THE COMPETITION COUNCIL SANCTIONS TEN DISTRIBUTORS OF AUDIOVISUAL PRODUCTION FOR THE PROHIBITED AGREEMENTS

The Competition Council passed the decision concerning the compliance of actions by a number of companies manufacturing and trading in audiovisual production with the requirements of Article 5 of the Law on Competition of the Republic of Lithuania.

The Competition Council concluded that some of the companies engaged in the distribution of audiovisual production had concluded restricting agreements to establish (fix) the resale prices of movies recorded in digital versatile discs (DVD) and video home systems (VHS) for home use.

Having assessed all circumstances and facts related to the investigation the Competition Council imposed the following sanctions: UAB Bomba – LTL 18,300; UAB Computer data international – LTL 21,600; UAB Elektromarktas – LTL 30,500; UAB Forum Cinemas Home Entertainment – LTL 385,400; UAB GPP – LTL 104,200; BĮ UAB Interatlas – LTL 107,000; UAB Media Incognito – LTL 21,200; UAB Palink – LTL 312,400; UAB Pigu – LTL 1,200; UAB Play prekyba – LTL 20,700. The companies concerned were obliged by the Competition Council to forthwith terminate the infringement of the Law on Competition where the infringement was still continued. It has been also acknowledged that UAB Ronus had also been a party to the infringement, however, the company was declared bankrupt, and there being no successors of its rights, no sanction was imposed thereupon.

Although the investigation also covered the actions of other eighteen companies, no sufficient evidence or the composition of an infringement of the Law on Competition was established therefore in respect of these companies the investigation concerning the alleged participation in prohibited agreements was terminated.

The evidence collected in the course of the investigation enabled the Competition Council to draw up the conclusion that UAB Forum Cinemas Home Entertainment (that should be considered the initiator of the agreements) had concluded the agreements with other companies (in selected cases the parties even concluded written agreements confirmed by their official stamps, thus declaring the common will of the participants) concerning the conditions for marketing films. Thus the companies established conditions materially restricting competition, i.e., by imposing the restrictions upon entities to independently establish the prices of the goods marketed to third parties. The investigation covered the period 2006-2009.

As was established in the Resolution passed by the Competition Council in this connection the sanctions were imposed upon a number of companies engaged in the distribution of audiovisual production that in connection to marketing the goods to third parties applied (with minor tolerable deviations in the case of UAB Forum Cinemas Home Entertainment) the prices fixed in the agreements with the latter company. Furthermore, the Competition Council did not establish any evidence that any of the undertakings participating in the prohibited agreement (except UAB Ínteratlas) had intentionally deviated from the agreement on price fixing.

While concluding the infringement of Article 5 of the Law on Competition the Competition Council acknowledged that the investigation produced sufficient evidence that the agreements between the undertakings to fix prices for certain goods or determine the purchase or sale prices did or could restrict competition in the relevant market. Any agreements the object whereof is to restrict competition by such measures as price fixing are considered specifically detrimental, as they affect competition directly: as a result of such price fixing consumers are charged more.  Price competition is extremely important, therefore it is absolutely obvious that the statutorily prohibited agreements between the wholesale supplier and the retail suppliers regarding movies marketed in DVD and VHS format restrict the possibilities of the buyer (retailer) to independently establish the sale price which constitutes the infringement of the requirements of Article 5 of the Law on Competition, as the agreements by their objective are restrictive and adversely affect competition. 

When assessing the nature of the infringement the Competition Council duly considered that the agreements whereby the undertakings established (fixed) the resale prices are to be considered as hardcore infringements of the Law on Competition. However, when imposing the sanctions the Competition Council was guided by the principles of justice and proportionality. In this relation the Competition Council took into account the fact that the distribution of films recorded in digital video versatile discs and video home systems for some companies was only an auxiliary activity, and assessed the amounts of the illegitimate proceeds generated by the companies by engaging in the established infringement. The Competition Council carried out a comprehensive assessment of the nature and scope of the infringement, all the circumstances alleviating (acknowledgment of the commitment, the will to eliminate the damage caused thereby, and terminate the consequences caused by the infringement), and aggravating circumstances (obstruction to the investigation), the duration of the infringement in respect of each individual undertaking and a number of other factors.