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On competition in the sphere of passenger carriage

Case No. 6/2012

 THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA
IN THE NAME OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF ITEM 2 OF PARAGRAPH 2 OF ARTICLE 171 (WORDING OF 17 DECEMBER 2009) OF THE ROAD TRANSPORT CODE OF THE REPUBLIC OF LITHUANIA WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

15 January 2015, No. KT3-N1/2015
Vilnius

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Elvyra Baltutytė, Vytautas Greičius, Danutė Jočienė, Pranas Kuconis, Gediminas Mesonis, Vytas Milius, Egidijus Šileikis, Algirdas Taminskas, and Dainius Žalimas

The court reporter—Daiva Pitrėnaitė

The Constitutional Court of the Republic of Lithuania, pursuant to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1 and 531 of the Law on the Constitutional Court of the Republic of Lithuania, at the Court’s hearing, on 19 December 2014, considered, under written procedure, constitutional justice case No. 6/2012 subsequent to the petition (No. 1B-11/2012) of the Vilnius Regional Administrative Court, the petitioner, requesting an investigation into whether Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code of the Republic of Lithuania is not in conflict with Paragraph 1 of Article 29 and Paragraphs 1, 3, and 4 of Article 46 of the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

The petition of the Vilnius Regional Administrative Court, the petitioner, is substantiated by the following arguments.

  1. Under the impugned legal regulation, a municipality may, without a competition or another procedure ensuring competition, choose whom to give a right (whom to assign) to carry out the activities of the carriage of passengers. Such legal regulation creates the preconditions for giving privileges unreasonably to one economic entity and discriminating against other possible participants in the market for transport services. Therefore, such legal regulation that denies fair competition, limits freedom of individual economic activity and initiative, and promotes the creation of a monopoly may be in conflict with the Constitution.
  2. The differences between the enterprises or institutions established by a municipality to which the provision of the services of the carriage of passengers may be assigned by a municipality without a competition, and between private economic entities are not such as to justify an exclusive legal status of the enterprises or institutions established by a municipality, however, the impugned legal regulation gives more favourable treatment to the enterprises or institutions established by a municipality than to private economic entities to carry out the activities of carriers since the former may be given assignments from municipalities to carry out the said activities (and receive remuneration for that) without having to compete with private entities.

II

In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Dainius Budrys, the then Chair of the Seimas Committee on Economics and a then member of the Seimas, acting as the representative of the Seimas, the party concerned, in which it is maintained that the impugned legal regulation is not in conflict with the Constitution. The position of the representative of the party concerned is substantiated by the following arguments.

The Republic of Lithuania’s Law Amending Articles 2, 3, 8, 10, 12, 13, 14, 15, 16, 171, and 18 of the Road Transport Code and the Annex to the Code (Article 9 whereof amended the provisions of Article 171 of the Road Transport Code) was prepared and adopted for the proper implementation of Regulation (EC) No. 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos. 1191/69 and 1107/70 (hereinafter referred to as the Regulation) which is directly applicable in the Republic of Lithuania and has supremacy over the laws and other legal acts of the Republic of Lithuania. Therefore, there are no grounds for recognising that Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code is in conflict with the Constitution.

III

In the course of the preparation of the case for the Constitutional Court’s hearing, written opinions were received from Karolis Dieninis, the Deputy Director-General of the European Law Department under the Ministry of Justice of the Republic of Lithuania, Šarūnas Keserauskas, the Chair of the Competition Council of the Republic of Lithuania, Rimantas Sinkevičius, the Minister of Transport and Communications of the Republic of Lithuania, and Rimantas Čepas, the Deputy Director of the Association of Lithuanian Municipalities.

The Constitutional Court

holds that:

  1. The petitioner requests an investigation into the compliance of Item 2 (which regulates the relations of the organisation of the provision of public road passenger transport services) of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code with Paragraph 1 of Article 29 and Paragraphs 1, 3, and 4 of Article 46 of the Constitution.
  2. Article 46 of the Constitution prescribes:

“Lithuania’s economy shall be based on the right of private ownership, freedom of individual economic activity and initiative.

