effect arising from or as a result of the agreement need not be established. The SALC also acknowledged that the Competition Council had correctly calculated and differentiated the sanctions imposed upon individual infringers. In the opinion of the Panel of Judges of the SALC the amounts of the fines (that ranged from LTL 2,500 to LTL 481,000) were reasonable and proportionate.

“The essence of competition lies in the possibility for each undertaking acting independently to decide concerning its behaviour in the relevant market.Prices in general are considered one of the most important conditions for competing, therefore any decisions related to prices should be passed by each undertaking independently”, emphasises Elonas Šatas, Head of the Law and Competition Policy Division.

The Competition Council hereby takes an opportunity to remind that according to Article 5 of the Law on Competition all agreements which have as their object the restriction of competition or which may restrict competition shall be prohibited and shall be void from the moment of conclusion thereof.Agreements between competitors to directly or indirectly establish product prices or other terms for purchase or sale, territorialy share the product market by groups of buyers or suppliers, or on other basis, fix production or sale volumes of certain goods, restrict technical progress or investment, apply dissimilar (discriminating) conditions to equivalent transactions with individual undertakings thus placing them at a competitive disadvantage are in all cases considered restricting competition. Please be also advised that all undertakings participating in prohibited agreements, seeking to be granted immunity for the infringement or to reduce the imminent sanctions may apply to the Competition Council to take advantage of the leniency programme.

Competition Council Spokesperson