2019 showed that more and more is expected from competition law and its enforcement. The new EU directive empowering competition authorities, amendments of national Law on Competition which broaden the powers of the Competition Council and established new grounds for sanctions, as well as regular attention from politics to certain industry sectors signals the necessity to be aware and comply with the competition law and know how to act during the dawn raids.
Even though competition law infringements in digital markets are in the spotlight, in practice infringements remain “conventional”.
Cartels in public procurement are among them. Centralised tendering systems and institutional cooperation allow relevantly easier to detect and prove prohibited agreements between competitors regarding proposals, pricing, winners and territory sharing. Thus, in Lithuania, as in all EU, public procurement will be in the centre of attention.
The Competition Council started to apply sanctions to the public sector more actively. Business having contractual relations with the public sector should assess the risks to their regulatory environment and contracts in the light of potential obligations applied by the Competition Council to end infringing actions or recommendations to change legal acts.
Recent amendments of Lithuanian Law on the Prohibition of Unfair Competition in the Retail Sector increased the protection of suppliers. At the end of 2019, the Competition Council issued a decision constituting an infringement of the law. Most likely that both the Council and suppliers themselves will be active in keeping an eye on contracts between larger retailers and suppliers.
The functions of the supervision of unfair advertising practices have been taken over from the Competition Council by the State Consumer Rights Protection Authority.
The imposition of sanctions on the managers of an undertaking which infringed competition rules became a regular practice. The Competition Council uses its power to impose sanctions to managers and courts uphold them.
Also, the Competition Council more and more often applies joint liability of related undertakings invoking the concept of a single economic entity. Furthermore, the Council has a right to apply structural remedies at its discretion since the amendments of the Law on Competition. Therefore, compliance with the competition law is crucial not only at certain undertakings but also in the whole group.
Both business and its supervision are becoming global. Implementation of the new EU ECN+ directive into national laws will allow EU competition authorities to extend their cooperation from information exchange, investigation support to recovery of fines and other sanction implementation.
The increasing enforcement of competition law implies that successful daily operation and strategic activities will depend on thought risk assessment of potential infringements, compliance programmes, as well as training of employees.
Trends to follow:
- Intensive enforcement of competition law: due to new powers of the Competition Council
- Public procurement: ensure compliance with both public procurement and competition law rules.
- Sanctions to the public sector: may have consequences to the regulatory environment of business.
- Retail sector: protection of suppliers strengthened in contractual relations with large retailers.
- Sanctions on managers: a right to hold a managerial position may be restricted to a manager of an undertaking which participated in a cartel for 3-5 years.
- Joint liability of undertakings: risk assessment of a potential that controlling undertaking may have to pay the fine for infringement.
- Prevention of infringements: awareness of competition rules at all levels of an undertaking or group of undertakings is a key.