INFRINGEMENT IDENTIFIED BY THE COMPETITION COUNCIL MAY DETER ALMOST HALF A HUNDRED POTENTIAL VIOLATIONS 

The Competition Council's activities bring not only direct but also indirect benefits to consumers. The latter manifest itself through the deterrent effect of the institution's decisions, when companies, aware of the investigations being conducted and possible sanctions, refrain from illegal actions or cease them. Surveys of businesses and lawyers conducted in Lithuania have revealed that the indirect benefits of the Competition Council's deterrent effect are likely to significantly exceed the direct benefits to consumers.

Since 2011, the Competition Council has been assessing the direct benefits it generates to consumers on an annual basis, based on the methodology of the Organisation for Economic Co-operation and Development (OECD). Its calculations reflect the savings likely to be passed on to consumers in the form of price reductions or no price increases as a result of decisions taken by the Authority, such as ending restrictive practices by undertakings and public entities, prohibiting business mergers or allowing them with commitments.

Between 2022 and 2024, 1 Euro of the national budget allocated to the activities of the Competition Council resulted in 5.7 Euros of expected direct benefits to consumers, with an average annual direct expected benefit to consumers of 17.5 million Euros.

The assessment of direct benefits does not cover all the activities of the Competition Council due to the limited reliable data – it does not include the benefits to consumers that arise, for example, from the enforcement of the Law on the Prohibition of Unfair Practices by Retailers, the dissemination of competition culture among businesses and public authorities, and education and preventive activities to raise awareness of the benefits and rules of competition. In line with international practices, the assessment of direct benefits to consumers does not include fines imposed by the Authority (and collected by the state budget), which amounted to 3.12 million Euros last year and 3.07 million Euros was paid to the state budget.

In addition to the direct economic benefits, the activities of the Competition Council also generate indirect benefits to consumers, which, inter alia, manifest themselves through the deterrent effect of the Authority's decisions.

Jolanta Ivanauskienė, the Chairwoman of the Competition Council, stressed that the deterrent effect of the Authority’s decisions is very important as it encourages companies not to engage in illegal actions at all, or, if such activities are being carried out, to immediately terminate the potential infringement or not to plan a merger that restricts competition.

“Although the deterrent effect is not regarded as a direct economic benefit to consumers, I share the view of my colleagues from the UK Competition Authority and the OECD that a change in business behaviour is the most important outcome of competition enforcement”, said J. Ivanauskienė, underlining that research shows that proactive competition authorities deter substantial harm to consumers.

In order to assess the deterrent effect of the Competition Council's investigations and decisions on competition law compliance, surveys of businesses and lawyers working in the field of competition law were carried out in autumn 2024 by Spinter Research.

The results of the survey of lawyers showed that, on average, between 2021 and 2024, a concentration prohibited or authorised with commitments deterred 2.6 potentially problematic transactions, while the deterrence rate (coefficient) for prohibited agreements according to the survey of businesses is 46.4, i.e. a single infringement decision adopted by the Authority deters almost half a hundred potentially prohibited agreements.

Based on the results of the above-mentioned surveys, the practice of the European Commission and the UK Competition Authority, the Competition Council developed a methodology for assessing the deterrent effect, which was used to calculate the average total expected benefits (both direct and indirect), which could have reached up to 204.7 million Euros in 2022–2024. This means that every euro allocated to the institution’s activities may have generated up to 66 Euros in benefits to consumers.