BY RESTRICTING COMPETITION BETWEEN NOTARIES, MINISTRY OF JUSTICE PREVENTS CONSUMERS FROM PAYING LESS FOR SERVICES

The Lithuanian competition authority Konkurencijos taryba has found the fixed and minimum rates of notary fees approved by the Ministry of Justice of the Republic of Lithuania to restrict the ability of notaries to compete on prices. Having failed to ensure the freedom of fair competition, the Ministry of Justice received a fine of EUR 45,000 and has been ordered to eliminate the infringement of the Law on Competition within six months from the authority’s decision.

The Law on Notaries stipulates that a notary charges a fee for the performance of notarial acts, drafting of transactions, consultations and technical services, the rate (tariffs) of which is set by the Minister of Justice, upon agreement with the Minister of Finance. The fee rate must guarantee a notary such income that would allow him to be economically independent, ensure adequate facilities for providing services to clients, employ the necessary staff and have a well-equipped office.

Konkurencijos taryba found that although the activities of notaries are strictly regulated, notaries carry them out in a self-employed capacity, receive remuneration for notary services, as well as bear all financial burden related to their activities, and are therefore considered economic entities. By setting the minimum and fixed notary fees, the Ministry of Justice, which regulates the notaries‘ activities, established regulation which restricted the abilities of notaries to compete on prices and thus breached the duty to ensure the freedom of fair competition foreseen by the Law on Competition.

The Ministry of Justice disputed the fact that notaries engage in economic activity and indicated that by setting fixed and minimum rates of notary fees the Ministry sought to ensure the economic independence of the notaries, as well as the quality and accessibility of their services. According to the calculations made by the Ministry, a notary should receive at least EUR 2,200 of net income per month to ensure his economic independence. However, the data provided by the Ministry showed that in practice the income earned by the notaries in Lithuania exceeded that number almost three times: in 2017 the average net income of all notaries constituted EUR 73,061 (EUR 6,088 per month), while in 2018 – EUR 78,282 (EUR 6,523 per month).

“Since the notaries are not able to compete on prices and introduce fees that would be smaller than those set by the Ministry of Justice, consumers are prevented from paying less for services“, said Šarūnas Keserauskas, Chairman of the Lithuanian competition authority.

Besides, Konkurencijos taryba did not find that getting rid of minimum and fixed notary fees would result in negative consequences, for example, unaffordability of the services for consumers, since the Ministry of Justice has also set the maximum rates of notary fees so that the notary services would not get expensive and be accessible to all persons.

Having assessed the gravity, duration and other circumstances relating to the infringement, Konkurencijos taryba imposed EUR 45,000 fine on the Ministry of Justice and ordered it to amend or repeal legal acts which have been found incompatible with the Law on Competition.

The decision of Konkurencijos taryba can be appealed to Vilnius Regional Administrative Court.