In December 2011 the Competition Council issued a decision against 32 shipbroking and agency companies, together with their representative association, for their participation in a price-fixing agreement for ship agency services. The fines imposed totalled Lit12 million (around €3.5 million); the highest individual fine was more than Lit1.8 million (around €520,000). An appeal is pending before the Administrative Court.


Companies that provide ship agency services typically manage customs and cargo documents, pay port dues and other charges, oversee the arrival and departure of vessels and provide other shipping services.

In 1998 the predecessor of the Lithuanian association of shipbrokers and agents introduced recommended minimum tariffs for ship agency services. In 2003 the association adopted a code of ethics which included provisions on penalties for the application of tariffs significantly below its recommended levels. The association investigated several companies that failed to comply with the recommendations, imposing disciplinary measures. These were the main facts that led to the council's conclusion that an anti-competitive agreement was in place.

The parties' main objection related to the council's assessment of the duration of the infringement. The council claimed that the infringement had lasted for 13 years, from 1998 to 2011. Its investigation revealed reasonably compelling evidence of infringement until 2006, but the decision was not supported by substantial evidence for the period from 2006 to 2011. The parties argued that the infringement had ended in 2006 at the latest. If this were the case, no fine could be imposed on the companies, as the limitation period - which at the relevant time was three years - would have elapsed.


De facto termination of anti-competitive practices
As evidence of the anti-competitive agreement after 2006 was vague, the parties argued that the obligation to follow recommended minimum tariffs had ended. This argument was based on the fact that association members ignored the recommended tariffs in their pricing practices; it was claimed that all members were aware that they should not expect their competitors to follow the recommendations. Moreover, in 2005 the association lost its statutory veto rights over the licensing of ship agency activities, which significantly reduced the association's influence over its members. On this basis, it was argued that since 2005 the association had been unable either to require its members to comply with its decisions or to impose disciplinary penalties on them.

The council rejected these arguments, stating that an agreement is terminated only when all members "publicly and unambiguously" express their decision not to participate in anti-competitive practices. In giving directions on how association members should terminate or rebut participation in an anti-competitive agreement, the council failed to give practical guidance on how to comply publicly and unambiguously. However, according to commonly accepted practice, refusal to participate in anti-competitive activities should be announced at an association meeting and should be formally recorded in the minutes.

Participation in association implies higher risk of infringement
The council confirmed that in cases involving associations, it will treat all members as participants in an infringement, irrespective of whether they were aware of the anti-competitive practice in question. This approach follows the principle formulated by the Supreme Administrative Court in 2011, in a case involving media agencies, in which it was stated that participation in an association imposes an obligation on a member to acquaint itself with all decisions taken by that association, including decisions that were adopted in the past and have not been formally terminated. In practice, this means that undertakings may be held liable for anti-competitive agreements even if they are unaware of a particular anti-competitive decision adopted by the association. In such cases it is assumed that the undertaking should have known of the existence and substance of the decision and may therefore be held liable for competition law infringement on the basis that it did not distance itself from the anti-competitive behaviour in question.

Calculating fines – income relating to infringement
When the decision was issued, the council did not have a well-established practice on the calculation of fines. In some cases, fines were calculated on the basis of the income relating to the infringement, whereas in other cases the undertaking's total income was used. In the present case the council did not explain how the individual fines were calculated. Nevertheless, it appears that for at least some companies (ie, those that were only occasionally engaged in ship agency activities), the council based the fines on income relating to the infringement.


The pending appeal will be highly significant for both the council and the companies. At first glance the obvious cartel agreement raises fundamental questions. In which circumstances can undertakings claim de facto termination of anti-competitive practices? Is de facto termination even recognised in Lithuanian competition practice? The answers are vital for companies that seek to ensure competition compliance - to what extent must they distance themselves from practices that they consider to be no longer current?

The council's approach suggests that an undertaking should exercise caution when joining an association and participating in its activities, as failure to distance itself from anti-competitive practices engaged in by the association will make it party to a cartel agreement. Before joining such an association, undertakings should consider conducting a legal audit of the association's previous decisions in order to ensure that these do not represent a potential source of infringement. Moreover, it is particularly important to remain informed of all meetings and the issues discussed, and to refute - publicly and unambiguously - the undertaking's participation in any anti-competitive activities.

The question of the calculation of fines in the ship agency case appears to have been resolved by statutory measures. In early 2012 the government formally adopted a methodology for calculating fines which indicates that the basic amount of a fine must be calculated according to the income relating to the infringement.

For further information on this topic please contact Karolis Kačerauskas or Lina Barauskaite at LAWIN by telephone (+370 5 268 1888), fax (+370 5 212 5591) or email ([email protected] or [email protected]).