The State shall support economic efforts and initiative that are useful to society.

The State shall regulate economic activity so that it serves the general welfare of the Nation.

The law shall prohibit monopolisation of production and the market and shall protect freedom of fair competition.

The State shall defend the interests of the consumer.“

As the Constitutional Court has held on more than one occasion, the principles consolidated in Article 46 of the Constitution are seen as a whole—the constitutional basis of the economy of this country—therefore, the provisions of all the paragraphs of this article are interrelated and supplement each other; the balance is maintained among the principles consolidated therein, each of them should be construed without denying the other principles, and, if a legal norm in one of the paragraphs of this article is violated, the legal norms laid down in the other paragraphs of this article are violated as well, or preconditions are created for their violation. The Constitutional Court’s acts (inter alia, the Constitutional Court’s rulings of 5 March 2008, 29 April 2009, 29 September 2010, and 6 January 2011) set out a broad official constitutional doctrine disclosing the content of the provisions of Article 46 of the Constitution.

2.1. The Constitutional Court has noted that freedom of individual economic activity and initiative imply, inter alia, freedom of the conclusion of contracts, freedom of fair competition, the equality of rights of economic entities, etc.; they are inseparable from an opportunity for a person, who is willing to engage in an economic activity or, conversely, who is willing to drop it, to get into the market and abandon it without any artificial barriers (the Constitutional Court’s rulings of 31 May 2006, 2 March 2009, and 29 April 2009).

2.2. The Constitutional Court has also held on more than one occasion that freedom of economic activity is not absolute, and a person may exercise it in observance of certain mandatory requirements and limitations; it is impermissible, by means of established limitations, to deny the essential provisions of freedom of economic activity such as the equality of rights of economic entities, fair competition, etc.; under the Constitution, the state is not allowed to interfere with individual economic activity without any limitations; the state, when regulating economic activity, must follow the principle of the reconciliation of the interests of the person and society, must also ensure the interests of both a private person (an entity of economic activity) and society, must not seek the welfare of individual persons, but precisely the general welfare of the nation which cannot be opposed to the welfare, rights, and legitimate interests of the economic entity itself (whose activity is regulated) as well as to those of the persons that have established and are running the said economic entity or are otherwise related to the said entity; the fact that economic activity serves the general welfare of the nation may not substantiate or justify any regulation by which the rights and legitimate interests of a certain economic entity would be limited more than necessary for ensuring the public interest and by which unfavourable and unequal conditions for conducting economic activity would be created for economic entities, the initiative of economic entities would be limited, and no opportunities would be created for such an initiative (the Constitutional Court’s rulings of 29 September 2010, 6 January 2011, and 7 July 2013).

2.3. The protection of fair competition is the main method to ensure harmony between the interests of the person and society while regulating economic activity, to create the self-regulation of economy as a system which promotes the optimal distribution of economic resources, their efficient use, an increase in economic growth and an improvement in the welfare of consumers; the provision that the law protects freedom of fair competition means the obligation for the legislature to establish by law the legal regulation in order that production and the market would not be monopolised, freedom of fair competition would be ensured and the means and methods would be provided for its protection; the constitutional guarantee of the protection of fair competition implies the prohibition directed at state authority and municipal institutions which regulate economic activity against adopting decisions which distort or can distort fair competition and obliges state authority and municipal institutions to ensure freedom of fair competition by legal means (the Constitutional Court’s rulings of 5 March 2008, 2 March 2009, and 29 April 2009).

2.4. Under the Constitution, the state, when regulating economic activity, must pay heed to the constitutional requirement for the equality of rights of economic entities, which is directly linked to the principle of the equality of rights of all persons consolidated in Article 29 of the Constitution, since otherwise the legal regulation of economic activity could not be regarded as serving the general welfare of the nation (the Constitutional Court’s rulings of 13 May 2005, 31 May 2006, 2 March 2009, and 24 May 2013).

