THE ADMINISTRATION OF THE VILNIUS MUNICIPALITY OBLIGATED TO TERMINATE OR AMEND THE AGREEMENT

Having examined the findings and conclusions of the completed investigation the Competition Council acknowledged that Resolution No. 1-759 of 13 April 2005 of the Council of the Vilnius Municipality “On the procurement of services from UAB Rubicon Eventus for the purpose of organising the non-governmental events and the non-commercial events held by other organisations“ and the Agreement No. 14-90 of the Administration of the Vilnius Municipality of 19 August 2005 constitute an infringement of Article 4 of the Law on Competition of the Republic of Lithuania. The Director of the Administration of the Vilnius Municipality was obligated within the established time limit to terminate the premises lease agreement No. 14-90 of 19 August 2005 or to amend the provisions of Agreement to bring it into compliance with the requirements of Article 4 of the Law on Competition.

Article 4 of the Law on Competition contains a prohibition in respect of public and local authorities from adopting legal acts or other decisions which grant privileges to or discriminate against any individual undertakings or their groups and which bring about or may bring about differences in the conditions of competition for competitors in the relevant market, except where the difference in the conditions of competition cannot be avoided when the requirements of the laws of the Republic of Lithuania are complied with.

The investigation concerning the compliance of the actions of the Vilnius Municipality when purchasing the services from UAB Rubicon Eventus with the requirements of the Law on Competition had been previously initiated by the competition authority in April 2005. However, in October 2005, the Competition Council terminated the investigation, since pending its completion the Council of the Vilnius Municipality declared the resolution in respect of which the investigation was conducted invalidated. However, in 2006, upon receipt of the application from UAB Versenta the investigation was renewed on the basis of the newly obtained evidence: the revocation of the resolution of the Vilnius Municipality was a purely formal action that had no effect upon the actual situation in the relevant market, since in August 2006 the premises lease agreement No. 14-90 was concluded between the Administration of the Vilnius Municipality and UAB Rubicon Eventus that had not been revised or amended. This created the legal grounds for passing the decisions or resolutions that granted privileges to UAB Rubicon Eventus and discriminated other economic entities.

The Competition Council concluded that by obligating the Administration of the Municipality to purchase, annually, from UAB Rubicon Eventus services for LTL 1.5 m and thus ensuring the funding for a single economic entity the Council of the Municipality was creating different competition conditions for the undertakings operating in the relevant markets. All the more so that there are other undertakings operating in the relevant markets and able to provide comparable services. Therefore, for the purpose of holding the non-commercial events the Vilnius Municipality could rent the premises not only in the Siemens arena operated by UAB Rubicon Eventus but also from other companies, for instance, the entertainment arena Utena, the multi-purpose hall Sportima, centre Forum Palace and others. Since the agreement concerning the procurement of services from UAB Rubicon Eventus is to be considered as a long-term obligation (until 2012), it may have a potential affect upon other undertakings operating in the relevant markets in the future, while for the time being it definitely creates the exceptional conditions for a single entity by releasing it from the need to compete by quality and prices for the purpose of the generation of a considerable share of its revenues.