ENEFIT MAY HAVE INFRINGED THE LAW BY TAKING OVER CONTRACTS OF EGTO ENERGIJA CUSTOMERS WITHOUT THE APPROVAL OF THE COMPETITION COUNCIL

The Competition Council has completed its investigation into the implementation of an unnotified concentration and sent a Statement of Objections (SO) to Enefit, an electricity supplier, for a possible infringement of the Law on Competition.

The SO indicates that on 18 September 2023, Enefit entered into a transaction with EGTO energija and took over the latter's retail electricity supply contracts with its customers, without first obtaining the authorisation of the Competition Council. 

On September 27, 2023, in response to the information about the transaction that appeared in the media, the Competition Council requested the undertakings to provide explanations as to whether the implementation of the deal violated the requirements of the Law on Competition. The merger notification was received by the Authority on November 23, 2023, and the transaction was cleared on December 21. However, having assessed the fact that the parties had only submitted the notification and received clearance after the actual implementation of the merger, the Competition Council initiated an investigation into a possible breach of the Law on Competition.

The investigation established that the companies were obliged to notify the planned transaction and obtain clearance from the Competition Council. Each of the undertakings involved in the merger had revenues in Lithuania exceeding EUR 2 million in 2022 and their combined revenues exceeded EUR 20 million, thus exceeding the total revenues of the parties to the transaction as provided for in the Law on Competition.

On May 16, 2024, Enefit submitted a statement of acknowledgment of a violation, indicating that by taking over the electricity purchase-sale contracts of EGTO energija, it implemented a concentration that should have been reported to the Competition Council before it began, but it did not do so.

The ex-ante merger control mechanism in the Competition Law is designed to ensure that the concentration does not adversely affect competition and its structure. It is therefore essential that mergers are carried out only after the Competition Council has assessed the impact of such transactions. This is why the implementation of a concentration without notification to and clearance by the Authority is considered a serious infringement.

The Merger Supervision Group proposes to recognise that Enefit has infringed the Law on Competition by implementing the merger without notifying the Competition Council and without obtaining its permission. For this violation, the company is proposed to be fined as stipulated by the law.

The interested parties, after having taken into consideration the material collected and the assessment carried out by the Authority's investigators, have the right to submit their arguments in writing to the Council and to make an oral presentation at the hearing before the Competition Council adopts a final decision on the possible infringement and imposes financial penalties.

The SO does not constitute a final decision of the Competition Council and in no way restricts the right of the Competition Council to arrive at a different conclusion in the final decision than that proposed in the Group's Statement.