CONTRACT EXTENSIONS WITH PASSENGER ROAD TRANSPORT SERVICE PROVIDERS WITHOUT A COMPETITIVE PROCEDURE RESTRICTED COMPETITION
The Lithuanian competition authority Konkurencijos taryba has found that the Lithuanian transport safety administration (LTSA) infringed the Law on Competition when it extended contracts with 42 regular road passenger transport service providers without a competitive procedure, thereby restricting competition and impeding the entry of new market participants. The LTSA has been obliged to pay EUR 43,120 fine, terminate existing contracts with relevant carriers, as well as to organise an open competitive procedure.
Konkurencijos taryba found that specific intercity bus routes in Lithuania are currently operated by 43 private and municipal companies, out of which only 1 was selected through a competitive process, while the remaining contracts were simply extended in 2018. Such anti-competitive behaviour of the LTSA resulted in the privileges to incumbent market participants and distortion of competition in the market.
The LTSA attempted to justify its decisions to extend contracts by the Rules for the Issuance of Permissions to Provide Regular Road Passenger Transport Services, as approved by the Minister of Transport and Communications. The Rules stipulate that contracts with relevant carriers may be extended for up to 5 years if they adhered to the requirements of the aforementioned Rules and conditions of the existing contract. However, according to Konkurencijos taryba, before extending the contracts, the LTSA had to take into account the provisions of the Law on Competition and create equal competitive conditions for all market players (old and new ones), i.e. allowing to compete for the provision of passenger transport services.
“Although the Rules do not state that a competitive procedure has to be organised also in cases when contracts with carriers cease to be valid, the LTSA, which is responsible for organising and ensuring long-distance passenger transport services, has a duty to check the situation on the market and evaluate whether there are other potential market players willing and able to provide the aforementioned services“, – said Šarūnas Keserauskas, Chairman of Konkurencijos taryba.
The authority imposed EUR 43,120 fine on the LTSA for the infringement of the Law on Competition, as well as obliged the infringer to terminate existing contracts with 42 carriers and organise a new competitive procedure.
To prevent possible competition restrictions in the future, Konkurencijos taryba recommended to the Government to authorise the Ministry Transport and Communications to review the rules regulating the actions of a competent authority after the contracts with carriers expire, as well as examine the rules relating to the extension of contracts.
Konkurencijos taryba has terminated investigation into the compliance of the Rules approved by the Minister of Transport and Communications in 2006, finding no competition law infringement.
The authority‘s decision can be appealed to Vilnius Regional Administrative Court.