  1. The Constitutional Court has also held that the legislature, being under the constitutional duty to regulate economic activity so that it serves the general welfare of the nation, also regulates by law the economic activity of carriers of passengers, lays down the conditions for it, the requirements for the exercise of this activity, the limitations and prohibitions on this activity, as well as the control over the economic activity of carriers of passengers (the Constitutional Court’s ruling of 5 March 2008). While doing so, the legislature must pay heed to the imperatives stemming from the Constitution, inter alia, Articles 29 and 46 thereof.

3.1. It should also be noted that the legislature, when regulating economic activity in the area of the carriage of passengers, may, and in some cases also must, delegate some functions of the organisation of this activity to municipalities. Under the Constitution, the functions of municipalities may be established only by law; none of the functions assigned to municipalities means absolute independence of municipalities in a relevant area (the Constitutional Court’s rulings of 24 December 2002, 8 July 2005, and 5 March 2008); while performing the assigned functions, municipalities must heed the Constitution and laws (the Constitutional Court’s ruling of 5 March 2008).

3.2. In the context of the constitutional justice case at issue, it should also be noted that the legislature, having delegated certain functions of the organisation of the activities of the carriage of passengers to municipalities, must, in accordance with the imperatives stemming from Article 46 of the Constitution, inter alia, the requirement that economic activity serve the general welfare of the nation, as well as the requirements for fair competition and the protection of consumer rights, which are consolidated in the said article, and also in accordance with the imperative of the equality of rights of persons consolidated in Article 29 of the Constitution, establish the legal regulation under which municipalities would ensure freedom of fair competition (inter alia, that the means of, and the methods for, its protection are provided for and also that the market for the carriage of passengers is not monopolised) and consumer rights in the area of the carriage of passengers (inter alia, that consumers receive quality and affordable services which are in line with their interests even in cases where the provision of such services is disadvantageous), as well as they would not deny the equality of rights of carriers of passengers.

  1. As mentioned before, the petitioner doubts whether the legal regulation established in Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code is in line with Paragraph 1 of Article 29 and Paragraphs 1, 3, and 4 of Article 46 of the Constitution.

In the opinion of the petitioner, the impugned regal regulation which grants the right to a municipality to select, without a competition or another procedure ensuring competition, whom to give a right (whom to assign) to carry out the activities of the carriage of passengers creates the preconditions for giving privileges unreasonably to one economic entity and discriminating against other possible participants in the market for transport services, denies fair competition and limits freedom of economic activity and initiative.

  1. On 19 November 1996, the Seimas adopted the Road Transport Code which came into force on 11 December 1996. This code regulates the organisation and effecting of the carriage of passengers, luggage, goods and postal items by road, the state management and control of the carriage as well as the liability for property damage (Paragraph 1).
  2. The Road Transport Code has been amended and/or supplemented on more than one occasion, inter alia, by means of the Republic of Lithuania’s Law Amending Articles 1, 2, 4, 7, 8, 13, 14, 16, 17, 18, 20, 21, 23, 29, 37, 40, 42, 44, and 47 and the Title of the Seventh Section of the Road Transport Code, Supplementing the Code with Article 171 and Declaring Articles 57 and 58 No Longer Valid, which was adopted by the Seimas on 19 March 2002. The said law came into force on 9 April 2002 and by means of it the Road Transport Code was supplemented with new Article 171 “Organisation of Public Service”. The said article, inter alia, prescribed:

“1. The Government or an institution authorised by it and municipal institutions shall ensure the provision of necessary road passenger transport services to the public even under the conditions that are not in the carriers’ commercial interest. The losses sustained by carriers due to the provision of the above-mentioned services shall be compensated in the manner established by the Government or an institution authorised by it. The Government or an institution authorised by it, as well as municipal institutions, shall select carriers for the performance of public service obligations on the basis of competition and award a contract for the provision of public services to the successful bidders. Public service contracts shall be concluded for a period not exceeding 5 years.”

