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A Settlement to avert a Violation of the Competition Law



On 2 June 2014, the Competition Council (CC) of Latvia took a decision to fine the Latvian Leasing Association (LLA) for a prohibited agreement among its members. To avert the violation, for the first time in the history of the CC the settlement during the investigation was applied.

Before closing the investigation, the LLA pleaded guilty to the violation, committed to prevent further damages to the competition and not to appeal the decision by the CC to the court. Therefore, as a result of the settlement, a fine imposed in the amount of EUR 1623 (5,3 % of previous financial year net turnover of the LLA) was reduced by 10 % and was set at the amount of EUR 1461.

The violation is classified as a prohibited agreement among members of the LLA, including largest Latvian lessors. Members agreed on significant business principles, such as conditions relating to the term of operational leasing and the amount of the first payment, surrender value of the car, pre-emptive rights and conditions regarding service and maintenance of a car. Furthermore, members of the LLA agreed on principles on which they settle with car dealers and insurance companies.

Although, members of the LLA did not always follow conditions they agreed on, the agreement allowed to anticipate further actions by competitors, thus, reduce the mutual competition. The LLA stressed that the aim of the agreement was to protect consumers from imprudent borrowing to purchase cars. However, the CC during the investigation stated that the agreement was concluded, firstly, in order to provide lessors with such benefits to avoid from irrecoverable loans without losing potential clients to other competitors.

Negotiating the settlement helps the CC to detect and avert the violation more quickly, as well as to save resources for the investigation and proceedings, therefore the fine imposed is reduced