On 26 April, the Competition Council (CC) took a decision to fine two construction companies – GATE L SIA and Aksīte SIA – for implementing a prohibited agreement by mutually allocating apartment house insulation objects in Saldus. Both companies reached a settlement with the CC, as a result of which they admitted their guilt to the infringement and undertook not to appeal against the CC’s decision, for which they received a reduction of the fine. Both companies were fined a total of EUR 108 472.36. 

The initial information on the alleged infringement of competition law was received by the CC from the Central Finance and Contracting Agency. Taking into account the evidence obtained during the investigation of the case, the CC found that GATE L SIA and Aksīte SIA agreed on the terms of participation in tenders, reaching a mutual agreement for the allocation of insulation projects in 2017 for three houses on Nākotnes Street and in 2021-2022 for two houses on Veidenbauma Street.

The CC found that the two companies allocated the insulation of two houses on Veidenbauma Street, including exchanging commercially sensitive information. At the same time, the CC found that in the procurement of insulation for the houses on Nākotnes Street, the two contractors formed an alliance, but did not carry out the work to the same extent on each site as foreseen in the contract and each carried out the work on a different site instead. GATE L SIA executed works at the object at 7 Nākotnes Street, while Aksīte SIA executed all works at 1A Nākotnes Street and 1B Nākotnes Street. The alliance was thus set up to reduce competition in the procurement in question and to exchange commercially sensitive information under the cover of the alliance.

Juris Gaiķis, Chairman of the CC: “Insulation of apartment houses with EU co-funding is a popular solution not only for improving the energy efficiency of houses, but also for improving the quality of life of residents. But when organising such projects, especially if they are organised by the residents themselves in the form of an association, it is important to remember to organise procurements correctly and to attract fair bidders who have competed with each other to offer the best deal at the best price. In such situations, where the parties involved are ready to admit that mistakes have been made during the project, a successful solution is the conclusion of an administrative agreement or settlement, whereby the companies end their legal dispute with the CC and receive a reduction of the fine, as happened in this case.”

The CC imposed fines on the companies concerned, calculated as a percentage of the net turnover of the company in the preceding financial year. Both parties received a 10% reduction of the fine as a result of the settlement. GATE L SIA was fined EUR 53 506.52 and Aksīte SIA was fined EUR 54 965.84.