TEO LT FINED FOR THE INFRINGEMENT OF THE LAW ON COMPETITION

Having examined the findings of the completed investigation and heaving heard the statements by the representatives of TEO LT, AB, the Company (hereinafter – TEO LT, AB), the Competition Council passed the resolution whereby it recognised that the company had infringed the requirements of Article 9 of the Law on Competition prohibiting the abuse of a dominant position. The Resolution obligated TEO LT, AB to terminate the actions constituting an infringement of the competition law and within the established period adjust the terms for the provision of the ADSL access so that the direct or indirect imposition of unfair prices or other terms for the purchase of the service are eliminated. For the infringement of the Law on Competition the Company was subjected to a fine in the amount of LTL 3,011,000.

When considering the sanction for the infringement of Article 9 of the Law on Competition the Competition Council took due account of several circumstances. In principle, TEO LT, AB did not challenge the evidence established during the investigation conducted by the Competition Council and admitted to have infringed the law. Based on the findings of the investigation TEO LT, AB intends to assume specific obligations whereby it shall rectify the situation both in the wholesale and the retail DSL service market.

In the conclusions of the investigation that covered the period of 2002–2004 and 1Q 2005 the Competition Council established that during the period surveyed actions of AB Lietuvos telekomas (currently TEO LT, AB) in the relevant markets resulted in the imposition of unfair prices referred to as „margin squeeze“. One of the major objects of the investigation was the provision of the ADSL (the digital subscriber lines that allows more bandwidth downstream, – from the network to the customer site – than upstream) internet access service to the final users.

The services were provided on the basis of the wholesale AB Lietuvos telekomas ADSL internet access framework. The comparison of the prices for services providing by undertakings operating in the market revealed that in the retail market AB Lietuvos telekomas was rendering certain ADSL internet access services to its final users (households and business customers) at the prices that would be lower than the service provision costs if the service were rendered for the prices offered to other customers in the wholesale market. Such actions are to be treated as abuse of the dominant position by using margin squeeze. The Competition Council assessed such actions of AB Lietuvos telekomas as abuse of the dominant position in the relevant wholesale ADSL internet access market. Such actions to a large extent restricted the possibilities for other companies to compete in prices when providing services in the retail market to the final consumers.

The investigation concerning actions of AB Lietuvos telekomas was initiated in 2005, upon receipt of a request of UAB MicroLink Lietuva, UAB Baltnetos komunikacijos, UAB Tele 2, UAB Penki kontinentai, UAB Elneta and SE Infostruktūra. With some of these companies in 2002 AB Lietuvos telekomas had concluded the contracts concerning the provision of the wholesale DSL (digital subscriber lines) services. By applying to the Competition Council the applicants requested an investigation of certain actions of AB Lietuvos telekomas in the DSL service market: the imposition of unfair prices upon competing companies and application of dissimilar (discriminatory) terms upon undertakings in similar contracts.

This has been the third time, in the course of the several previous years, that AB Lietuvos telekomas was sanctioned for the abuse of the dominant position. In 2000, the Competition Council imposed a fine upon AB Lietuvos telekomas in the amount of LTL 150,000 for the infringement of Article 9 of the Law on Competition. In 2002, by the Resolution of the Competition Council AB Lietuvos telekomas was obligated to cease the actions infringing the requirements of Article 9 of the Law on Competition. The Company was then subjected to a fine in excess of LTL 2 m.