COMPETITION COUNCIL PRESENTS TO THE GOVERNMENT AND THE PUBLIC THE FINDINGS OF THE INVESTIGATION CONCERNING THE CHANGES IN THE FOOD PRODUCT PRICES

Having completed the investigation commissioned by the Prime Minister of the Republic of Lithuania concerning the changes in the food product prices the Competition Council presented its findingsdiv to the Government and the public. The purpose of the investigation was to identify the factors and reasons that have caused the recent changes in the food product prices. The findings of the investigation present the factual circumstances established during the investigation, and the analysis of the changes in the retail prices of food products and factors that have caused the changes.

The information collected in the course of the investigation substantiated the conclusion that the trend of the increasing retail food product prices has been observed not only in the Lithuanian, but also in other markets, therefore it cannot be designated as a problem limited to Lithuania only.

The conclusions also pointed out that a significant increase in retail food prices in view of the rise in the prices of production resources, and, on the contrary, the slow decrease of the prices in connection to the declining prices of production resources is not entirely uncharacteristic of competitive markets, and is not necessarily indicative of the existence of oligopoly markets or prohibited agreements. These developments are caused, inter alia, by the number of intermediaries operating in the food product chain, the competitive structure of the elements of the chain, differences in the negotiating power of the parties to the transaction; although, definitely, prices may be also affected by anticompetitive actions.

It is important to note, however, that the assessment of the changes in the key production resource prices and the changes in the wholesale and retail prices for dairy and grain products concluded that the changes in the resource prices alone do not fully account for the extent of the increase in the retail prices for dairy and grain products in the country.

Having considered that the information collected did not lead to the conclusion on the recent increase in the food product prices exclusively for objective economic reasons, rather than due to the weakened competition, the Competition Council, ex officio, initiated an investigation according to the provisions of the Law on Competition in order to assess whether or not a number of undertakings engaged in the production and/or marketing of food products have committed any actions prohibited by Article 5 of the Law on Competition (i.e., concerted actions or agreements) that could have possibly led to the increase in retail prices.

In the case concerned the data at the disposal of the Competition Council gave grounds to a reasonable suspicion that certain undertakings had infringed the Law on Competition. Such investigation is ordinarily started by a motivated Resolution of the Competition Council that may be appealed to the Vilnius Regional Administrative Court in the event the undertaking, in respect of which the investigation is initiated reasonably believes that the decision of the Competition Council was groundless. It is only in relation to the investigation concerning an infringement of the Law on Competition that authorised officers of the Competition Council, having obtained the authorisation from the court, may perform unannounced inspections in premises operated by undertakings.

The Competition Council confirms that its authorised officers, in performing the actions related to the investigations in question have already conducted the inspections at AB Kauno grūdai, UAB Malsena plius, UAB Vilniaus duona, UAB Mantinga and UAB Fazer kepyklos (investigation initiated according to Resolution No. 1S-172 of 21 September 2010 of the Competition Council), AB Pieno žvaigždės, AB Vilkyškių pieninė, AB Rokiškio sūris and UAB Rokiškio pienas, UAB Marijampolės pieno konservai and AB Žemaitijos pienas, and the Association Pieno centras of Lithuanian milk processing entities (investigation initiated according to Resolution No. 1S-178 of 1 October 2010 of the Competition Council). The inspections in question are still in progress with the authorised officers of the Competition Council inspecting retail trade enterprises. The mere fact that the authorised officers of the Competition Council conduct the investigations of the actions of the entities in question does not imply that the undertakings have infringed the Law on Competition, and shall have no effect upon the final decisions to be passed upon the completion of the investigation. The Competition Council respects the right to defence, and specifically the right to entities to be heard in the course of the investigation. The duration of the investigations launched may be affected by a number of factors including the complexity of each individual case, the scope of cooperation of the entities concerned and their recourse to the right to defence. However, fully realising the relevance of the investigations for public interests the Competition Council shall endeavour that these sufficiently complex, large scale and undoubtedly the investigations of highest priority order are completed within the shortest timeframe possible.

While approving the strive to increase the possibilities available to consumers to compare prices of different food products, since only better informed consumers are able to enhance competition among trade networks, the Competition Council speaks for the public announcement of the retail prices of part of the most common food products in selected trade networks and the average trade mark-up that they are subjected to.

Currently the Competition Council is also in the process of assessing the efficiency of the provisions of the Law on the Prohibition of Unfair Commercial Activities by Retail Trade Entities and, where necessary, will submit amendments to the Law prior to the term specified therein.