The Supreme Court of the Republic of Latvia decided that the Freeport of Riga Authority for engaging in commercial activity, thus infringing the public person law, and subsequent infringement of the Competition Law is obliged to compensate loss of the private company AS “PKL Flote”. The Freeport of Riga Authority is obliged to pay almost 1.35 million euros for the loss incurred by the company.
The court recognized that tugboat services provided by the Freeport of Riga Authority are unlawful. The Freeport of Riga Authority has not observed instances specified in the State Administration Structure Law, which stipulate, when a public person is eligible to carry out commercial activity. The court also concluded, that abuse of the dominant position by the Freeport of Riga Authority and restriction of operation of its competitor AS “PKL Flote” at the port serves as a basis for compensation of loss. The judgment states, that AS “PKL Flote” is entitled to receive not only the profit lost in the period from 2008 to 2009, which was gained by the Freeport of Riga Authority during the infringement, but also the loss related to idle standing of tugboats. In total, the amount of compensation constitutes almost 1.35 million euros.
This is the first time, when a general jurisdiction court in Latvia has recognised, that a public person is obliged to compensate loss to a private commercial company for an infringement of the Competition Law.
“Since Latvia has adopted Damage Directive, each injured party of infringement of the Competition Law is eligible to request compensation of incurred loss from the infringer. The more frequently injured parties will exercise these rights, the more the potential infringers will learn from mistakes made by others and will avoid any conduct in bad faith. In this way, not only the fines imposed by the Competition Council (the CC), but also compensated loss serve as preventive tools for mitigation of competition distortions,” the benefits of compensation of loss are emphasized by the Chairwoman of the CC Skaidrīte Ābrama.
In this specific case, the fact of infringement of the Competition Law was based on a decision adopted by the CC in 2009. The CC has repeatedly – in 2009, 2011 and 2015 – imposed fines on the Freeport of Riga Authority for competition distortion using their administrative power to ensure competition advantages to their owned tugboats and preventing private tugboat companies from operating at the port. The competition was deformed at the port for more than seven years.