INVESTIGATION OF ACTIONS OF AB MAŽEIKIŲ NAFTA

Specialists of the Industry Division of the Competition Council introduced the findings of the investigation conducted concerning actions of AB Mažeikių nafta. The investigation was initiated in compliance of the requirements of the Law on Competition of the Republic of Lithuania; however, a suspicion having aroused in the course of the investigation that actions of AB Mažeikių nafta could have had an impact upon the trade among the EU Member States Lithuania, Latvia and Estonia, a decision was passed to extend the scope of the investigation in accordance with the provisions of Art. 82 of the Treaty establishing the European Community. The investigation was exceptionally extensive in its scope; drawing up of the findings required a comprehensive analysis of documents of AB Mažeikių nafta and undertakings trading in oil products, as well as collection of relevant explanations from the undertakings concerned. The competition authority also examined the information received from the relevant Estonian and Latvian as well as other institutions that has become instrumental in the assessment of the actions of AB Mažeikių nafta and of UAB „Mažeikių naftos“ prekybos namai (trading affiliate) while concluding the agreements with the companies engaged in trading in oil products.

The investigation concerning the compliance of actions of AB Mažeikių nafta in the period 2002-2004 with the requirements of the Law on Competition was started by the Competition Council with a view to establishing whether or not such actions could have had an impact upon the different prices of gasoline and diesel fuel in the markets of the Baltic States, also seeking to establish whether such differences could have been related to the infringements of competition and abuse by AB Mažeikių nafta in the market.

In accordance with the established procedure all interested parties will be made familiar with the findings of the investigation. Having received and examined response from the parties, in September, the Competition Council intends to pass the final decision concerning the issue. The investigation was conducted both in accordance with the requirements of the Law on Competition and the requirements of Art. 82 of the Treaty, and findings of the investigation proved that certain actions of UAB „Mažeikių naftos“ prekybos namai had an impact upon trade in gasoline between the EU Member States -Lithuania, Latvia and Estonia. In the view of the above and considering the possible infringement of the requirements of Art. 82 of the Treaty by AB Mažeikių nafta, the relevant notification will be submitted to the European Commission which will have a possibility to take it under its jurisdiction.

The investigation showed that fuel prices in Lithuania higher than those in Latvia and Estonia were caused both by objective reasons resulting from different conditions in individual areas of the markets of the Baltic States, as well as subjective factors. Possible price differences in the Baltic States might have also resulted from different rates in excise duties conversion, as well as in the view of the requirement imposed in Lithuania to accumulate the mandatory fuel reserves, freeze part of the funds, which necessitates a certain rise in the fuel prices. In this respect it should be noted that the Competition Council for several years had been seeking to reduce the previously applicable 15% customs duty imposed upon the imports of fuels (currently the duty is at the rate of 4,7% in respect of gasoline imported from third countries) which would facilitate the imports of less expensive fuels from neighbouring countries and enhance competition. In 2002-2004, imports of fuels in Latvia and Estonia were duty-free, and after the accession of the countries into the EU in May 2004, the customs duties in the three States were unified.

The investigation established a considerable amount of evidence and circumstances substantiating an alleged abuse by AB Mažeikių nafta and UAB „Mažeikių naftos“ prekybos namai through the applied strategy and pricing policies for the Lithuanian, Estonian and Latvian buyers, that could have had an impact upon the prices of fuels, as well as a variety of actions aimed at restricting trade which could have resulted in creation of dissimilar conditions for undertakings operating in the market and discrimination of certain individual undertakings. For that reason such undertakings might have been forced to market fuel to Lithuanian consumers at higher prices than to the Latvian and Estonian consumer. Certain actions establishing discriminating prices and purchase conditions might have incurred damage to buyers. Evidence of abuse of the dominant position by AB Mažeikių nafta established during the investigation allows a suspicion of an infringement of Art. 9 of the Law on Competition in the Lithuanian fuel markets, and in accordance with the provisions of Art. 82 of the Treaty establishing the European Community - in the fuel markets of Lithuania, Latvia and Estonia.