SUPREME ADMINISTRATIVE COURT UPHOLDS COMPETITION COUNCIL‘S DECISION TO SANCTION SHIPPING AGNECY COMPANIES

On 7 April, the Supreme Administrative Court of Lithuania (the Court) approved the Competition Council‘s (the KT) decision concluding that Lithuanian Shipbrokers and Agents Association (the Association) and 32 association members entered into anticompetitive agreement on the application of minimum tariffs for shipping agency services. Even though the fines imposed on some of the contractors were reduced, the Court upheld the KT‘s position regarding the anticompetitive behaviour of the Association and its members.

On 8 December 2011, the KT issued a decision, according to which, the Association and its members had breached Article 5 of the Law on Competition and Article 101 TFEU. The KT found that an agreement among some of the Association members concerning minimum tariffs for shipping agency services had been in effect for more than a decade. Having set the prices, the contractors announced them in leaflets and on the Association’s website. Moreover, the Association’s Code of Ethics introduced sanctions for the application of notably lower than the recommended tariffs.

The Court held that free competition on prices is one of the major forms of fair competition, whilst price fixing impedes the development of results achieved through competitive processes.

“The ruling by the Court has once again confirmed that the decisions, whereby companies and associations set tariffs for goods and services, restrict competition and, thus, can be considered as serious infringement of competition. Having agreed on minimum tariffs, shipping agency companies deprived ship owners of their right to enjoy the benefits brought by competition.

The KT has prepared guidelines on the allowed and prohibited activities in associations and has been organising free seminars on the subject matter. The KT has evaluated actions of 11 associations since 2000 and we hope that this ruling will draw the attention of associations and encourage association members to enjoy the benefits of their membership without breaching competition law.” – says Elonas Šatas, Deputy Chairman of the KT.

The Court once again confirmed that the membership means acceptance of the rules and decisions issued by a certain association, therefore, the fact that an undertaking did not attend the meeting of association members or entered the association after the decisions had been adopted does not exempt the undertaking from liability.

The KT reminds that Article 5 of the Law on Competition and Article 101 TFEU prohibits agreements whereby contractors fix prices, production or sale volumes, share the product market on a territorial basis and other agreements that are restrictive of competition. The breach of Article 101 TFEU was established having evaluated the international trade importance of Klaipėda Sea Port. The gravity and duration of the breach were the major factors that determined the amount of fines imposed by the KT.

However, due to legislative changes concerning the order of setting fines, the Court reduced the fines imposed on some of the contractors. The Court adjusted the fines to meet the criteria of individualization and proportionality.