A 2 min read

Self-regulation is the way to go

Who knows better what works, and what does not work when it comes to industry-specific topics than the industry itself? With strategic planning and adequate business cooperation, it is possible to avoid Government interference and establish self-regulatory tools in its place. There are several success stories implementing this strategy already in place in Lithuania.

Food industry pledge

Back in 2017 there was a strong political will to introduce a sugar tax in Lithuania. The idea had been a popular one for some time, both in Europe and in South America. The reasoning behind the tax was to encourage food reformulation – incentivise food and beverage companies to reduce the sugar content of their products. Therefore, there was a window of opportunity to suggest a voluntary pledge instead of mandatory regulation.

As of today, there are over 20 local and international companies which have made pledges on food improvement which have been signed with the Ministry of Health. There is already a wide range of commitments in place. The companies reduce their portion sizes, introduce new healthier options, and cut the amount of sugar, salt, or fat in their regular products. This solution has allowed us to prevent the introduction of a new tax, while also changing the food we consume for the better.

Energy Drink Code

In 2013 the Lithuanian Parliament approved several energy drink related restrictions. One of these restrictions was the obligation to use the warning message “Not to be consumed with alcoholic beverages” on all energy drink advertisements. However, at that time, the law on advertising did not oblige any institution to lay down the precise requirements for the usage of this warning. Instead, the largest beverage companies took this opportunity to introduce a self-regulatory Code on Energy Drink Advertising and Marketing. This regulatory code was signed in 2014.

In 2018 the Law on Advertising was amended by obliging the Government to introduce the rules on the presentation of a warning sign. At first, the Ministry responsible intended to copy the provisions which already applied to pharmaceutical advertising rules. However, the industry’s Code worked as a great argument against this idea. The final Government rules mostly repeated the provisions of that Code. The pro-active steps taken 4 years earlier meant that the energy drink industry did not have to change the manner in which they advertise.

Vilnius e-scooter agreement

In early 2019 the e-scooter rental industry was booming worldwide. With this growth in popularity a whole raft of e-scooter parking and safety issues became a growing and urgent issue.

At that time, in the Lithuanian capital Vilnius, there were 5 micro-mobility companies harbouring preliminary plans to launch in spring. Fearing that the country, or the city, could introduce some unmeasured market restrictions there was an idea to sign a memorandum of cooperation. Both the industry, and the municipality were in favour and the memorandum was signed in February 2019. This agreement remains as a useful benchmark to this day. At least in the city of Vilnius, the e-scooter industry has an important say regarding any discussions on its further regulation.  

Ridesharing services appeared on the Lithuanian market in 2015; at that time, the service operated in a grey-zone worldwide. Lithuania’s State Tax Inspectorate was also highly skeptical of the newcomer to the market.

However, the authority’s attitude shifted significantly as the company suggested signing a memorandum of understanding (MoU), and thereby laying the groundwork for cooperation. It foresaw voluntary data sharing of the drivers’ income, directly with the inspectorate, and generated via the ridesharing platform. The purpose of this strategy was to openly facilitate the fulfillment of their tax compliance, while ensuring a level of transparency previously unseen in the passenger transportation sector.

Ridesharing memorandum

Ridesharing services appeared on the Lithuanian market in 2015; at that time, the service operated in a grey-zone worldwide. Lithuania’s State Tax Inspectorate was also highly skeptical of the newcomer to the market.

However, the authority’s attitude shifted significantly as the company suggested signing a memorandum of understanding (MoU), and thereby laying the groundwork for cooperation. It foresaw voluntary data sharing of the drivers’ income, directly with the inspectorate, and generated via the ridesharing platform. The purpose of this strategy was to openly facilitate the fulfillment of their tax compliance, while ensuring a level of transparency previously unseen in the passenger transportation sector.

The MoU was signed in 2016 making Lithuania the first country worldwide whose tax administrator had such an agreement with a ridesharing company.

What is next?

The revised Audiovisual Media Services Directive encourages self-regulatory measures limiting the exposure of children to the advertising of foods and beverages that do not fit general nutritional guidelines. In particular; foods and beverages that are high in salt, sugars, fat, saturated fats, or trans-fatty acids. Even though the priority is to have self-regulatory codes in place, the Member States are also left with the possibility of introducing a set of compulsory rules – in case the self-regulatory approach fails. 

This situation creates an urgent need for a joint-effort from media companies, marketing agencies, and food producers. By taking the EU pledge on the subject of marketing to children as an example, there is a window of opportunity to approve a similar local code of conduct. This would become a highly effective tool, by creating a unified advertising environment for all, while at the same time avoiding unnecessary regulatory debates. 

