Since the 1st May 2004 seems to be a historic date for the accession of the new States to the European Union (EU), this date also appears to be of great importance for the EU competition policy. By reason of Lithuania’s membership in the EU, the Lithuanian competition law was harmonised with the requirements of EU competition law. The reform was introduced in spring 2004 and mainly affected restrictive agreements and merger control regulation, as well as fines imposed on undertakings for violation of competition law requirements.

Restrictive Agreements

The most recent amendments of the Lithuanian legislation reflect the EU reform introduced by Regulation 1/2003 in the field of restrictive agreements. Similarly to the EU reform, the notification system of restrictive agreements was abolished. Therefore, no formal notification of a particular agreement is required. However, informal guidance can be obtained from the Lithuanian Competition Authority (Competition Council of the Republic of Lithuania (Competition Council), before concluding a restrictive agreement. In general, the Competition Council did not grant many individual exemptions under the old system, as it was not a common practice for Lithuanian undertakings to request those. Noteworthy, decisions of the Competition Council made before 1 May 2004 on individual and block exemptions are no longer in effect. However, individual exemptions granted by the Competition Council before such date will remain in full force until the expiry of the date indicated in the exemptions. In addition, vertical agreements falling within the scope of the Competition Council’s block exemption granted before 1 May 2004 will remain in full force until 1 December 2004. Furthermore, according to the Lithuanian legislation, restrictive agreements, which cannot affect trade between the EU Member States, but satisfy the conditions provided for in the various EU block exemption regulations, will be assessed under the Law on Competition. However, when applying the said rules, amounts of annual turnover in euros set out in EU block exemption regulations, will be reduced by ten times.

It is worth mentioning that the Competition Council, as national competition authority, has the same enforcement powers in relation to infringements of Article 81 of the EC Treaty as for infringements under the Law on Competition. However, currently the Competition Council has no experience in enforcing Article 81.

Merger Control

The reform also introduced several significant changes to the Lithuanian merger control regulation. Firstly, the 7-day-term for submission of a notification on intended concentrations has been abolished, and instead, pursuant to the new regulation, a notification should be made to the Competition Council prior the completion of the concentration. The completion of a concentration will be considered as the actual acquisition of control; that is, a possibility to exercise a decisive influence on the activities and management of a company. Secondly, a fee for examination of a notification has been established (ca. EUR 1,160). Thirdly, the substantive test has been changed, i.e. a concentration may be blocked if it would not only establish or strengthen a dominant position but also if such concentration would significantly impede (substantially lessen) effective competition in a relevant market.

Furthermore, according to new legislation, if, in the opinion of the Competition Council, a concentration may result in the creation or strengthening of the dominant position, or a significant restraint of competition in the relevant market, it may obligate the undertakings to submit a notification on concentration and apply the concentration control procedure, even if the threshold of aggregate turnover is not met.

Fines

In addition to the aforementioned novelties, fines for the violation of competition law requirements have also been modified. According to the pre-reform legislation, the Competition Council had the right to impose fines on undertakings ranging from LTL 1,000 (ca. EUR 290) to LTL 100,000 (ca. EUR 29,000); in addition, fines in the form of certain percentage of turnover could only be imposed if aggravating circumstances were established. Currently, the Competition Council may apply fines up to 10 per cent of annual turnover without any restrictions. However, the aforementioned fine may be imposed only for restrictive agreements, abuse of dominant position, implementation of concentration without the permission of the Council, continuing a concentration within the period of its suspension, or infringement of concentration conditions or mandatory obligations established by the Council. For other violations of competition law requirements (e.g. failure to provide the Council with the information required, etc.), the Competition Council may impose fines up to 5 per cent of annual turnover.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.