Lithuania: Private Enforcement of Competition Law

Applicable legislation

In Lithuania, the issues related to the private enforcement of competition law are governed by the Law on Competition (23 March 1999, No VIII-1099) (the "Law on Competition" or the "Law"), the Code of Civil Procedure (28 February 2002, No IX-743) (the "Code of Civil Procedure") and the Civil Code (18 July 2000, No VIII-1864) (the "Civil Code").

The Law on Competition provides for a two-fold approach to the private party enforcement of competition law.

First, the Law provides that an undertaking, whose legitimate interests were violated by actions in breach of Articles 81 or 82 of the EC Treaty or other restrictive actions prohibited by the Law on Competition, is entitled to bring an action before the Vilnius County Court for the termination of illegal actions and compensation for damage incurred.

The Law prohibits standard restrictions on competition:

1. Restrictive agreements and practices (e.g. price fixing, market sharing).
2. Abuse of dominant position (e.g. refusal to supply, tying).
3. Unfair competition (e.g. misleading advertising, trademark infringements).

Noteworthy is that in case of unfair competition, an undertaking, whose legitimate interests were violated (e.g. owner of the registered trademark, undertaking injured by misleading advertising), is entitled to bring an action before the courts for the termination of illegal use actions and/or compensation for damage incurred.

Secondly, the Law on Competition establishes an obligation for undertakings that are in breach of the Law to indemnify for the damages caused to other undertakings or natural and legal persons. Indemnification is to be granted in accordance with the procedure and principles established by virtue of the Code of Civil Procedure and the Civil Code.

By virtue of Lithuanian law both legal and natural persons are free to bring an action against anticompetitive behaviour of an undertaking. Though the Law on Competition provides for only the right of undertakings to an action for compensation for damages incurred, however, direct actions for damages by consumers against anticompetitive behaviour are also possible under Lithuanian law. Further, in an action against unfair competition, a consumer organisation can also be a party; however, they cannot claim damages.

Class actions are provided under Lithuanian law. However, due to the lack of certain legislative instruments implementing the mechanism of class actions, collective consumer antitrust actions are not at present considered a genuinely relevant cause of action. Notwithstanding that, actions brought by a prosecutor in defence of public interests and actions from either consumer protection institutions or public consumer organisations are possible (although, as stated above, they cannot claim indemnification for damages).

According to the Law on Competition, the Vilnius County Court as the court of first instance has exclusive competence to hear civil disputes concerning violation of national and EC competition rules. Interpretation and application of Articles 81 and 82 of the EC Treaty by national courts derogating from the practice of the EC Commission should be the statutory basis to renew the proceedings.

According to the Code of Civil Procedure, the parties have to prove their allegation on which they base their claims. The standard of proof established by the procedural laws is that of "beyond reasonable doubt". Hence, the proof of burden of the infringement of Law on Competition and of the incurrence of damage and its amount lies on the plaintiff. The defendant, conversely, has a right to refute the plaintiff’s allegations and bring in evidence to the contrary, although the defendant is presumed to have acted at a fault.

Lithuanian law does not provide for any mechanism comparable to ‘discovery’ under the common law system. It is for each of the parties in dispute to obtain and present the evidence that it wishes to rely on. A party can, however, request the court to order the other party to submit written evidence if the requesting party demonstrates that the requested documents could constitute possible relevant evidence in the action. Additionally, Lithuanian procedural laws provide for the mechanism of securing the evidence at the request of the party.

Thus, the private party enforcement of competition law follows the standard adversarial court procedure.

First, according to the Civil Code, damages include the amount of direct expenses related to the injury (direct losses), as well as income not received due to the infringement by the defendant (indirect losses). Damages also include reasonable expenses to mitigate the damage and expenses to recover damages in out-of-court proceedings.

If the plaintiff is able to prove that causality exists, but the proof regarding the exact amount of the plaintiff’s loss cannot be obtained or would be exceptionally difficult or costly to provide, Lithuanian courts are entitled to award damages based on the estimation made at their own discretion. The profit made by the defendant can be used as a measure of damages in such cases. Importantly, according to Lithuanian law, the courts may also award future damages, on the ground of evidence that such damages have sufficient probability to occur in the future.

Secondly, litigation expenses are covered by the loosing party. It is to be noted, however, that the recommended maximum possible litigation costs are established by supplementary acts of the Government. However, usually the courts award litigation expenses at their own discretion, therefore attorney fees are awarded only to a limited extent.

The result of the litigation can be a decision from the court ordering the cessation of illegal activity and/or indemnification for damages. In unfair competition actions, courts can also order other remedies (e.g. oblige the party to publicly deny incorrect information supplied to the public, or seizure and destruction of goods or their packaging in trademark infringement cases directly related with unfair competition). An appeal against the decision of the first instance court, both on points of fact and law, can be lodged with the appellate court within 30 days. A further appeal (cassation), albeit on points of law only, can be submitted to the Lithuanian Supreme Court, whose rulings are final and subject to no further appeal.

The law provides for a 3-year time limit for the institution of proceedings of private enforcement. On average, the proceedings take ca. 11-14 months. Possibilities to accelerate the proceedings are rather limited.

Dominant undertakings under investigation for abuse of dominant position may be granted immunity from fines by national competition authority (Lithuanian Competition Council (the "Council"), inter alia, in case of voluntary compensation for all the damages caused as a result of infringement of competition rules. On the other hand, non-application of sanctions for whistle-blowers in cartel cases does not release the latter from civil liability, i.e. obligation to compensate for damages.

Although there is a rather elaborate legislative framework for the private party enforcement of competition law, there is little actual practice. It is only in the field of unfair competition that private parties are engaged in direct litigation, especially with regard to trademark infringements. However, direct litigation between private parties on anticompetitive behaviour and the damage arising from it is rather rare (such litigation involves a couple of cases related to compensation for damages caused by allegedly abusive dominance by the major oil refinery in the Baltic, and one of the leading manufacturers and exporters of alcoholic beverages in Lithuania), and so far there are no cases reported by the Supreme Court, which is entrusted with unification of the case law.

A traditional approach is to complain to ‘the watchdog’, the Council, which is entrusted with the enforcement of the Law on Competition. The Council can act upon complaint from the private party, ascertain anticompetitive behaviour and punish the offender. Such a decision of the Council can serve as a prejudicial basis for an action for damages in the civil courts. This type of strategy has certain advantages for the complainant as the Council has extensive investigative powers and the complainant is also involved in such proceedings. The end result can be that the offender does not only have to indemnify for damages, but is also fined by the Council.

The existing legal basis is in principle sufficient for the private enforcement of competition rules in Lithuania. Any legal or natural person, whose interests have been violated by the breach of competition rules, may apply to civil courts for compensation for direct and indirect damages. However, up to now the related case law has been rather scarce. Generally, the victims of anticompetitive activities are not being compensated for their losses. Thus, underdevelopment of private enforcement also means that the deterrent effect of competition rules is not as great as it should be.

Such scarce use of courts can be attributed to a number of factors which include the complexity of cases, difficulties in calculating damages and demonstrating the causation, scarce practical possibilities of bringing class actions and, arguably, non-litigating nature of the Lithuanian business society.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.