On 25 January, the Senate of the Republic of Latvia upheld the judgment of the Administrative Regional Court which concluded that the 2017 decision of the Competition Council (the CC) regarding the participation of SIA “DEPO DIY” in a prohibited vertical agreement and a prohibited horizontal agreement or cartel of manufacturers and traders of construction materials is justified. Given that the decision is not subject to appeal, SIA “DEPO DIY” must pay the fine of EUR 3,718,323 to the state budget.
Juris Gaiķis, chairman of the CC: “This judgment of the Senate on the involvement of SIA “DEPO DIY” in the cartel concludes a seven-year series of proceedings against the undertakings involved in the competition infringement in question, upholding in full the authority’s decision. The Court has confirmed the finding of the Competition Council in its decision that all parties to a prohibited agreement, irrespective of the role of each market participant in the prohibited agreement or market power, must be held liable for distortion of competition. Even if the cartel was initiated by the manufacturer and retailers were pressured to sell the product at a certain price, this does not exempt market players from liability for the infringement, especially if the terms of trade offered by the manufacturers were also convenient and advantageous for the retailers. In such situations, the undertaking should actively, clearly and unequivocally disassociate itself from the competition infringement by disclosing it to the other parties to the agreement and report the prohibited conduct to the Competition Council. It should also be noted that Latvian competition law and its application are fully in line with EU law. Whether competition law is applied in the circumstances by one of the competition authorities of the member States of the European Union or even by the European Commission, the result would be identical to the one reached in this case.”
During the investigation of the case, the CC assessed the agreement between the building material manufacturers SIA “Knauf” and SIA “Norgips” and four major building material retailers – SIA “DEPO DIY”, AS “Kesko Senukai Latvia”, SIA “Tirdzniecības nams ‘Kurši’” and SIA “Krūza” – to fix minimum resale price levels and fixed price levels for products distributed by SIA “Knauf” and SIA “Norgips” over a prolonged period. The CC found that the prohibited agreement took the form of both vertical restraints between SIA “Knauf” and SIA “Norgips” and the retailers, and horizontal cartel agreements, whereby the retailers, through the manufacturers, reached a common understanding and concerted action on common operating principles and mutual control in the implementation of the agreement regarding the price of the products of SIA “Knauf” and SIA “Norgips”.
Prior to the adoption of the decision of the CC, administrative agreements were concluded with SIA “Knauf”, SIA “Norgips” and SIA “Krūza”, which provided for the termination of the legal dispute and the payment of fines totalling EUR 1.6 million. The other three building material traders – AS “Kesko Senukai Latvia”, SIA “Tirdzniecības nams ‘Kurši’” and SIA “DEPO DIY” – were fined EUR 5.8 million.
The three fined building material traders appealed the 2017 decision of the CC to the Administrative Regional Court, and in 2020 the court rejected the companies’ applications, finding the decision of the CC to be justified. AS “Kesko Senukai Latvia” decided not to appeal the unfavourable court ruling and paid the fine of EUR 920,618. In turn, SIA “Tirdzniecības nams ‘Kurši’” and SIA “DEPO DIY” appealed against the judgment of the Administrative Court in the next instance. On 28 December last year, the Senate of the Republic of Latvia decided to uphold the judgment of the Administrative Court regarding the involvement of SIA “Tirdzniecības nams ‘Kurši’” in a prohibited agreement, while on 25 January this year, it decided to uphold the judgment of the previous instance also concerning the involvement of SIA “DEPO DIY” in the cartel. SIA “DEPO DIY” must pay the imposed fine of EUR 3,718,323 to the state budget. This concludes the series of proceedings regarding all the undertakings involved in the infringement in question, upholding the authority’s decision in its entirety.