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FINE IMPOSED UPON AB LIETUVOS PAŠTAS FOR THE INFRINGEMENT OF THE LAW ON COMPETITION

05 01 2006

The Competition Council examined the findings of the completed investigation concerning the compliance of actions by the Lithuanian post office AB Lietuvos paštas to the requirements of the Law on Competition. Having arranged for the hearing of explanations offered by interested parties the authority passed the resolution concerning the issue considered. The resolution of the authority stipulated that actions of the AB Lietuvos paštas whereby discriminatory rates have been established in respect of an undertaking operating under equivalent conditions with another undertaking, constituted an infringement of provisions of Art.9 of the Law on Competition providing for the prohibition to abuse a dominant position. For this infringement a fine in the amount of LTL 80,000 was imposed upon AB Lietuvos paštas.

The investigation concerning the compliance of actions of AB Lietuvos paštas with the requirements of the Law on Competition was initiated upon a request of UAB Biznio mašinų kompanija (BMK) to examine whether actions of AB Lietuvos paštas by establishing dissimilar delivery rates contained any features of the abuse of a dominant position. The investigation thoroughly examined all circumstances related to the tender announced by the Lithuanian energy company UAB Vilniaus energija for the procurement of the combined services of invoice printing, folding and enveloping and the delivery of mail parcels to the addressees within the city of Vilnius. Besides AB Lietuvos paštas, printing, folding and enveloping services can be provided by several other companies operating the necessary equipment. However, such companies must provide another, very closely related service, - the delivery of invoices to the customers at a triple price in cases where the weight of the mail parcel fall within the limit reserved for AB Lietuvos paštas. For that reason the latter was the sole provider of the delivery service at lower rates. Companies participating in the tender launched by UAB Vilniaus energija could submit rates consisting of two parts: the rates for printing, folding and enveloping of invoices to be performed by the tendering companies themselves and the rate for the delivery mail offered to the tenderers by AB Lietuvos Paštas.

With an intention to submit an offer for the tender UAB Biznio mašinų kompanija applied to AB Lietuvos paštas seeking cooperation and requested rates for the delivery of envelops within the city of Vilnius. AB Lietuvos paštas however, did not provide such rates as requested on the grounds that it itself was participating at the tender, therefore eventually UAB Biznio mašinų kompanija (BMK) was able to offer only the rates fixed as contracted with AB Lietuvos paštas on the provision of post services. Another tenderer in addition to the above companies was the national settlement centre UAB Nacionalinis atsiskaitymų centras. AB Lietuvos paštas, having offered the price for the printing, folding and enveloping of mail similar to that of its competitors, offered a 1,5 times lower delivery rate. AB Lietuvos paštas was able to offer a rate more attractive than that of its competitors being aware of the rates that could be offered by the other two tenderers those being parties to the agreement on the provision of universal post services concluded with AB Lietuvos paštas. Thus AB Lietuvos paštas could acquire a significant advantage by virtue of its ability to offer much more attractive rates than those offered by other tenderers subject to the biding agreement with AB Lietuvos paštas on the provision of mailing services.

The Competition Council concluded that by such actions AB Lietuvos paštas was abusing its dominant position in the market for the reserved post services and was seeking to strengthen its position and foreclose its competitors from another closely related market, - that of printing, folding and enveloping of invoices.

Competition Council Spokesperson