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ASSESSING THE IMPACT OF THE WORK OF THE COMPETITION COUNCIL: BENEFITS TO CONSUMERS ARE OBVIOUS

06 10 2011

In accordance with international best practice the Competition Council for the first time carried out an impact assessment of its activities on consumers. The published results demonstrate that the benefits provided to consumers as a result of the activities of the Competition Council are more than forty times higher than the annual budget of the institution.

The main function of the Competition Council is enforcing the Law on Competition of the Republic of Lithuania and implementing competition policy in Lithuania. While conducting its activities the Competition Council aims at creating direct financial benefits to consumers.

The evaluation of the impact of the activities of the Competition Council was conducted in accordance with the methodologies established by the top competition authorities around the globe and the recent academic literature. The basis for the assessment was the methodology used by the Office of Fair Trading of the United Kingdom (the OFT).

The objective of the following impact assessment is twofold. First, this document is a means of external accountability, which enables the society to assess the activities of the Competition Council and directly see the benefits brought by its work. Second, having regard to the objective of the Competition Council to prioritise its work and concentrate on conducting investigations in the areas where solving the competition restriction problems would provide the highest benefits to consumers, the methodology provided in this document will be used as an integral part of the Competition Council‘s decision making process when an issue of whether to open an investigation arises.

According to Matthew Bennett, director for economics at the OFT, who is also a foreign expert advising the Competition Council, impact assessment is crucial both as a means of informing consumers about the benefits as well as allowing the institution to monitor its activities and take up investigations capable to create the most significant positive impact. As Mr. Bennett says, „The methodology of the OFT was developed by a team of economists and sociologists and the positive impact results have already been published in the UK 6 times, therefore we are glad that the Lithuanian Competition Council has chosen to apply the OFT‘s methodology. In my opinion, the consultations with the OFT experts have ensured the quality and the conservative nature of the published results and I hope that such impact assessment will become a common practice for estimating the benefits to consumers“.

This document provides the assessment of the direct and indirect benefits to consumers created by the Competition Council during the period between 2008 and 2010. Although the benefits assessment was based on conservative assumptions and rules, the results, however, obviously show that the total benefits created to consumers as a result of the work of the Competition Council constitute from LTL 154,76 m to LTL 921,22 m depending on whether only direct financial benefits to consumers are assessed or whether the fines collected by the Competition Council and the benefits resulting from deterrent effect of the activities of the Competition Council are also included. Having compared these sums with the budget allocated to the Competition Council in 2008-2010 that constitutes LTL 11,2 m (on average LTL 3,7 m per year) it could be observed that just the direct benefits provided to consumers exceed the Competition Council’s annual budget by 42 times.

These and other numbers and figures can be found in the material of the impact assessment published on the Competition Council’s website.

Competition Council Spokesperson