On 1 November 2020, important amendments to the Law on Competition will come into force, which will further increase the need for businesses to prevent infringements of competition law.
Greater liability and significantly increased fines can potentially lead to the termination of businesses. We are highlighting amendments to the Law that are vital for businesses to pay attention to.
Joint liability of group companies for competition law infringements
Companies in the same corporate group as an infringing company (e.g. parent companies) could be found jointly and severally liable for an infringement. Joint liability could apply solely because companies belong to the same corporate group – it is not necessary to prove that the other companies knew about the infringement, encouraged it, and so on.
The amendments to the Law related to the application of joint and several liability are also intended to avoid situations where companies escape fines by transferring their activities to other companies or through corporate restructuring.
The maximum fine for an infringement in Lithuania will be capped at 10% of worldwide turnover
Until now, the Lithuanian Competition Council has imposed fines not exceeding 10% of an undertaking’s turnover in Lithuania.
Fines for associations and consortia
Associations and consortia, which do not have the means to pay a fine imposed for infringements of competition law, will be able to require their members to pay a contribution to cover the amount of the fine.
Fines ‒ payment terms
Fines must be paid to the state budget within 3 months from adoption of a decision by the Competition Council, unless the decision is appealed to a court and the undertaking concerned provides the Competition Council with a financial guarantee or suretyship insurance to cover the fine.
In addition, infringements of competition law can have other negative consequences
- The Competition Council may require company reorganization or sale ‒ of the company, property, or shares
- Possible personal liability of managers (a fine of EUR 14 500 and a ban on holding a managerial position for 3-5 years)
- Possible disqualification of companies from public tenders for up to 3 years
Preventive compliance measures
Infringements of competition law are often committed due to a lack of knowledge of applicable rules. In order to address the risks of competition law infringements in a timely manner and to avoid significantly increased fines in the future, we recommend the following competition compliance measures:
- conducting an internal audit of company agreements, documents and employees’ correspondence;
- developing and implementing a robust competition law compliance programme to meet company needs;
- conducting interactive and sector-specific competition law training for employees.