Competition law violations: the antidote to potential fines – knowledge and caution

2024 was rather challenging for businesses in terms of competition law violations. The Competition Council adopted a total of 47 decisions last year.

The scope of liability was expanded to include parent companies, and actual liability was imposed even in cases where a company had formally gone bankrupt. Fines were issued for conduct that seemingly all competitors engage in. So, what should businesses keep in mind and regularly revisit to avoid violations in the future?

47 decisions by the Competition Council in 2024

Of the 47 decisions, 36 related to merger approvals, 1 was a refusal to grant a merger clearance, 5 were decisions to not open investigations, 1 investigation was terminated, 2 fines were imposed for a resale price maintenance (in the food supplement and heating system sectors), 1 fine was imposed for a breach of a merger control regulation (in the electricity sector), and 1 cartel case involving price fixing in consumer services.

Regrettably, many violations still occur due to ignorance and lack of knowledge. For nearly a decade, I have emphasised that awareness of competition law is strengthened not so much by fines, but by educational tools – training, publications, and other communication efforts. The current Competition Council is actively working in this area, and the positive change is visible. In a utopia, I would like to see at least one paid fine allocated by the state entirely to education. After all, ignorance of the law does not exempt one from the liability, and surveys show that one in five companies is totally unaware that price-fixing agreements are prohibited. Yet this is the most investigated and most severely penalized competition law infringement.

What happened in 2024: a brief overview

In a consumer services investigation, the Competition Council alleged that a cartel existed in the market between 2015–2020, allegedly inflating prices by up to threefold. The alleged infringement was textbook in nature (though whether the published facts reflect reality remains to be seen), but the case brought something new: a company that was not part of the cartel was still held liable. One of the cartel participants ceased operations before the fine was imposed. Almost simultaneously, a new company – presumably with the same employees – began operating in the same location. On May 16, 2024, the Council fined this “phoenix” company EUR 16.150 – modest in the context of competition law.

Whether the facts are as alleged will likely be determined by the courts. However, one thing is clear: it is not permissible to shut down one company and immediately set up a new one just to avoid liability from the Competition Council.

Another publicly discussed case involved a supplier of heating systems. Instead of the maximum potential fine of EUR 130.000, the Competition Council imposed a fine of EUR 909.000. The penalty targeted both, the company suspected of the infringement and its parent company, even though the latter was not directly involved.

This raises a valid question: will such decisions enhance Lithuania’s competitiveness? Unlikely. For international investors, this hardly incentivizes establishing or acquiring businesses in Lithuania.

It’s also noteworthy that only one party to a prohibited agreement was fined, even though it was the party arguably benefiting less (if at all). This selective enforcement raises sustainability concerns for long-term legal practice.

Why is abuse of dominance rarely investigated?

In 2024, there were three publicly known private enforcement cases (company vs. company). In a cartel damages claim, the plaintiff prevailed. However, in two abuse of dominance cases, the plaintiffs lost: once because the court allegedly lacked jurisdiction over private competition claims, and once due to the plaintiff’s clear misjudgement of its legal standing. Additionally, at least one non-public damages case followed a European Commission cartel decision, and another case may see a final decision this year.

Abuse of dominance cases are rare in Lithuania, not because the dominant players don’t exist, but due to the high costs and duration of litigation, and a lack of expertise and practical experience. Nevertheless, at the annual Lithuanian competition law conference, it was argued that such cases should be more frequent. International experts suggest that these cases are attractive to regulators due to lighter evidentiary burdens and strong public interest. Yet in Lithuania, there’s a prevailing belief that applying economic logic – whether in defence or prosecution – is a complex and unproductive endeavour. We hope this mindset will change.

It must be acknowledged that there are still too few professionals in Lithuania – among lawyers, judges, and regulators – with a deep understanding of competition economics. This contributes to the scarcity of abuse of dominance cases. More active exchange of international best practices and know-how would help to shift this stagnant dynamic.

What to expect in 2025: the Lithuanian outlook

Currently, seven investigations are underway: two involving mergers, three into prohibited agreements across various sectors, one regarding participation in public procurement, and one concerning an internal transaction.

Statistically, we can expect one case to be dropped, two fines for resale price maintenance, and one decision on a merger control violation. The remaining four investigation “slots” will likely be filled by the usual suspects: two traditional cases (price fixing or non-solicitation agreements, or unlawful information exchange), one more complex matter, and potentially something entirely new.

It seems the Competition Council will maintain last year’s pace. Hopefully, educational efforts will also continue.

Key insights for priority sectors:

• Energy Sector: It is critical to ensure that operations comply with fair competition rules, especially in renewable energy and electric vehicle infrastructure.
• Defence Sector: Market participants should strictly follow public procurement rules, train their staff in procurement basics, and enhance awareness of how to avoid anti-competitive agreements.
• Digital Markets: Platform operators should ensure compliance with new regulations and be prepared for potential investigations.
• Retail Sector: This sector consistently draws the Council’s attention, with supplier relationships remaining a key focus area.
• All Sectors: It is advisable to annually review and update internal compliance mechanisms and consult legal experts to assess and mitigate risks. Adequate preparation ensures business continuity in the event of investigations.