THE COMPETITION COUNCIL SANCTIONS EVENT ORGANISERS AND THEIR ASSOCIATION FOR A PROHIBITED AGREEMENT

The Competition Council passed the Resolution concerning the compliance of several undertakings rendering event organisation services and the Association of Event Organisers (hereinafter – ROA) with the requirements of Article 5 of the Law on Competition (prohibited agreements). The actions of a number of undertakings – companies engaged in the activity of event organisation – were assessed as an infringement of the Law on Competition being a prohibited agreement between competitors on price fixing. Having duly examined the findings of the investigation and assessed the arguments presented by the undertakings the Competition Council arrived at a conclusion that ROA and its members – companies providing event organisation services in Lithuania – UAB Alchemic, UAB Anoniminių darboholikų klubas, UAB Concept Events & Media, PE Pirmoji kava and UAB Saldo grupė had concluded a prohibited agreement to introduce a fixed-amount tender fee to be charged upon the organisers of tenders for procurement of event organisation services thus infringing the requirements of Article 5 of the Law on Competition. For the infringement of the Law on Competition the competition authority imposed the following fines:  UAB Alchemic – LTL 9,300 , UAB Anoniminių darboholikų klubas – LTL 35,200, UAB Concept Events & Media – LTL 45,300, PE Pirmoji kava – LTL 39,000 and UAB Saldo grupė – LTL 22,200. ROA and other companies charged with the infringement were obligated by the Competition Council to terminate the infringement where it was still continued.

The investigation was initiated by the Competition Council ex officio in February 2008 with a view to analysing activities companies engaged in provision of event organisation services in the Republic of Lithuania. The investigation enabled the Competition Council to obtain and collect sufficient evidence that the Association of Event Organisers and its members had been communicating on the issue of the tender fee, and that a meetings of the Board of ROA introduced a tender fee in the amount of LTL 2,008. Having regard to the findings of the investigation the Competition Council concluded that the decisions concerning the tender fee by the undertakings engaged in the event organisation activity were taken acting in concert which represents actions infringing fundamental principles of fair competition.

The fixed amount tender fee (LTL 2,008 incl. VAT) was to be charged in respect of event organisation procurement tenders of any type, scope or duration irrespective of the costs incurred in relation to the preparation of a tender offer incurred by the undertaking. Having regard to the terms of application of the tender fee a conclusion may be drawn that the tender fee represents a fixed amount charge for the service provided by event organisers, i.e., the preparation of tender offer for the customer who intends to acquire the event organisation service by way of tender. The agreement between ROA and its members concerning the fixed amount fee of LTL 2,008 severely infringes the interests of users of event organisation services, since the payment of the fee on the basis of the agreement between ROA members artificially increases the costs of tender organisers which eventually will be passed to the final consumer of the service.

Having assessed the agreement between ROA and its members concerning the introduction of the LTL 2,008 tender fee the Competition Council concludes that the undertakings, i.e., each individual member of ROA providing event organisation services had to independently decide concerning application or refusal to apply such fee, as well as its specific amount. In respect of such tender fee each undertaking is to take an independent decision, i.e., within a tender each individual undertaking should independently decide whether or not to apply the tender fee, and where a decision to apply is taken, the undertaking should independently resolve concerning the amount of such fee having considered the costs of the preparation of tender offer, its reputation and other criteria. In this particular case the restrictive effect and the infringement of the Law on Competition specifically stemmed from fact that concerning the fee and further its application members of ROA agreed jointly by taking the relevant decisions and further enforcing them.

Having stated the infringement of the Law on Competition committed and imposing the fines (the amount of the fine for the severity of the infringement constitutes 1 percent of the total annual income of an undertaking for 2007), the Competition Council considered certain circumstances extenuating the liability. In this respect account was taken of the duration of the infringement, furthermore, at the meeting of the Competition Council UAB Alchemic, UAB Anoniminių darboholikų klubas and PE Pirmoji kava essentially acknowledged to have infringed the Law on Competition, therefore the amount of the fine in respect of these undertakings was reduced by 10 percent. Having considered the economic situation in the event organisation market in Lithuania, also being guided by principles of justice and proportionality in respect of the imposition of fines the Competition Council additionally reduced the fines by 10 percent in respect of all undertakings concerned.