KT REJECTS SUSPICIONS ABOUT EXCESSIVE PRICES OF LIQUEFIED PETROLEUM GAS

The Competition Council (Konkurencijos taryba, KT) refused to launch investigations on the actions of AB Suskystintos dujos and UAB Saurida compliance with the requirements of Article 7 of the Law on Competition, according to which, an undertaking that holds a dominant position within the relevant market is prohibited from abusing it. The KT adopted such decision after having examined the data provided by the undertakings, i. e. the data concerned with the prices of central liquefied petroleum gas supply (central gas supply, gas), and having determined that there are no evidence that the undertakings are applying excessive prices in the sense of competition law.

The KT carried out such investigations, having received several municipalities’ requests to evaluate undertakings’ decisions to increase the price of central liquefied gas supply to consumers.

The KT notes that the size of the price, applied by the dominant undertaking, itself does not indicate that the price is unfair (excessive) and that the undertaking applying such price infringes the requirements of the Law on Competition. The abuse of a dominant position is established only when the price has no reasonable relation to the economic value of the product.

When evaluating the prices applied by AB Suskystintos dujos from 1 Frebruary 2013, the KT took into consideration the expenses of the undertaking and the fact that its activities performed in 2011 – 2012 were loss-making. Moreover, having determined the aforementioned prices, in 2013 the predicted mark-up of the undertaking’s profit will be up to 10 per cent. The aforementioned circumstances do not allow predicting that the prices applied by AB Suskystintos dujos may be unfair (excessive) in the sense of competition law.

When evaluating the gas prices applied by UAB Saurida from 1 December 2012, the KT compared average monthly bills for the gas received by the clients of UAB Saurida and AB Suskystintos dujos and determined that the average bill for the gas received by the client of UAB Saurida is 20 per cent higher than the one received by the client of AB Suskystintos dujos. Taken into consideration the fact that UAB Saurida is planning to carry out repair works and renovation of a pipeline and its equipment as well as the additional expenses resulting from the latter activities, the KT decided that the expenses of UAB Saurida when selling analogical products may be higher then the expenses of AB Suskystintos dujos, and the established difference between the prices applied by UAB Saurida and AB Suskystintos dujos does not allow to suspect that the prices applied by UAB Saurida are unfair (excessive) in the sense of competition law.

It is important to note that on 1 July 2013 amendments to the Energy Law of the Republic of Lithuania came into force. According to the amendments concerned, the prices of central liquefied gas supply are subject to control. Pursuant to the methodologies of determining prices confirmed by the National Commission for Prices and Energy, the undertakings that supply gas have to prepare the project of prices and the foundation for the pricing confirmed by the National Commission for Prices and Energy. The present prices for gas will be valid until 1 December 2013.

Notice

The undertakings are prohibited from abusing their dominant position within a relevant market by performing any acts which restrict or may restrict competition, limit, without due cause, the possibilities of other undertakings to act in the market or violate the interests of consumers. One of the forms of abuse of dominant position is the direct or indirect imposition of unfair prices or other unfair conditions of purchase or sale (Law on Competition, Article 7).

Communication Division