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Latvian Watchdog Fines Three Companies for Prohibited Agreement

By  |  November 2, 2023
Information Exchange

The Latvian Competition Council (KP) has taken decisive action against three companies, SIA “AKE LOGISTIKA,” SIA “LATGALES MULČA,” and SIA “MG Auto,” for their alleged involvement in a prohibited agreement. The firms are accused of exchanging commercially sensitive information related to the conditions of participation in five procurements organized by the state-owned enterprise “Latvijas valsts meži” (LVM), which deals with the provision of wood chips, delivery, chipping, storage, and transportation services.

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    The KP imposed a collective fine of EUR 163,630 on these companies for their alleged anticompetitive behavior.

    The investigation into this case began when LVM, the procurement customer, raised concerns about coordinated actions among applicants during the bid submission process. Further inquiry revealed that the offers submitted by these companies in LVM procurements between 2018 and 2022 displayed remarkable similarities both in content and in the manner of submission, indicating a lack of independence in their bidding.

    During the investigation, the KP discovered that in four out of five procurements, all three companies submitted their bids from the same IP address in the Electronic Procurement System (EIS). Additionally, two of the companies used a single email address for registration in the EIS. Representatives of SIA “AKE LOGISTIKA” were also found to be actively involved in the preparation and submission of procurement documentation for all the penalized companies.

    Despite these interconnections, the KP emphasized that, under Competition Law, the companies are considered independent market participants. The firms had submitted declarations of independence asserting that their procurement offers were prepared independently.

    Ieva Šmite, Director of the Prohibited Agreements Department of the KP, highlighted the gravity of the situation, stating, “General agreements in procurement are agreements between the customer and several suppliers with the aim of determining the procurement contracts to be concluded in the relevant period and providing for their terms, for example, on prices and expected volume… the exchange of commercially sensitive information and the coordination of activities are not allowed and are punishable.”

    The imposition of this fine serves as a stern warning to companies engaging in anticompetitive practices and underscores the importance of fair and transparent procurement processes in Latvia.

    Source: Eng Lsm