KONKURENCIJOS TARYBA APPROVES COMMITMENTS BY LIETUVOS PAŠTAS

Lietuvos paštas committed to inform other postal service providers about any pricing changes in advance and not to create any obstacles to its competitors operating in the same market. Konkurencijos taryba decided that these commitments proposed by the company are appropriate and sufficient to eliminate the alleged infringement of the Law on Competition, therefore, the investigation into the abuse of dominance has been terminated.

The investigation was initiated after suspecting that the company abuses its dominant position by restricting competition in the market of business correspondence delivery services.

During the investigation the authority evaluated the pricing applied by Lietuvos paštas from 1 January 2016 and aimed to find out whether the company impeded competition by changing the tariffs applied to its business customers, including the postal service providers, and discouraged them from participating in public tenders. In order to provide postal services and deliver correspondence in the territory of Lithuania, other postal service providers must use the postal network operated by Lietuvos paštas. For using this network, operators are charged with a relevant fee which could be changed unilaterally by giving notice to the other party 30 days in advance. Awarded public contracts are usually signed for a long-term and any price changes during the implementation of the contract are forbidden, which means that the winners of the tenders have to apply the same price rate which was offered during the tendering process. Being able to change the rates applied to its competitors for the use of the postal network without notifying about it long enough in advance, Lietuvos paštas could increase the costs of its competitors' contracts and thus impede their implementation. For these reasons, the competitors of Lietuvos paštas were discouraged from participating in public tendering process and entering into long-term contracts.

In order to eliminate the expressed competition concerns, Lietuvos paštas offered commitments.

The company committed to announce new service rates on its website at least 3 months prior to their entry into force, ensuring that all market participants are simultaneously informed about the upcoming changes in tariffs, and have sufficient time to take this into account, as well as to consider any necessary future changes in pricing when preparing for public tenders.

In case of any changes in pricing, when participating in public tendering process Lietuvos paštas also committed to include the old and the new rates in the price calculation formula of the bids, taking into account their duration, and submit the average of these rates. For contracts concluded prior to the announcement of the new tariffs, Lietuvos paštas committed to apply a 21-month transition period, i. e. enable to finish the implementation of contracts at the previous rates. This commitment solves the problem of discouraging the competitors of Lietuvos paštas from participating in public tenders and ensures that the implementation of contracts would not be impeded. If Lietuvos paštas had existing public contracts subject to the previous tariffs after the transitional period has ended, these contracts would have to be terminated by the end of the transitional period, thereby ensuring that the company’s clients were not favoured against its competitors.

Having evaluated the opinions of the interested parties, Konkurencijos taryba acknowledged that the commitments offered by Lietuvos paštas are appropriate and sufficient to eliminate the alleged infringement of the Law on Competition, and thus terminated the investigation.

The decision of Konkurencijos taryba does not constitute an infringement of competition law, but obliges the company to comply with its commitments.

The largest postal service provider in the country will have to comply with the approved commitments for 5 years.

Failure to comply with the commitments may result in a fine of up to 10 per cent of the gross annual income for the preceding financial year.