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VILNIUS MUNICIPALITY FAILS TO ENSURE THE FREEDOM OF FAIR COMPETITION WHEN PROVIDING PUBLIC PASSENGER TRANSPORT SERVICES

21 06 2013

On 19 June the Competition Council (Konkurencijos taryba, KT) acknowledged that Vilnius Municipality (Municipality) had failed to comply with the requirements of Article 4 of the Law on Competition by authorising UAB Vilniaus viešasis transportas to provide public passengers transport services without competitive procedure and by failing to evaluate the abilities as well as to create the conditions for other operators providing passengers transport services to compete for the opportunity to provide public passengers transport services.

Having received a complaint of the Vilnius Carriers Association (Association), the KT launched an investigation on the Municipality decisions’ compliance with the requirements of the Law on Competition. According to the Association, the Municipality by the means of its decisions had limited the possibilities of the carriers, i.e. the members of the Association, to compete with UAB Vilniaus viešasis transportas, the operator, governed by the Municipality.

During the investigation the KT determined that the Municipality signed a contract with UAB Vilniaus viešasis transportas authorising the latter to provide the public passengers transport services for the duration of five years. On the grounds of the contract, the aforementioned carrier gained an exclusive right to provide the public passengers transport services on 95 routes set by the Municipality as well as could receive compensation for the damages suffered when realizing the public service obligations. That is, before authorising UAB Vilniaus viešasis transportas to provide the public passengers transport services, the Municipality failed to evaluate other operators’ abilities to provide such services and did not ensure fair competition between the operators providing passengers transport services. Moreover, such decision whereby one operator is authorised to provide the public passengers transport services, does not encourage the operator concerned to operate with the lowest expenditures and this, in turn, may determine the irrational use of Municipality‘s resources.

Having established that the decisions adopted by the Municipality fail to comply with the requirements of the Law on Competition, the KT obligated the Municipality to repeal or amend the decision and the contract in the course of six months, so that the incompliance with the provisions of the Law on Competition would be eliminated.

Notices

(1) When carrying out the assigned tasks related to the regulation of economic activity within the Republic of Lithuania, entities of public administration must ensure freedom of fair competition (Law on Competition, Article 4(1))

(2) Entities of public administration are prohibited from adopting legal acts or other decisions which grant privileges to or discriminate against any individual undertakings or their groups and which give rise to or may give rise to differences in the conditions of competition for undertakings competing 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. (Law on Competition, Article 4(2))

 

Communication Division

Competition Council Spokesperson