Court judgement in the appeal against the decision of the Latvian Competition Council
26 Januar 2024 - 8:45AM
UK Regulatory
Court judgement in the appeal against the decision of the Latvian
Competition Council
With the 09.08.2021 stock exchange announcement,
AS Merko Ehitus disclosed information concerning the decision of
the Latvian Competition Council according to which the group's
subsidiary SIA Merks is considered one of the nine companies
involved in the prohibited cooperation of Latvian construction
companies during the period 2015-2019, which means a violation of
Section 11(1) of the Latvian Competition Act. Latvian Competition
Council does not accuse the companies in the price-fixing. The
decision of the Competition Council was largely based on
conversation transcripts that were handed over by the Latvian
Corruption Prevention and Combating Bureau (KNAB) which conducted
wiretapping during surveillance activities. According to the
decision of the Latvian Competition Council, a former manager of
SIA Merks participated in a meeting of Latvian construction
companies on 27.06.2016. According to the decision of the
Competition Council of Latvia, a total of 12 such meetings took
place, the rest of which were not attended by the representative of
SIA Merks.
SIA Merks has not been criminally charged with a
cartel in Latvia. Unlike Estonia, possible violations of
competition rules are handled in Latvia in administrative
proceedings, where the Competition Council is simultaneously both
the investigator of the case and the decision-maker. The accused
company can challenge the decision in the administrative court, but
contrary to criminal proceedings, the burden of proof is reversed,
i.e. the company must prove that it is not guilty.
Prior to the decision, the company was able to
express its views on the raised accusations in writing once and
participate in one meeting of the Latvian Competition Council. SIA
Merks and AS Merko Ehitus contested the legality of the Latvian
Competition Council's decision in the Latvian District Court due to
manifest procedural and substantive mistakes, about which AS Merko
Ehitus notified with the 09.13.2021 stock exchange announcement.
Additional comments have been published in interim and annual
reports, all materials have been available in the corresponding
subsection of AS Merko Ehitus' website.
Yesterday, on 25 January 2024 the Latvian
Administrative Regional Court announced its judgement, which upheld
the decision of the Latvian Competition Council.
Merko Ehitus group continues to consider the
views of the Latvian Competition Council regarding SIA Merks’
business practices to be unfounded in their entirety. The
group will thoroughly analyse the conclusions reached in the
judgement of the Administrative District Court of Latvia and decide
the submission of a cassation appeal to the Supreme Court of Latvia
in the near future. AS Merko Ehitus will notify about the cassation
through the stock exchange system.
The administrative fine imposed by the
Competition Council of 5.4% from SIA Merks’s revenue of the
financial year of 2020, i.e. 2,688,950.79 euros will not become due
and all other possible consequences under Latvian laws will not
take effect until the final court ruling enters into force. The
consequences under the law mean the prohibition of SIA Merks from
participating in public procurement for three years after the
judgement comes into force, and the civil lawsuits of the damaged
parties. The Competition Council of Latvia did not reproach the
companies accused of the cartel about price agreements,
respectively we consider it unreasonable to assume the occurrence
of damage without concrete evidence.
Merko Ehitus publishes an updated impact
assessment in each interim and annual report as reliable
information becomes available. The group publishes information on
event with a one-time significant impact as stock exchange
announcement.
Merko Ehitus group remains committed to
promoting and implementing ethical business standards and
behaviour, as well as compliance with all applicable laws and
regulations governing business practices. Any possible infringement
of fair competition is in violation of the operating principles and
values of the group.
Urmas Somelar
Head of Group Finance Unit
AS Merko Ehitus
+372 650 1250
urmas.somelar@merko.ee
AS Merko Ehitus
(group.merko.ee) group companies develop real
estate and construct buildings and infrastructure. We create a
better living environment and build the future. We operate in
Estonia, Latvia, Lithuania and Norway. As at the end of 2022, the
group employed 661 people, and the group’s revenue for 2022 was EUR
410 million.
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