AS LIETUVOS PAŠTAS PLANS TO CHANGE ITS PRICING, THE COMPETITION COUNCIL WILL NOT LAUNCH AN INVESTIGATION INTO THE COMPANY’S ACTIONS

The Competition Council has decided not to initiate an investigation into the possible abuse of a dominant position by Lietuvos paštas, having found insufficient evidence that the company may have breached commitments it undertook several years ago. Such an investigation would also not correspond to the institution’s enforcement priorities, as it would be irrational to examine pricing that Lietuvos paštas applied in a single public procurement procedure and is planning to change.

The company Unifiedpost applied to the Competition Council, claiming that Lietuvos paštas may be abusing its dominant position in the market for the delivery of correspondence to business customers. According to the applicant, while participating in a public procurement procedure, Lietuvos paštas offered unfairly low prices, for example providing part of the services for EUR 0, and thus may have applied predatory pricing and breached the commitments approved by the Competition Council in 2019. Unifiedpost also complained about the discount system and so-called project-based pricing, whereby individual tariffs applied in public procurement procedures were lower than the rates previously applied to business customers.

After examining the collected information, the Competition Council determined that, when Lietuvos paštas participated in the public procurement procedure, the entire service package was assessed rather than its individual components. Therefore, the mere fact that part of the services was offered for EUR 0 does not in itself confirm the application of predatory pricing, as it was not established that such actions were systematic or had a significant impact on competition.

The Competition Council noted that the project-based pricing of Lietuvos paštas was applied in a single public procurement procedure and was not repeated in other tenders. In addition, the company indicated that it is considering changing the principles for forming project-based pricing – namely, not applying it to certain services – to ensure more equal competitive conditions. After assessing the planned changes, the institution’s experts additionally drew the company’s attention to the importance of defining a clear, objective, and economically justified methodology for applying project-based pricing.

Having assessed the above circumstances, the Competition Council decided not to initiate an investigation into the actions of Lietuvos paštas, as it would not have a significant impact on effective competition or consumer welfare, while a more detailed examination and assessment of the circumstances would require disproportionate institutional resources compared to the expected results of the investigation and would not align with the institution’s enforcement priorities. Moreover, there is no basis to suspect that the company violated obligations previously imposed by the Competition Council.

"Although no investigation into a possible violation will be carried out, we hope that the expert assessment of the situation provided by our institution to Lietuvos Paštas will encourage positive changes in the business parcel delivery market and, once the company has adjusted its pricing, the risks of restricting competition will decrease in the future," said Elonas Šatas, Chief Advisor for Infringement Investigation at the Competition Council.

The decision may be appealed to the Regional Administrative Court within one month from the date of its delivery or from the date of its publication on the Competition Council’s website.

If other circumstances come to light or additional information is received that would allow suspicion of possible infringements of the Law on Competition, the institution may initiate an investigation on its own initiative.