On 14 December, the Competition Council (CC) imposed a fine in the total amount of 59 425 EUR on seven logging undertakings for operating a cartel in the state owned forest property and management company AS Latvijas valsts meži organized procurements.
Tenders for two procurements in one of the forestries (Austrumvidzemes mežaismniecība) undertakings entrusted to prepare to one person, therefore exchanging information containing commercial secret and eliminating a real competition.
All seven fined undertakings – SIA ADV Forestry, SIA Andrēnkalni, SIA CLEAN FOREST, IK WHITE WATER HOUSE, SIA Ramuss, SIA LatKada, and SIA LMV Mežsaimniecība – submitted cartelised tenders in a procurement of forest planting and agro-technical thinning of the restored forest area. Furthermore, SIA ADV Forestry, SIA CLEAN FOREST, and SIA LMV Mežsaimniecība submitted coordinated tenders in a procurement of forestry work.
The CC initiated the investigation after application of the AS Latvijas valsts meži. Cartel participants denied any correlation, while later changed their original testimony and pointed out that they are one market participant, substantiating statement with a mutual relationship and trust agreements through which all undertakings are controlled by one person. During the investigation, the CC did not gain evidence on the actual execution of such agreements.
In the context of the case, the CC highlights that family ties between employees or owners are not an excuse for submitting coordinated tenders. Cartel misleads organizer on the competition of market participants. A fact that owners of several undertakings are linked by kinship, does not give a basis for them to be recognized as one market participant, which mutually does not compete, and to be justified in misleading organizer of the procurement. Undertakings have to compete or, if in case of kinship it is not possible, have to operate officially as one market participant.
Due to provision of the false and contradictory information and impeding the investigation, not providing the information to the competition authority in a timely manner or at all, the CC increased the fines imposed to all cartel participants.
For media inquiries:
Inita Kabanova
Head of Communication Division
The Competition Council of Latvia
E-mail: inita.kabanova@kp.gov.lv
Ph: +371 67365210; Mob: +371 20219048