Thus, the legal regulation established in the said article provided a duty for the Government, an institution authorised by it and municipal institutions to ensure the provision of road passenger transport services to the public even in cases where it is commercially disadvantageous to carriers. Carriers had to be selected for the provision of road passenger transport services to the public on the basis of competition. The said article did not consolidate any other methods for the selection of carriers.

  1. On 17 December 2009, the Seimas adopted the Law Amending Articles 2, 3, 8, 10, 12, 13, 14, 16, 171, and 18 of the Road Transport Code and the Annex to the Code, which came into force on 28 December 2009. By means of Article 9 thereof, it amended Article 171 (wording of 19 March 2002) of the Road Transport Code.

Article 171 (wording of 17 December 2009) (Item 2 of Paragraph 2 whereof is impugned by the petitioner) of the Road Transport Code prescribes:

“1. In accordance with Regulation (EC) 1370/2007, municipal institutions ensure the provision of public road passenger transport services satisfying general interests, which, considering their commercial interests, would not be taken up by carriers or would not be taken up by them either to such an extent or under the same conditions without receiving any remuneration.

  1. Municipal institutions select carriers for the provision of public services under public service obligations:

1) through a competition, in accordance with the requirements referred to in Article 5 of Regulation (EC) No. 1370/2007;

2) by awarding a contract for the provision of public services directly to the carrier that meets the requirements referred to in Article 5 of Regulation (EC) No. 1370/2007.

  1. Regulation (EC) No. 1370/2007 lays down the content and duration of public service contracts, the conditions for, and the procedure of, awarding them, the losses incurred by carriers in discharging public service obligations and the rules applicable to the calculation of compensation. The procedure for the calculation of compensation for the losses incurred in discharging public service obligations shall be established by the Government or an institution authorised by it in accordance with the rules laid down in the annex to Regulation (EC) No. 1370/2007.“

Having compared the legal regulation established in Article 171 (wording of 17 December 2009) of the Road Transport Code with the one established in Article 171 (wording of 19 March 2002) of the said code, it should be noted that the legal regulation has changed in the sense that the provisions of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code consolidate two methods for the selection of carriers providing public road passenger transport services: carriers may be selected for the provision of these services through a competition in accordance with the requirements referred to in the Regulation (Item 1 of this paragraph) or by awarding a contract for the provision of public services directly to the carrier that meets the requirements referred to in Article 5 of the Regulation (Item 2 of this paragraph), i.e. without a competition. The legal regulation under which municipal institutions have a duty to ensure the provision of public road passenger transport services satisfying general interests even in cases where it is commercially disadvantageous to carriers has remained unchanged.

  1. In view of the fact that in the provisions of Article 171 (wording of 17 December 2009) of the Road Transport Code, inter alia, in Item 2 (impugned by the petitioner) of Paragraph 2 thereof, references are made to the legal regulation consolidated in the Regulation, the said provisions should be construed in conjunction with the provisions of this regulation which, as a legal act of the European Union, under Paragraph 2 of the Constitutional Act “On Membership of the Republic of Lithuania in the European Union”—a constituent part of the Constitution—is a constituent part of the legal system of the Republic of Lithuania.

8.1. The Regulation was adopted with the purpose to define how, in accordance with the rules of EU law, competent authorities may act in the field of public passenger transport to guarantee the provision of services of general interest which are more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed (Paragraph 1 of Article 1).

