PALANGA CITY MUNICIPALITY IS OBLIGED TO ORGANISE A COMPETITIVE PROCEDURE FOR THE SELECTION OF A SWIMMING POOL MANAGER

Konkurencijos taryba has decided that the Municipality of Palanga (Municipality) infringed the Law on Competition by transferring the management of a swimming pool and the provision of various types of services, including commercial ones, without a competitive procedure, to its own institution Palangos investicijų valdymas.

During the investigation, Konkurencijos taryba found that the Municipality, without any competitive procedure, entrusted its institution with the unlimited provision of not only free of charge non-formal education services for children and young people (swimming lessons), but also with the provision of commercial services for the recreation of the residents (swimming in the swimming pool, public sauna, events), which accounted for a significant part of the municipality's revenues.

Palangos investicijų valdymas did not have to build the pool on its own – it was done with funds from the state investment programme and the budget of the Municipality. However, the mere fact that the swimming pool was built with a part of the municipality's investment does not mean that public services can be entrusted to a municipal body without a competitive procedure. In the view of Konkurencijos taryba, a transparent competitive procedure is the best way to find the most efficient way to manage an asset created with public funds.

Konkurencijos taryba stated that before entrusting the provision of services to its own institution, the municipality should have organised a tender or other competitive procedure, which would have assessed whether there were other business entities potentially capable of providing the services under the conditions set. Such a duty on municipalities has been emphasised by both the Supreme Administrative Court of Lithuania and the Constitutional Court. The courts have clarified that municipalities, in the exercise of their functions, must ensure the freedom of fair competition and must not take decisions which favour or discriminate against individual entities or groups of entities operating on the market and which result or may result in a difference in the conditions of competition between entities competing on the relevant market.

Having assessed all the circumstances established during the investigation, Konkurencijos taryba concluded that the Municipality of Palanga, by granting the right to its institution to provide services, including the commercial ones, without a competitive procedure, violated the Law on Competition by privileging its institution in relation to its competitors and by discriminating against the latter. It is precisely because of such decisions of the Municipality that differences in the conditions of competition may have arisen between economic entities on the market.

Konkurencijos taryba has obliged the Municipality to revoke the decisions or amend them in a way that would be consistent with the Law on Competition and to organise a competitive procedure for the selection of a pool management operator within 12 months from the date of publication of the decision. Since the case-law of the courts of the highest instance relevant to the present case has changed during the period of the infringement, it was decided not to impose a financial fine on the municipality.

The decision of Konkurencijos taryba may be appealed to Vilnius Regional Administrative Court within one month of its notification or publication on the authority's website.