On the Approval of Guidelines on the Application of Competition Policy Provisions


Published: 2012-12-12

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Government of the Republic of Lithuania
 
 
 
RESOLUTION NO 1510
 
ON
 
THE APPROVAL OF GUIDELINES ON THE APPLICATION OF COMPETITION POLICY PROVISIONS
 
 
 
12 December 2012
 
Vilnius
 
 
 
Aiming to ensure consistent application of competition policy provisions in public policy, the Government of the Republic of Lithuania has resolved
 
1. To approve the Guidelines on the Application of Competition Policy Provisions (as appended);
 
2. To order ministries, bodies under ministries, other state institutions subject to the ministries, institutions under the Government of the Republic of Lithuania and other state institutions accountable to the Government of the Republic of Lithuania to follow the Guidelines on the Application of Competition Policy Provisions;
 
3. To recommend the municipalities and state institutions that are not subordinate to the Government of the Republic of Lithuania to follow the Guidelines on the Application of Competition Policy Provisions.
 
 
 
 
 
PRIME MINISTER AT INTERIM                                                       ANDRIUS KUBILIUS
 
 
 
MINISTER OF ECONOMY AT INTERIM                                           RIMANTAS ŽYLIUS
 
 
 
_________________
 
 
 
APPROVED
 
by Resolution No 1510 of
 
the Government of the Republic of Lithuania of 12 December 2012
 
 
 
GUIDELINES ON THE APPLICATION OF COMPETITION POLICY PROVISIONS
 
 
 
I. GENERAL PROVISIONS
 
1. Guidelines on the Application of Competition Policy Provisions specify the main aim of the competition policy, determine the system of institutions that frame and implement competition policy, indicate the problems specific to competition policy as well as define measures ensuring the solution of such problems.
 
2. The Guidelines were prepared aiming to implement the recommendations of 30 December 2010 of the State Audit Report No VA-P-20-10-26 "Protection of Freedom of Competition" of National Audit Office of Lithuania submitted to the Government of the Republic of Lithuania (hereinafter referred to as "the Government") and the implementation plan of the abovementioned recommendations adopted by the Government. 
 
 
 
II. COMPETITION AND COMPETITION POLICY
 
3. The principle of fair competition is enshrined in Article 46 of the Constitution of the Republic of Lithuania that reads as follows: "the law prohibits the monopolization of production and market, it defends the freedom of fair competition". Article 119 of the Treaty on the Functioning of the European Union says that economic policies of the European Union "are conducted in accordance with the principle of an open market economy with free competition". Fair and free competition in the markets is a universal value that guarantees the constitutional freedom and initiative of economic activity, constituting a precondition for higher wellbeing of consumers and stronger economic growth.
 
4. The State ensures fair competition by framing and establishing competition policy, by implementing the principles and rules of competition.
 
5. The framing of competition policy is an activity of the Ministry of Economy aimed to establish a favourable competition environment from a legal perspective, to set the priorities of competition policy, the development trend thereof and means to achieve them, to foresee target results and competence of state institutions and bodies necessary for their achievement, to draft related legislation and resolutions of the Seimas of the Republic of Lithuania (hereinafter referred to as "the Seimas") and the Government, to encourage competition, to prohibit or restrict actions and business practice that restrict competition. Decisions of other state and municipal institutions and bodies as well as adopted legislation (hereinafter referred to as "the decisions") may also influence competition.
 
6. The main aim of competition policy is to protect the freedom of competition and ensure the possibility to compete aiming at effective and fair competition among economic entities that would provide the consumers with maximum possible  benefit, improve business conditions and encourage the growth of economy.
 
7. The principles and rules of competition policy are regulated by the Constitution of the Republic of Lithuania, directly applied legislation of the European Union, the Law on Competition of the Republic of Lithuania (Official Gazette, 1999, No 30-856; 2012, No 42-2041) (hereinafter referred to as "the Competition Law"), other special legislation, resolutions of the Government and Competition Council as well as regulatory legislation of other implementing bodies indicated in paragraph 9 of the Guidelines.
 