8.2. The preamble to the Regulation emphasises that many inland passenger transport services which are required in the general economic interest cannot be operated on a commercial basis, therefore, the competent authorities of the Member States must be able to act to ensure that such services are provided (Recital 5). However, it is also noted that the provision of public passenger transport services must seek to ensure competition (Recitals 2 and 17), and, in those states where public passenger transport services are provided by several service providers, “the introduction of <...> competition <...> leads to more attractive and innovative services at lower cost and is not likely to obstruct the performance of the specific tasks assigned to public service operators“ (Recital 7). It is also prescribed that, subject to the relevant provisions of national law, any local authority or, in the absence thereof, any national authority may choose to provide its own public passenger transport services in the area it administers or to entrust them to an internal operator without competitive tendering, however, this self-provision option needs to be strictly controlled to ensure a level playing field (Recital 18). Directly awarded public service contracts should be subject to greater transparency (Recital 30).

8.3. Article 5 of the Regulation, which is relevant for the constitutional justice case at issue and to which references are made in Article 171 (wording of 17 December 2009) of the Road Transport Code, prescribes:

“2. Unless prohibited by national law, any competent local authority, whether or not it is an individual authority or a group of authorities providing integrated public passenger transport services, may decide to provide public passenger transport services itself or to award public service contracts directly to a legally distinct entity over which the competent local authority, or in the case of a group of authorities at least one competent local authority, exercises control similar to that exercised over its own departments <...>.

  1. Any competent authority which has recourse to a third party other than an internal operator, shall award public service contracts on the basis of a competitive tendering procedure, except in the cases specified in paragraphs 4, 5 and 6. The procedure adopted for competitive tendering shall be open to all operators, shall be fair and shall observe the principles of transparency and non-discrimination. Following the submission of tenders and any preselection, the procedure may involve negotiations in accordance with these principles in order to determine how best to meet specific or complex requirements.
  2. Unless prohibited by national law, the competent authorities may decide to award public service contracts directly either where their average annual value is estimated at less than EUR 1,000,000 or where they concern the annual provision of less than 300,000 kilometres of public passenger transport services.

In the case of a public service contract directly awarded to a small or medium-sized enterprise operating not more than 23 vehicles, these thresholds may be increased to either an average annual value estimated at less than EUR 2,000,000 or where they concern the annual provision of less than 600,000 kilometres of public passenger transport services.

  1. In the event of a disruption of services or the immediate risk of such a situation, the competent authority may take an emergency measure. This emergency measure shall take the form of a direct award or a formal agreement to extend a public service contract or a requirement to provide certain public service obligations. <...> The award or extension of a public service contract by emergency measure or the imposition of such a contract shall not exceed two years.
  2. <...>
  3. Member States shall take the necessary measures to ensure that decisions taken in accordance with paragraphs 2 to 6 may be reviewed effectively and rapidly, at the request of any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement, on the grounds that such decisions have infringed Community law or national rules implementing that law.
  4. <...>”

Thus, under the legal regulation established in Article 5 of the Regulation, a competent local authority of a Member State which organises the provision of public passenger transport services may, without competitive tendering, select a carrier providing these services, in the following ways:

– decide to provide public passenger transport services itself;

– to award a contract for the provision of public passenger transport services directly to an internal operator, i.e. a legally distinct entity over which the said authority exercises control;

– to award a contract for the provision of public passenger transport services directly to a third party—an economic entity providing passenger transport services—where at least one of the following conditions is met: 1) their average annual value of passenger transport services or annual distance of carriage within the territory of a municipal institution does not exceed those established in the Regulation (the established thresholds may be expanded in case a contract is awarded to a small or medium-sized enterprise, depending on the amount of vehicles operated by it); 2) emergency measures need to be taken when the provision of services is disrupted or there is a serious risk of such a situation—for no longer than 2 years.

It needs to be emphasised that Article 5 of the Regulation directly consolidates that a competent local authority may decide to provide public passenger transport services itself or to award a contract for the provision of public services, under the conditions specified in this regulation, directly, i.e. without competitive tendering, to an economic entity over which it exercises control or to a third party—an economic entity providing passenger transport services—only if it is not prohibited by national law.

