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Competition of state-owned undertakings and state aid

Any intervention of the State in the economy triggers many discussions. It is generally agreed that the State should protect fair competition and ensure a level playing field in terms of competition for all market participants. However, for very different reasons the State often decides to intervene into the market by granting financial incentives or special rights to some market operators or by starting its own operation in the market via State-owned undertakings.
 
Admittedly, such actions can serve rational and quite legitimate purposes. The State could aim to remedy structural market problems that cannot be resolved by private business on their own. Or to ensure the provision of public services that are not offered by private participants of the market. Nevertheless, on many occasions State intervention into the economy causes new competition problems. State-owned companies tend to receive preferential treatment from the governmental institutions, which naturally distorts equal conditions of competition between State-owned and private businesses. In its turn, the provision of state aid to certain separate undertakings threatens to eliminate more efficient competitors from the market. To avoid this, it is necessary to ensure that the State intervention in the economy is always highly expedient and measured. 
 
The law firm Ellex Valiunas has accumulated a unique experience in advising clients of private and public sectors on matters concerning compliance of State intervention into economy. At present, we are the only law firm in Lithuania whose expertise in the area of state aid has already earned recognition in major international legal directories (Legal500, Chambers and Partners, Global Competition Law Review).
 
The Ellex Valiunas team dealing with public entities’ competition and state aid issues renders assistance in the following three main areas:
  • Compliance with state aid rules;
  • Compliance with a prohibition to the State to distort equal conditions of competition; and
  • Compliance with a prohibition to local self-government authorities to participate in business. 

Key contacts

Dr. Karolis Kačerauskas

Partner

Head of Public Procurement & PPP and State Aid practice
+370 52681878
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Key projects in the field

We Are Advising the Telecommunications Company Telia Lietuva, AB in Challenging an Exclusive Right Granted to the State-Controlled Enterprise
We are advising the telecommunications company Telia Lietuva, AB in challenging an exclusive right granted to the state-controlled enterprise to provide the secure state data communication network services. This is the first litigation in Lithuania where the legitimacy of the state monopoly is disputed on the basis of EU state aid rules.
We Assisted AB Klaipėdos Nafta in Coordinating with the European Commission the State Aid to Klaipėda LNG Terminal
We assisted AB Klaipėdos nafta in coordinating with the European Commission the state aid of approximately 448 milllion euros to Klaipėda LNG terminal. The state aid scheme, which has been cleared by the European Commission, constitutes an essential basis of AB Klaipėdos nafta-owned LNG terminal business. Therefore, state aid clearance significantly contributed to the implementation of the terminal project that opened up an opportunity for Lithuania and the entire Baltic region to acquire natural gas in global natural gas markets.