On 25 January, the Administrative Regional Court rejected the construction companies’ application for annulment of the Competition Council’s (CC) decision of 30 July 2021 in the so-called “builders’ cartel case”, in which the CC found a cartel among 10 construction companies and imposed a fine of more than EUR 16 million on the market participants.
Eight of the ten companies fined by the CC appealed the CC’s decision to the Administrative Regional Court, but several appeals were lodged by construction companies together with their parent companies, making a total of 13 companies as claimants in the case.
The Court rejected the applications of SIA “Abora” and SIA “Tehnocentrs”, SIA “Arčers”, SIA “Latvijas energoceltnieks”, AS “LNK Industries”, SIA “LNK (Latvijas Novitātes Komplekss)”, SIA “Merks” and AS “Merko Ehitus”, SIA “Re&Re”, SIA “Rere būve” and AS “Rere grupa”, SIA “Skonto būve” and AS “UGN” in their entirety. Thus, the finding in the CC’s decision of an infringement of the prohibition of prohibited agreements in the activities of the construction undertakings under Section 11 of the Competition Law and Article 101 of the Treaty on the Functioning of the European Union, and the fines imposed on these market participants are found to be lawful and justified.
Māris Spička, executive director of the Competition Council, says: “The Competition Council welcomes the judgment of the Administrative Regional Court, which comprehensively assessed the evidence in the case, as a result of which the Court was convinced that the construction companies negotiated and agreed for years on the distribution of major construction procurements and the terms of participation in the procurements, for example, agreeing on the Mežaparks Stage, Riga Technical University, New Riga Theatre, Latvian National Art Museum, VEF and other procurements. The Court, having assessed the national regulatory framework and the legal framework of the European Union, as well as the case law of the European Union, also concluded that the Competition Council was entitled to use secretly intercepted recordings of conversations of natural persons obtained from criminal proceedings to substantiate the finding of the infringement and that such evidence was admissible if the interception was carried out in accordance with the requirements of the law. In its judgment, the Court also drew attention to the issue of actions taken by the true beneficiary of an undertaking, including a shareholder, in the interests of a particular market participant, which had not been considered in Latvian case-law before. The Court confirmed that in order to prove that a natural person who participated in the prohibited negotiations represents the interests of a particular undertaking, it is necessary to assess not only the legal but also the factual links between the person and the undertaking.”
Two of the ten companies fined did not appeal against the CC’s decision; these are “Velve”, with which the CC agreed on a settlement and gave a positive opinion on the measures taken by the company to “restore the credibility of the customer”, and “RBSSKALS būvvadība”, which had already been declared insolvent at the time of the CC’s decision.
The Regional Court’s judgment may be appealed to the Senate’s Department of Administrative Cases within one month from the date of the judgment.
Read more about what the CC decided in the “builders’ cartel case” here: https://www.kp.gov.lv/en/article/competition-council-fines-10-construction-companies-participating-cartel