8. Competition Council that adopts decisions on its own and independently is the principal institution implementing competition policy.  The functions and status of the Competition Council are defined in the Competition Law and other legislation.
 
9. In addition, rules that regulate competition are implemented by other state institutions and bodies responsible for the implementation of competition rules under the legislation regulating their activity: National Commission for Energy Control and Prices, Communications Regulatory Authority, State Consumer Rights Protection Authority as well as state institutions and bodies that do not directly perform the function of competition policy implementation, but are responsible for that in relation to other functions (ministries, business control institutions, pre-trial and judicial bodies, municipalities, etc.)
 
10. Associations of economic entities and other non-governmental organizations shall contribute to the propagation of competition policy and compliance with the principles and rules of competition.
 
11. Aimed at proper implementation of competition rules, the implementing institutions indicated in paragraph 9 of the Guidelines shall cooperate with the Competition Council and Ministry of Economy.
 
12. Conditions necessary for fair competition are closely related to the implementation of the following measures aimed at better business environment: simplification of business supervision, reduction of administrative burden, prevention of intentional bankruptcy, fight against shadow business, simplification of procedures for the establishment and closure of legal entities, tax policy, speedy and effective resolution of disputes, etc.
 
 
 
III. AIMS OF GUIDELINES
 
13. The aims of the Guidelines are as follows:
 
13.1. To consistently frame competition policy throughout the entire legislative procedure;
 
13.2. To adjust policy implementation measures in other policy fields to competition policy;
 
13.3. To expand the obligations of policy makers of various fields to encourage competition;
 
13.4. To ensure the compliance of decisions taken with the principles and rules of competition;
 
13.5. To remove legal restrictions that allow economic entities to dominate as well as to ensure the prevention of new restrictions.
 
 
 
IV. PROBLEMS OF COMPETITION POLICY AND MEASURES TO ADDRESS THEM
 
14. The decisions of state and municipal institutions and bodies not always ensure the best balance of various interests and often fail to reflect the principles and rules of competition. The analysis of present legislation procedures and steps made when taking and implementing decisions allows to point out the following problems of competition policy:
 
14.1. horizontal problems (lack of consistent approach to the formation of competition policy, insufficient integration of competition policy into the policy of other fields, lack of competence of civil servants on competition issues, principles and rules of competition often are not considered as priorities when taking decisions, etc.) that preclude from framing and  implementing a consistent competition policy;
 
14.2. problems specific to certain sectors and fields (use of European Union structural funds, public procurement, ineffective competition and vertical integration of common activities of economic entities of the state and municipalities, application of discriminating clauses in relation to private economic entities in the sectors of services of general interest, etc.) that may restrict the productivity of the abovementioned sectors, eliminate possibility to improve the quality of services, restrict the offer of services, increase prices.
 
15. Problems of competition policy should be solved taking into account two aspects:
 
15.1. decisions in particular fields and sectors must be made taking account of the principles and rules that ensure competition;
 
15.2. procedural rules that ensure proper and competitive assessment of impact on competition must be observed when taking decisions.
 
16. Decisions in particular fields and sectors must be made taking account of the principles and rules that ensure competition (including but not limited to):
 
16.1. decisions must conform to the rules of competition law stipulated in the Competition Law and other legal acts indicated in  paragraph 7 of the Guidelines;
 
16.2. decisions cannot include unfounded exceptions to the competition principles or rules to be applied to particular economic entities or sectors;
 
16.3. restrictions on competition are possible only if the following conditions are met: restrictions are applied under the law; restrictions in a democratic society are necessary with a view to protect the rights and freedoms of other persons, values enshrined in the Constitution of the Republic of Lithuania, objectives that are important from a constitutional point of view; restrictions do not negate the nature and essence of rights and freedoms; the principle of constitutional proportionality is applied;
 
16.4. non-discriminating environment must be ensured for economic entities of Lithuania and other member states of the European Union as well as of private and public economic entities;
 