8.4. It should be noted that the provisions of Article 5 of the Regulation, which, inter alia, establish the methods of how competent local authorities may select a carrier providing public passenger transport services, and the provisions laid down in the preamble thereto, inter alia, in Recitals 5 and 18 thereof, make it clear that the possibility for competent local authorities to select a carrier providing public passenger transport services without competitive tendering, but by awarding a contract for the provision of public passenger transport services directly to an internal operator or another economic entity if the conditions laid down in the Regulation are met, is provided for due to the fact that inland passenger transport services which are required in the general interest must also be provided where it is commercially disadvantageous to carriers, thus, the competent authorities of the Member States must have a possibility of taking action which would ensure the provision of these services; under the aforesaid provisions of the Regulation, this self-provision option needs to be strictly controlled. It should also be noted that, under the provisions of Paragraph 7 of Article 5 of the Regulation, Member States must take measures to ensure that decisions, adopted by a local authority, on the selection of a carrier for the provision of public passenger transport services may be reviewed effectively and rapidly at the request of any person having or having had an interest in obtaining a particular contract.

  1. It has been mentioned that the provisions of the Regulation with regard to the method for the selection of a carrier for the provision of public passenger transport services apply unless prohibited by national law. Thus, the legal regulation impugned by the petitioner should also be construed in the context of other legal acts of the Republic of Lithuania which regulate the provision of public services.

9.1. Under the Republic of Lithuania’s Law on Local Self-Government (wording of 15 September 2008), the organisation of the carriage of passengers on local lines and the calculation and payment of compensation for the concessionary carriage of passengers constitute one of the independent functions of municipalities which must be performed by them while paying heed to the principles of the transparency of activities, the lawfulness of the decisions taken and the equality of rights of persons (Items 6, 10, and 13 of Article 4 and Item 33 of Article 6).

9.2. Article 4 of the Republic of Lithuania’s Law on Competition (wording of 9 April 2009) prescribes that, in executing the assigned tasks related to the regulation of economic activity within the Republic of Lithuania, public administration entities must ensure freedom of fair competition; public administration entities are prohibited from adopting legal acts or other decisions which grant privileges or discriminate against any individual economic entities or their groups and which give or may give rise to differences in the conditions of competition with regard to economic entities competing in a relevant market.

9.3. When construing Paragraph 2 (which establishes two methods for the selection of carriers providing public road passenger transport services) of Article 171 (wording of 17 December 2009) of the Road Transport Code in conjunction with the above-mentioned provisions of the Law on Self-Government and the Law on Competition, it should be noted that municipalities, when organising the carriage of passengers on local lines and selecting carriers for the provision of these services, must follow the principles of the transparency of activities, the lawfulness of the decisions taken and the equality of rights of persons; when performing the functions assigned to them in relation to the organisation of the provision of public road passenger transport services, inter alia, when selecting a carrier for the provision of the aforesaid functions, municipalities have to ensure freedom of fair competition in the area of the carriage of passengers and not to take any decisions that give privileges or discriminate against any individual economic entities or their groups operating in the market for carriers and that give rise or may give rise to differences in the conditions of competition with regard to economic entities competing in a respective market.

This means that municipalities which have the duty to ensure the provision of the road passenger transport services that are in line with general interests do not have absolute discretion to decide on the method for the selection of carriers providing these services. Municipalities may take decisions on the selection of carriers providing public road passenger transport services under Item 2 (by awarding contracts for the provision of public services directly to carriers under the conditions laid down in the law) of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code rather than under Item 1 (through a competition) only in cases where such decisions will not give any privileges or discriminate against individual economic entities or their groups.

Thus, when deciding on the method for the selection of a provider of public road passenger transport services, a municipality must take account, inter alia, of whether there are any other economic entities which are willing and able to provide public road passenger transport services and, if there are any, to ensure that they are in a competitive position to provide these services.