Meta team

Andrius Reznikovas Account Manager

Andrius Romanovskis Partner

A 3 min read

Frequencies – does the overestimation of state needs lead to the waste of state resources?

The radio frequency spectrum is a finite and limited state resource. Because of this, the progress of national telecommunications is tightly linked with its regulation and deliberate distribution. 

Lithuania is widely acknowledged for its telecommunication services’ affordability, along with effective competition among the country’s three biggest operators: Tele2, Bitė Lietuva, and Telia Lietuva. 

Despite the country’s size, Lithuania’s small telecoms market is considered to be among the most advanced in Europe, particularly given the universal access to LTE infrastructure and the extensive fibre footprint. However, the state-owned communications network – mostly employed by public safety and emergency services – lacks similar development and operates using 2G technology, which is limited to voice services alone.

New State Critical Communications Network: Is it what they say it is?

In September 2020, the previous Government considered the establishment of the State Critical Radio Network, aiming to better cover the needs of public protection and disaster relief (PPDR) services. The Government has already approved the concept proposed by the Ministry of Transport and Communications. The ultimate goal of the new network would be to advance the PPDR sector to the next generation network (high-speed mobile data/broadband systems).

However, according to the plan, 30% of the 700 MHz and 25% of 3500 MHz bands would be reserved for the state network’s needs, the same bands used for commercial 5G networks. These proportions are relatively large, compared to the expected demand for the service. The estimated number of potential users is approximately 11,000, while the investment in the new state network is expected to reach 43 million EUR. 

In this context, the following question appears. Is it a miscalculation of the state needs, or does the plan hide other ambitions – the establishment of a new state-owned mobile operator?

No discussion may lead to market distortion

Before the Government’s approval, the concept of the State Critical Radio Network had not been discussed with other market participants. The Government has not considered the alternative solutions, already successfully applied in other countries, and requiring far less investment. For instance, the private operators could share certain network elements, or even help create a hybrid model. The latter option works when the state uses its own core network and integrates it with the radio access network shared by one, or several private operators. If applied, these models would allow the Government to effectively meet the demands in PPDR, without wasting limited public resources.

Without consideration of the models described, there is a high risk of market distortion. Private operators participating in future spectrum auctions would compete for only 70% of the 700 MHz, and 75 % of the 3500 MHz bands. The reduction of the commercial spectrum width would lead to the decline in 5G network quality, slower technological development, and lower investments. The Government would lose out on the opportunity of collecting the fees that otherwise would be paid for by private operators for the remaining spectrum.

Cooperation will be the key

It is acknowledged that Lithuania must improve the poor standard of the current mobile network so necessary to the PPDR. The arguments above indicate that the current plan lacks strategic depth and clarity. Opinion dictates that the Government should press the pause button on the entire project, and encourage active dialogue between the governmental institutions and the industry. It would allow all to prepare a well-reasoned, strategically beneficial, and in-depth plan for the new State Critical Radio Network.

Meta team

Anastazija Peciukonė Account Director

Andrius Romanovskis Partner

A 3 min read

Offshore wind – being a step ahead

Being a step ahead of your neighbours is always a good feeling. With a proposed timeline  for offshore wind power development, Lithuania is in the process of becoming the first Baltic State to have an operational offshore wind park by 2030.

Risks and shortages lead to innovation

Lithuania has realised that having almost no fossil fuels reserves, along with the ongoing closure of the Ignalina Nuclear Power Plant, and being in a highly disadvantaged geopolitical situation, are all factors dictating a strong focus on renewable energy sources. In fact, by 2018, Lithuania had already reached its 2020 renewable energy consumption target. It is also among the 6 forward-thinking EU countries who are active in encouraging the European Commission to ensure 100 % renewable energy sources by 2050. In the meantime, the next logical step for Lithuania is a move towards the sea and the renewable energy resources to be found there.

Using our advantages

Lithuania’s Baltic sea territory is a prime opportunity for the development of renewable energy sources. Studies have shown that approximately 3.35GW of wind power capacity can be harvested from Lithuania’s marine territory. The best location for offshore wind development is 30 kilometres off the shore of Šventoji, where wind speeds reach 9–10 m/s, and the sea depth is an accessible 25–40 m. With infrastructure corridors existing in parallel, this is a highly-favourable combination for the implementation of a successful, and cost-effective energy project.