16.5. the principles of transparency, explicitness, proportionality and equality must be observed when formulating rules that may make direct or indirect impact on the market access of economic entities;
 
16.6. the initiatives of the European Union must be implemented as soon as possible and, if possible, by selecting an alternative that encourages competition most of all;
 
16.7. when distributing finance from the European Union structural funds the principles of transparency, explicitness, proportionality and equality must be observed, means and forms of financing or investment should be such as to ensure the effectiveness of investments and prevent the distortion of competition or extort the competition to the least possible extent (for example venture capital funds are used, interests, guarantees and other similar financial means are compensated); when choosing sectors to receive the abovementioned funds priority must be given to fields that stimulate the economic growth most of all;
 
16.8. the principles of transparency, explicitness, proportionality and equality must be observed when organizing and announcing public procurement or calls for tenders or when making decisions that may directly or indirectly restrict the freedom of competition of  individual economic entities or their groups;
 
16.9. when a state or municipal institution takes a decision regulating the economic activity in a field in which a state or municipality owned economic entity controlled by a state or municipal institution is active as well, the principles of transparency, explicitness and equality must be observed and a decision must be made taking into account the possible risk of the conflict of interests;
 
16.10. when solving the problems of ineffective competition and vertical integration of common activities of  economic entities of the state or municipalities as well as problems concerning the application of discriminating clauses in relation to private economic entities in the sectors of services of general interest, competition elements must be introduced in the sectors of services of general interest (energy sector, gas sector, railways, post, public transport, health care, social, education services, etc.); 
 
16.11. aiming to avoid unfounded and redundant regulatory requirements limiting the possibilities of economic entities to engage into certain activity, rules that grant to economic entities exclusive or special rights to engage into certain activity (licences, permits, etc.) must be reconsidered and simplified;
 
16.12. when regulating prices at state level the principle enshrined in Article 46 of the Constitution of the Republic of Lithuania that reads as follows: “Lithuania’s economy shall be based on the right of private ownership, freedom of individual economic activity and initiative”; regulation of prices at state level must be applied only in exceptional cases and without prejudice to the Constitution of the Republic of Lithuania and other legal acts.
 
17. Lithuania shall support the principles and alternatives that encourage competition most of all when it participates in taking decisions of the European Union having impact on competition (competition policy and state aid policy of the European Union, creation of energy market of the European Union, trade policy of the European Union, consumer protection policy, etc.).
 
18. Procedural rules that ensure proper and competitive assessment of impact on competition must be observed in decision making process:
 
18.1. draft decisions that may directly or indirectly influence competition must be assessed in relation to competition; impact on competition must be assessed in accordance with the Methodology on the assessment of supposed regulatory impact approved by  Resolution No 276 of 26 February 2003 of the Government of the Republic of Lithuania (Official Gazette, 2003, No 23-975; 2012, No 124-6234); it is recommended to follow the Guidelines on the assessment of impact on competition made by decisions of the Competition Council available on the  Competition Council website (http://kt.gov.lt);
 
18.2. Competition Council and Ministry of Economy, guided by the criteria established in  the Methodology on the assessment of supposed regulatory impact, legislation rules of the Government of the Republic of Lithuania approved by Resolution No 1244 of 30 September 2009 of the Government of the Republic of Lithuania (Official Gazette, 2009, No 121-5212) as well as in other legal acts, shall draw conclusions on the conformance of draft legislation to competition rules;
 
18.3. it is recommended that ministries appoint in each institution a person responsible for the assessment of impact of decisions on business environment and competition;
 
18.4. aiming to ensure the compliance of decisions adopted to competition rules and competent assessments of impact on competition, the qualification of civil servants and personnel of state institutions and bodies as well as of the courts in the fields of competition law and policy must be improved.
 
 
 
V. FINAL PROVISIONS
 
19. The Guidelines must be observed when making new decisions as well as when revising  and assessing the legislation in force in terms of competition.
 
 
 
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