KAUNAS CITY MUNICIPALITY BOUND TO AMEND A SUBSECTION OF ITS RESOLUTION INCONSISTENT WITH THE LAW ON COMPETITION

In compliance with the judgement of the Supreme Administrative Court of Lithuania remanding the case for further investigation, the Competition Council held a session and considered findings of further investigation performed. Having specified market definition and considered circumstances established, the Competition Council held that subsection 24 of rules of waste processing approved by resolution of Council of Kaunas City Municipality of 27 September 2001 No 212, which provides that enterprises controlled by municipality, commissioned by the Council of Kaunas City Municipality for the purpose, shall collect and transport mixed municipal waste taken from residents, institutions and organisations, was inconsistent with requirements of Article 4 of the Law on Competition; whereas subsection 1 of resolution by the Council of Kaunas City Municipality of 30 May 2002 No 123, which commissioned UAB Kauno švara with processing of mixed municipal waste in the territory of municipality, was inconsistent with requirements of Article 4 of the Law on Competition. Taking into account the new rules on waste processing in Kaunas City, approved in March 2008, the municipality was bound to amend subsection 1 of resolution by the municipality of 30 May 2002 No 123 on processing of mixed municipal (domestic) waste within three months in a manner consistent with requirements of Article 4 of the Law on Competition.

Article 4 of the Law on Competition imposes obligation on public and municipal authorities to ensure freedom of fair competition. The said authorities are not allowed to pass regulations or other resolutions granting privileges and discriminating against specific economic entities or groups thereof, thereby causing or potentially causing different conditions in the field of competition in given market, with regard to competing economic entities. The Competition Council found that resolutions passed by Kaunas City Municipality, commissioning UAB Kauno švara with collection and transport of mixed municipal (domestic) waste and granting exclusive rights to provide service to the same, prevented potential service providers from entering the market and competing with the enterprise controlled by the municipality.

The Competition Council is of the opinion that Kaunas City Municipality, in course of organisation of waste processing system in Kaunas City, was also under obligation to ensure freedom of fair competition, only subject to restriction under extraordinary circumstances. The municipality was under obligation to, before granting exclusive rights to economic entity it controlled, evaluate possible provision of waste collection and transport services in competitive circumstances.