CARTEL IN THE PAPER MARKET

Having considered in its meeting the findings of the completed investigation and heard the case of the interested parties the Competition Council passed the resolution whereby the authority recognised that UAB Antalis Lietuva, UAB Libra Vitalis, UAB Lukas, UAB MAP Lietuva, UAB Schneidersöhne Baltija, the latter also representing UAB Papyrus Distribution, had committed actions whereby they infringed the requirements of Article 5 of the Law on Competition of the Republic of Lithuania and Article 81 of the Treaty establishing the European Community. The companies concerned were obliged to cease the actions constituting such infringements. Having considered the severity and the duration of the cartel, the prohibited agreement, also the fact of the equivalent actions of the companies in a concerted manner, the Competition Council resolved to impose the following fines: LTL 66,840 upon UAB Antalis Lietuva, LTL 194,850 upon UAB Libra Vitalis, LTL 22,730 upon UAB Lukas, LTL 161,130 upon UAB MAP Lietuva, and LTL 235,330 upon UAB Schneidersöhne Baltija (including the LTL 55,880 fine that would have been imposed upon UAB Papyrus Distribution if the merger with UAB Schneidersöhne Baltija had not been implemented). The total of the fines as determined by the competition authority imposed to all infringing companies – LTL 680,880.

- After the accession ofLithuania to the European Union with the subsequent enforcement of the EU competition rules this has been the second instance in the practice of the Competition Council that the authority recognised actions of the undertakings to constitute an infringement of the requirements not only of the Law on Competition of the Republic of Lithuania but also those of the Treaty establishing the European Community. “On the basis of the findings of a complex investigation we have concluded the infringement not only of Article 5 of the Law on Competition prohibiting all agreements the object whereof is to restrict competition or restricting or intending to restrict competition, but also that of Article 81 of the EC which prohibits agreements and concerted actions between undertakings in the common market or part which may affect trade between Member States”, - noted Rimantas Stanikūnas, Chairman of the Competition Council on the resolution passed by the competition authority.

The investigation of actions of undertakings trading in paper was commenced in 2004, ex officio by the Competition Council upon suspicion of a possible cartel agreement in the wholesale paper market. The investigation covered the period from 1999 to 2004. At that time, due to the certain conditions in the Lithuanian market the companies concerned faced virtually no competitive pressure from the part of competitors operating outside the boundaries of the Republic of Lithuania. Therefore the principal competitors within the domestic market, namely, Antalis Lietuva, Libra Vitalis, Lukas, MAP Lietuva, Papyrus Distribution and Schneidersöhne Baltija, holding up to 94-97 % of the market in wholesale trade of chalky and office paper could exercise considerable influence therein. Actions performed within the framework of the investigation established sufficient facts and evidence proving that the companies had been regularly exchanging information of confidential nature on the shares held thereby in the wholesale markets for chalky and office paper. This enabled them to obtain knowledge of and monitor the behaviour of their competitors thus forecasting the strategy employed by the competitors in the markets concerned which undoubtedly weakened competition therein. While each holding medium to marginal shares of the market concerned not sufficient for an individual company to exercise any market power, the concerted actions provided an instrument of control of the competition in the relevant markets concerned. Furthermore, companies Antalis Lietuva, Libra Vitalis, Lukas, MAP Lietuva Papyrus Distribution and Schneidersöhne Baltija, jointly holding major shares in the chalky and office paper markets and through the coordination of their actions for an extensive period of time could obstruct the entry into the Lithuanian market of new companies thus considerably diminishing their possibilities to compete on fair grounds.

The investigation has shown that the companies had been exchanging information on the volumes of sales of chalky and office paper in the market which enabled them to forecast the trends in the sales by each competitor. By knowing the pattern of the average growth of the markets concerned the companies were able to plan the wholesale procurements of chalky and office paper from suppliers with a view to maintaining the stable market shares and restricting the entry of potential competitors into the Lithuanian markets concerned. It has been established that the competing companies had been also regularly exchanging a wide range of information thus keeping themselves aware of each other‘s business status. By affecting each other‘s behaviour the companies waived their possibilities’ to take individual independent decisions as to their behaviour, while that being a vital precondition for the promotion of competition in the market.

Both the competition rules of the European Union and the provisions of the Law on Competition of the Republic of Lithuania prohibit any cooperation and exchange of information on prices, price developments, market shares and the evolution thereof among competitors especially within associations of companies producing similar products. Such „coordination” of actions is deemed equal to cartel agreement.