The Competition Council of Lithuania has announced its intention to appeal a recent judgment of the Regional Administrative Court, which annulled the authority’s December 10, 2024 decision concerning alleged anti-competitive conduct in the heat pump distribution market. The case, which centers on resale price maintenance practices, will now likely proceed to the Supreme Administrative Court of Lithuania for further review.
The annulled decision had imposed a joint and several fine of €909,280 on Iglu Tech and its controlling company Unit Invest. The authority concluded that the companies had engaged in prohibited anti-competitive agreements by fixing resale prices and limiting discount levels applied by distributors of heat pumps across Lithuania. According to the findings, these practices constituted one of the most serious infringements of competition law, with direct consequences for consumer welfare in the form of higher prices.
The court of first instance, however, sided with the complainants and found that the investigation suffered from a fundamental procedural flaw. Specifically, it held that the Competition Council erred by focusing its investigation exclusively on the manufacturer, Iglu Tech, without formally including its distributors as parties to the proceedings. This omission, in the court’s view, amounted to a significant violation of procedural requirements, warranting the annulment of the entire decision regardless of the substantive findings.
The Competition Council has rejected this reasoning and maintains that its investigative approach was both lawful and justified. It emphasized that the decision to focus on the producer and its related entities was taken in order to ensure the efficient use of resources and the effectiveness of investigative actions. By appealing the ruling, the authority is seeking clarification on the permissible scope of investigations in vertical restraint cases and the procedural standards applicable to such enforcement actions.
Substantively, the case concerns practices dating back to mid-2021, when Iglu Tech entered into agreements with certain distributors that went beyond setting recommended resale prices. The authority found that these agreements effectively established fixed resale price levels and imposed strict caps on discounts offered to end users. Evidence indicated that Iglu Tech actively monitored compliance by tracking online prices, issuing warnings to distributors, and threatening to terminate contracts in cases of deviation.
Although contractual language often referred to prices as “recommended,” the Competition Council concluded that, in practice, distributors were required to adhere strictly to these pricing conditions. Correspondence between the manufacturer and distributors revealed explicit instructions to adjust prices within set deadlines and warnings that non-compliance could result in termination of cooperation. Similar conditions were reportedly imposed even on distributors operating without formal agreements, further reinforcing the uniform pricing structure across the distribution network.
The authority determined that such conduct restricted intra-brand competition among distributors, depriving consumers of the benefits of independent pricing decisions, including lower prices and more substantial discounts. The case also highlighted the broader risks associated with resale price maintenance practices, which are generally treated as serious infringements under European competition law.
In its original decision, the Competition Council also examined the potential involvement of other companies, including Axioma Servisas and Axioma LT, but ultimately terminated proceedings against them due to insufficient evidence. The focus remained on Iglu Tech and Unit Invest as the principal actors responsible for the infringement.
Commenting on the case, the Chairperson of the Competition Council, Jolanta Ivanauskienė, underscored the harm caused by agreements that restrict pricing freedom among distributors. She noted that when distributors are able to compete independently, consumers benefit from more attractive prices and greater choice. Conversely, practices that fix resale prices or limit discounts undermine this competitive dynamic and lead to adverse outcomes for buyers.
The forthcoming appeal will be closely watched, as it may clarify important procedural and substantive issues in the enforcement of competition law in Lithuania, particularly regarding the treatment of vertical agreements and the scope of investigations targeting manufacturers and their distribution systems.