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Court dismisses Legal Proceeding in Case on Unfair Discounts applied by Riga International Airport



On 29 September 2009, following an administrative agreement signed between the state owned company Riga International Airport and the Competition Council, the Administrative Regional Court dismissed the legal proceedings concerning the decision of 22 November 2006 of the Competition Council in which an infringement of Article 82 of the EC Treaty (now Art. 102 of the Treaty on the Functioning of the European Union) by the Riga International Airport was found.

The Competition Council agreed to sign an administrative agreement after the Cabinet Regulation No 911 of 5 December 2006 ("Procedures for Specifying Charges for the Services of Air Navigation and the State Joint Stock Company Riga International Airport and their Distribution") had modified the discount system applied by Riga International Airport. Henceforth Riga International Airport will apply charges at one fixed rate for all airlines.

The case was initiated in 2006 further to a complaint lodged by six airlines companies: "Austrian Airlines", "Czech Airlines", "Finnair", "British Airways", "Deutsche Lufthansa AG" and "KLM Royal Dutch Airlines". After investigating the Competition Council found that only two airlines companies benefited from the discounts applied by the airport and that all other airlines either benefited from discounts several times lower or did not benefit from any discount at all. The Competition Council concluded that these discounts are unfair and that they are discriminatory charges for equivalent services which cause discriminatory competition conditions as the airline companies receiving the maximum discounts pay less than the actual cost of the services while the remaining unpaid proportion of costs is covered by the other airlines.

Since 16 April 2008, the Latvian Competition Law foresees the possibility to conclude an administrative agreement in order to settle a legal dispute pending before the courts. When concluding such an administrative agreement, the Competition Council can decide to decrease the amount of the fine imposed for the infringement or to change the legal obligations imposed in its decision. Previous experience shows that the Competition Council has signed such agreements in cases when the distortion of competition has been eliminated and the infringement has been acknowledged. Administrative agreements serve as mean of reducing the length of proceedings and fostering the payment of fines.