THE APPROVED AGREEMENTS CONTRADICTED THE LAW ON COMPETITION

The Competition Council in its regular meeting examined and assessed the findings of the completed investigation and conducted a hearing of parties concerned, following which the Competition Council passed the appropriate decision. The decision resolved that item 1 of the Resolution No. I-1528 of 14 February 2007 of the Council of the Vilnius Municipality „Concerning the approval of the contract between the Vilnius Municipality and JCDECAUX LIETUVA UAB and the agreement concerning the advertising of the project “Vilnius – European Capital of Culture 2009” and the installation of the outdoor advertising boards in foreign countries" and other agreements approved by the relevant item of the Resolution  infringed the requirements of Article 4 of the Law on Competition. The Competition Council obligated the Council of the Vilnius Municipality not later than within 6 months to repeal the relevant item of its Resolution or amend it in a way that it does not contradict the requirements of Article 4 of the Law on Competition. Pending the fulfilment of this obligation the Vilnius Municipality was obligated to terminate the cooperation contract of 20 March 2007 between the Vilnius Municipality and JCDECAUX LIETUVA UAB and the concluded agreement concerning the advertising of the project “Vilnius – European Capital of Culture 2009” on the outdoor advertising facilities in foreign countries or to amend the provisions of the agreement so as to bring them into compliance with the requirements of Article 4 of the Law on Advertising.

The Competition Council initiated the investigation on the ex-officio basis in response to the application filed by the Baltic Association of the Outdoor Advertising Companies (BIRFA) and the applications of several outdoor advertising companies referred to the Competition Council by the Seimas Anticorruption Commission to examine the agreements between the Vilnius Municipality and JCDECAUX LIETUVA UAB of 20 March 2007 in terms of the compliance thereof with the requirements of Article 4 of the Law on Competition.

The Competition Council resolved that the Resolution passed by the Council of the Vilnius Municipality and the agreements concluded on the basis of the Resolution with JCDECAUX LIETUVA UAB granted privileges to the company and discriminated other undertakings. Under the cooperation agreement JCDECAUX LIETUVA UAB undertook an obligation to establish, maintain and operate a certain number of waiting pavilions, information columns and shop windows, public automatic toilets, and acquired a right to use the objects for the outdoor advertising purposes. Since the cooperation agreement was concluded without having announced a tender or applying any other procedure ensuring a fair competition between the undertakings, this did not lead to a creation of a competitive environment or the provision of equal possibilities for other undertakings to operate in the relevant market for the supply and the installation of the equipment for the outdoor visual advertising in Vilnius city. It was also concluded that certain provisions of the agreement created barriers for some, by then absolutely legitimately operating companies to continue their operations, or, under favourable conditions, to engage in such activities.

The agreement on the promotion of the project “Vilnius – European Capital of Culture 2009”, that had also been concluded without an announcement of a tender or applying other procedures ensuring fair competition between undertakings, largely limited the possibilities of other companies to operate in the relevant outdoor visual advertising  in the Lithuanian and foreign markets. This precluded the undertakings from competing in offering their services to the Vilnius Municipality by offering their services related to the advertising the project “Vilnius – European Capital of Culture 2009“. Under the agreement the Municipality, in exchange for the possibility to advertise in the stands managed by JCDECAUX LIETUVA UAB had granted the company a right to arrange and maintain the advertising boards on bridges and viaducts having disregarded that this could equally be performed by other companies operating in the relevant market. The agreement also included a clause whereby all authorisation held by JCDECAUX LIETUVA UAB were extended for another 10 years.

In the opinion of the Competition Council given that the agreements between the Vilnius Municipality and JCDECAUX LIETUVA UAB had been concluded for a considerable period of time (for, respectively 10 and 20 years), and JCDECAUX LIETUVA UAB is one of the leading advertising companies in Lithuania, a potential negative affect upon competition in the relevant market is significantly stronger. Provided the Municipality adheres to the principles of efficiency and cost-effectiveness that may be attained by announcing tenders or by virtue of other procedures ensuring fair competition a possibility would become available to select from several offers and the participant of the tender, by entering into mutual competition would be able to submit the most advantageous proposals.