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THE NERINGA MUNICIPALITY COUNCIL WILL HAVE TO AMEND CERTAIN PROVISIONS ON LOCAL CHARGE RELIEFS

13 12 2007

The Competition Council in its meeting examined and assessed the findings of the completed investigation and resolved to acknowledge that items 1.2 and 1.9. of the Procedure for the relief from the local charges for the permission to enter by mechanical vehicles into the State protected territory of the Kuršių Nerija National Park territory under the administration of the Neringa municipality approved by Resolution No. T1-271 of 27 December 2004 of the Neringa Municipality Council, to the extent they concern the operations of the undertakings operating in the relevant market, constitute an infringement of the provisions of Article 4 of the Law on Competition. Article 4 of the Law on Competition establishes the duty of public and local authorities to ensure freedom of fair competition. The Competition Council obligated the Council of the Neringa Municipality to amend the relevant items of the Procedure for the relief from the local charges to bring them into line with Law on Competition.

Considering the status of natural and legal persons of Neringa that resulted from the geographical position of the Neringa town and the granting to the territory of the national park status, the exemption from the local charges has been introduced with a view to easing up the conditions for the residents of the territory and equalising the competitive conditions for the undertakings operating in the continental part of Lithuania and Neringa. The Competition Council initiated the investigation with the purpose to clarify whether the certain items of the regulations on the local charges and the reliefs for the local charge payers could be considered discriminatory in respect of certain undertakings operating in the relevant market.

Item 1.2 on the Procedure on the reliefs provides for a relief being granted to the representatives of the legal persons running the registered office in the Neringa municipality territory upon producing a permit to enter the territory of Neringa by car, or by bus, or a freight vehicle with the marking "For business” and the vehicle registration certificate. The relief under item 1.9 is granted to long-distance passenger busses.

Whereas the undertakings (agencies) engaged in the provision of services to the incoming and local tourists normally rent busses from other undertakings (carriers), or, if possible, use their proprietary vehicles. In cases the rented vehicle is owned by a legal person other than registered in Neringa municipality the agency is charged the entry fee for entering into Kuršių Nerija of LTL 100 or LTL 70, depending on the season. Where the rented vehicle belongs to a legal person registered in Neringa municipality or when carrying the passengers on a long-distance route vehicles, the agency is exempted form the local charge. Although preferring the services provided by carriers registered in Neringa municipality the agencies have to deal with limited capacities of these carriers, particularly in summer seasons (since there are only two such undertakings in Neringa). For that reason the agencies are forced to procure the required services not only from Neringa and Klaipėda registered carriers, but also from other national carriers. The findings of the investigation showed that in cases of the use of the services of other carriers the entry fee is charged upon the agencies, rather than the carriers, thus transferring the costs upon passengers.

Price is one of the most important factors for the selection of the carriers by the agencies, therefore the carriers that are able to offer a lower service price definitely acquire certain competitive advantage. To conclude, by introducing the local charge reliefs the Neringa municipality Council ensured a certain competitive advantage to the carriers registered in the Neringa municipality enabling them to offer a lower price in comparison with, for instance, the carriers registered in Klaipėda city or Klaipėda region and thus created different competitive conditions for the undertakings operating in the same market.

Competition Council Spokesperson