Currently, Lithuania is pressing ahead with plans to develop a 700MW offshore wind farm which is expected to be completed by 2030. A wind farm of this capacity can produce approximately 2.5-3 TWh of electricity per year, which is almost a quarter of Lithuania’s present energy demands.

To make this happen, Lithuania needs solid regulations to be put in place. So far, the following wheels have been set in motion.

  • During the first half of 2020, Lithuania’s Ministry of Energy held intense consultations with the wind power industry and state institutions, on the subjects of potential offshore regulation and the various project development scenarios.
  • In June 2020 Lithuania’s Government approved the territory for a 700 MW wind park.
  • In September 2020, the previous Government gave approval to a package of draft laws, setting in motion the basis for offshore development: the contract for difference support model; wind park operation time and connection model; the division of responsibilities during the entire process; and other safeguards necessary for the project’s success.
  • The new Government re-evaluated the draft laws and in September 2021 suggested some changes to the original proposal. For example, the Government now supports the so-called ‘full-scope approach’, when an offshore wind park developer also builds the transmission asset. The experience from other markets has shown this is a more cost effective way which also helps mitigate risks. 
  • The Parliament now has the final word on the subject.

Cooperation will be key

Once we have the regulation in place, the next phase relies on implementation. A successful outcome will require high quality pre-tender research, a process which is in the hands of the Ministry of Energy. The Lithuanian energy agency is already in the process of tendering wind measurements, soil and seabed analysis, and bird/wildlife monitoring.

The National Energy Regulatory Council will be the ones responsible for the offshore tender procedures, along with the establishment of a tender cap. These are decisions which must be well-weighted – ensuring the country does not overpay for the facility, along with leaving enough room to facilitate reasonable bids from a business perspective.

However, The challenges will not diminish with the announcement of a successful tender. Starting and finishing the contract within the required time frame will require a coordinated plan of action in all processes.

Including receiving military approval, obtaining the necessary construction permits, tasking an environmental-impact assessment, along with many other subsidiary tasks.

Much depends on having the electricity transmission infrastructure updated, and any new or additional components constructed or installed in time.

So far, the future looks promising, and it is hoped that by 2030 Lithuania will have its own 700 MW offshore wind park in operation, with plans for an additional and similar facility already in place for the future.

Meta team

Anastazija Peciukonė Account Director

Andrius Romanovskis Partner

A 3 min read

Lobbying regulation – endless discussion and questionable outcomes

Lithuania has some of the strictest lobbying regulations in the EU. First introduced in 2000, the Law on Lobbying Activities has been debated ever since.

The most recent amendments came into force on 1 January, 2021. For the first time, it introduces obligations not only for lobbyists, but also for the public sector. The adopted law has established the so-called cross-declaration that requires lobbyists, as well as politicians and public servants, who have contact with lobbyists, to report their activities. Therefore, the President, the Members of Parliament, the government cabinet, and a long list of other government and municipal officials and public servants now have to declare each lobbying attempt. This includes meetings, calls, emails, and official letters on any subject regulation-related.

On the surface it seems like a logical approach to establishing transparency in the legislative process. But the actual implementation seems almost impossible. A stream of correspondence is constantly flowing into the email boxes of MPs, and anyone else on the list. Most of this constant flow contains a regulatory proposal in some form or other. Following this legislation, each communication now have to be declared, even if repeatedly sent to multiple recipients. A failure to declare any of these communications will be regarded as a violation of the legislation.  

Another tricky aspect to be considered, is the interpretation of what is, and what is not lobbying.

Another tricky aspect to be considered, is the interpretation of what is, and what is not lobbying. For example; is a generic discussion on VAT rates with a politician lobbying? Is a casual chat with a Minister on the best ways to boost renewable energy lobbying? Should it be declared each time by both sides? Eventually, it all boils down to interpretation by the supervisory authority. 

Is there a better alternative?

Let’s introduce a transparency registry instead, where each lobbyist, be it an NGO, a business organization, or an individual, could register and declare their topics of interest. To get a better picture of their legislative footprint, each of them would have to register specific draft laws or other legislation that they are actively working on.

Let’s introduce a transparency registry instead, where each lobbyist, be it an NGO, a business organization, or an individual, could register and declare their topics of interest.

Being on the registry should have real-life benefits. It could ensure access to additional information on specific topics, admission to meetings and working groups. In tandem with a potential punishment for undeclared lobbying, this would motivate all concerned parties to register. 

The transparency registry would be an easy, low maintenance means of having all the interest groups, segmented by topics, in one central database. It would indicate which, if any, attempted to influence specific legislation, without time-consuming and overly complicated cross-declaration. 

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