On 3 April, the Regional Administrative Court ruled to reject the application of construction materials trader SIA “DEPO DIY” concerning revocation of the decision taken by the Competition Council of Latvia (the CC) in 2017. The Court thus concluded in the respective court instance the series of court proceedings with all companies involved in the particular competition violation and fully upheld the Authority’s decision. In this decision, the CC found a prohibited agreement between two manufacturers and four traders of building materials on a long-term price fixing in stores.
During the case investigation, the CC examined an agreement concluded by manufacturers SIA “Knauf” and SIA “Norgips”, as well as the largest retailers of building materials – SIA “DEPO DIY”, SIA “Kesko Senukai Latvia”, SIA “Tirdzniecības nams “Kurši””, and SIA “Krūza” –, fixing the minimum resale price level and specific price level for products distributed by SIA “Knauf” and SIA “Norgips”. The CC established in the decision adopted in 2017 that the agreement manifested itself both as vertical restrictions between SIA “Knauf” and SIA “Norgips” and retailers, and as horizontal agreements by retailers reaching common understanding and implementing coordinated action regarding unified operational principles and mutual control in implementation of the agreement concerning products of SIA “Knauf” and SIA “Norgips”. In order to successfully implement the cartel agreement, participants of the agreement used mutual control and motivation tools.
In the decision of the CC, it was established that among the retailers the most active involvement in the control of resale prices was exercised by SIA “DEPO DIY”, as the company not only actively monitored the price discipline of other retailers, but also most actively influenced the formation of the resale price level. For the competition distortion, the CC imposed on SIA “DEPO DIY” the most severe fine among all participants of the cartel agreement, that is, 3 718 323 euros.
Valentīns Hitrovs, the Head of the Legal Department of the CC: “In its judgments, the court carried out a detailed and comprehensive analysis of the evidence available in legal proceedings and communication between the participants, which sufficiently revealed the goal of SIA “DEPO DIY” to reduce the competition. The court confirmed that a cartel can also be found in cases with no direct contacts between competitors as their market activities were coordinated through a third party which in this case was the supplier.”
The decision made in 2017 by the CC was appealed in the Administrative Regional Court by three offenders: SIA “DEPO DIY”, AS “Kesko Senukai Latvia” and SIA “Tirdzniecības nams “Kurši””. On 17 February, the Regional Administrative Court ruled to reject the applications of AS “Kesko Senukai Latvia” and SIA “Tirdzniecības nams “Kurši””. The decision of the CC regarding AS “Kesko Senukai Latvia” has entered into force, because the merchant decided not to appeal the court judgment unfavorable to the company. Whereas SIA “Tirdzniecības nams “Kurši”” appealed the judgment in the next court instance.
On 3 April, the Regional Court rejected the application of SIA “DEPO DIY”, thus concluding in the respective court instance the series of legal proceedings, leaving the decision of the CC in full force.
As a result of the implemented cartel agreement, the CC decided to impose a fine in the amount 5.8 million euros on three traders of construction materials: AS “Kesko Senukai Latvia”, SIA “Tirdzniecības nams “Kurši”” and SIA “DEPO DIY”. Prior to the decision of the CC, administrative agreements were reached with SIA “Knauf”, SIA “Norgips” and SIA “Krūza”, providing for termination of the legal dispute and payment of a fine in the total amount of 1.6 million euros.