  1. When construing Item 2 (impugned by the petitioner) of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code in conjunction with the provisions of the Law on Self-Government and the Law on Competition, as well as in the context of the provisions of the Regulation to which a reference is made in the impugned provision, it should be noted that a different method, consolidated by this legal regulation, for the selection of carriers providing public road passenger transport services—the selection of a carrier on a non-competitive basis, but by directly awarding a contract for the provision of public services—is established to enable municipal institutions to take necessary action in order to ensure the provision of public road passenger transport services which are required in the general economic interest even in cases where it is commercially disadvantageous to carriers. Thus, municipalities, being under the duty to ensure freedom of fair competition, when organising the carriage of passengers on local lines, may, under the impugned Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code, select a carrier for the provision of these services by directly awarding contracts for the provision of public services under the conditions laid down in the law rather than through a competition only in cases where action is needed in order to ensure the provision of public road passenger transport services which, considering their commercial interests, would not be taken up or would be taken up not in full by carriers, however, which is indispensable in order to satisfy general interests, and only if such decisions do not give any privileges or discriminate against individual economic entities or their groups.
  2. When deciding whether Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code is not in conflict with the Constitution, it should be noted that, as mentioned before, the legislature, having delegated certain functions of the organisation of the activities of the carriage of passengers to municipalities, must, in accordance with the imperatives stemming from Article 46 of the Constitution, inter alia, the requirement that economic activity serve the general welfare of the nation, as well as the requirements for fair competition and the protection of consumer rights, which are consolidated in the said article, and also in accordance with the imperative of the equality of rights of persons consolidated in Article 29 of the Constitution, establish the legal regulation under which municipalities would ensure freedom of fair competition and consumer rights (inter alia, that consumers receive quality and affordable services which are in line with their interests even in cases where the provision of such services is disadvantageous) in the area of the carriage of passengers, as well as they would not deny the equality of rights of carriers of passengers.

11.1. It has been mentioned that, under the legal regulation that is established in Item 2 (impugned by the petitioner) of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code, municipalities may select a carrier for the provision of public road passenger transport services by directly awarding contracts for the provision of public services under the conditions laid down in the law rather than through a competition only in cases where action is needed in order to ensure the provision of these services which, considering their commercial interests, would not be taken up or would be taken up not in full by carriers, however, which is indispensable in order to satisfy general interests, and only if such decisions do not give any privileges or discriminate against individual economic entities or their groups.

Thus, by means of the legal regulation consolidated in Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code, the legislature has created the preconditions for ensuring a stable and continuous provision of public road passenger transport services satisfying general interests to residents (inter alia, where it is commercially disadvantageous); under the impugned legal regulation, the provider of public road passenger transport services may be selected only where it is not possible to do so through a competition when both the institutions established by municipalities and private economic entities participate in it on equal terms.

11.2. Consequently, there is no ground for stating that the impugned legal regulation consolidated in Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code violates the requirement that economic activity serve the general welfare of the nation, as well as the requirements for fair competition and the protection of consumer rights, which are consolidated in Article 46 of the Constitution, and the imperative of the equality of rights of persons consolidated in Article 29 of the Constitution.

  1. In the light of the foregoing arguments, the conclusion should be drawn that Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009) of the Road Transport Code is not in conflict with Paragraph 1 of Article 29 and Paragraphs 1, 3, and 4 of Article 46 of the Constitution.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 531, 54, 55, and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

To recognise that Item 2 of Paragraph 2 of Article 171 (wording of 17 December 2009; Official Gazette Valstybės žinios, 2009, No. 154-6952) of the Road Transport Code of the Republic of Lithuania is not in conflict with the Constitution of the Republic of Lithuania.

This ruling of the Constitutional Court is final and not subject to appeal.

Justices of the Constitutional Court:                                             Elvyra Baltutytė
                                                                                                                  Vytautas Greičius
                                                                                                                  Danutė Jočienė
                                                                                                                  Pranas Kuconis
                                                                                                                  Gediminas Mesonis
                                                                                                                  Vytas Milius
                                                                                                                  Egidijus Šileikis
                                                                                                                  Algirdas Taminskas
                                                                                                                  Dainius Žalimas