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On 30 October 2009 the Latvian Competition Council passed an infringement decision against Samsung Electronics Baltics and four of its Latvian suppliers. The decision stands out for two reasons. First, it is a noteworthy fact in itself that the Competition Council has managed to detect a price fixing and market sharing cartel. Second, the total fine of 6.6 million lats on all the involved companies is the highest fine in the history of Latvian competition law. Even though most likely the fined undertakings will appeal the decision to the administrative courts, the evidence collected regarding contacts between the involved parties, the attempted hiding of evidence and, most of all, the fact that so far almost all the decisions of the Competition Council have been upheld by the courts, it will not be easy to avoid the fine ultimately.
Agreements between competitors to fix prices, restrict output or impose quotas, to divide markets or to fix the outcome of tenders, i.e., cartels are regarded as the gravest type of competition law infringements, and is therefore the most diligently hidden and the most persistently chased one in all jurisdictions which recognise competition law and have competition authorities. Latvia is not an exception.
Competition law contains specific provisions which facilitate the discovery and proving of the existence of cartels. It is not possible to avoid liability, e.g., by arguing that there is not an agreement since a written document does not exist, or that the agreement was concluded by the employees of the company, not the duly authorised representatives. A few inconsiderately drafted e-mails exchanged by the employees of two or more independent companies will be regarded as sufficient proof for the existence of a cartel. Also, deletion of e-mails will not be of any help, since the Competition Council is entitled to search the premises and to remove documents or objects, e.g., a PC and a server for expertise.
Even if the participants to a cartel never exchange written messages, meet only, e.g., at airports during intervals between different flights and engage in the most inconspicuous of the collusion methods (for instance, instead of raising prices simultaneously, agree on a discount policy), the so called leniency policy, pursued by many competition law systems, endangers the cartel from inside. According to the leniency policy, the cartel participant who first blows the whistle and produces conclusive evidence for proving the existence of the cartel is granted 100% immunity from the fine.
So far the Latvian Competition Council cannot boast with too many solved cartel cases. The most noteworthy instances are the 2004 decision on the so called eggs’ cartel and the above mentioned 2009 decision regarding distribution of Samsung electronic appliances. However, given that the Competition Council’s activity, competence and quality of investigations is improving with each year, one might expect the next major cartel case in less than 5 years.
It goes without saying that the safest way of avoiding cartel liability is resistance from anti-competitive behaviour. However, there are instances when the shareholders are not even aware that their employees have, on their own initiative, engaged in communication with the employees of the competitors. Therefore, it is recommended to educate one’s management and employees in competition law and to implement internal competition compliance manuals to avoid unpleasant surprises when a seemingly harmless participation in the meetings of a trade association or an excessively diligent manager’s attempts to earn the annual bonus lead to a fine in the amount of up to 10% of the whole group’s yearly turnover.
Agreements between competitors to fix prices, restrict output or impose quotas, to divide markets or to fix the outcome of tenders, i.e., cartels are regarded as the gravest type of competition law infringements, and is therefore the most diligently hidden and the most persistently chased one in all jurisdictions which recognise competition law and have competition authorities. Latvia is not an exception.
Competition law contains specific provisions which facilitate the discovery and proving of the existence of cartels. It is not possible to avoid liability, e.g., by arguing that there is not an agreement since a written document does not exist, or that the agreement was concluded by the employees of the company, not the duly authorised representatives. A few inconsiderately drafted e-mails exchanged by the employees of two or more independent companies will be regarded as sufficient proof for the existence of a cartel. Also, deletion of e-mails will not be of any help, since the Competition Council is entitled to search the premises and to remove documents or objects, e.g., a PC and a server for expertise.
Even if the participants to a cartel never exchange written messages, meet only, e.g., at airports during intervals between different flights and engage in the most inconspicuous of the collusion methods (for instance, instead of raising prices simultaneously, agree on a discount policy), the so called leniency policy, pursued by many competition law systems, endangers the cartel from inside. According to the leniency policy, the cartel participant who first blows the whistle and produces conclusive evidence for proving the existence of the cartel is granted 100% immunity from the fine.
So far the Latvian Competition Council cannot boast with too many solved cartel cases. The most noteworthy instances are the 2004 decision on the so called eggs’ cartel and the above mentioned 2009 decision regarding distribution of Samsung electronic appliances. However, given that the Competition Council’s activity, competence and quality of investigations is improving with each year, one might expect the next major cartel case in less than 5 years.
It goes without saying that the safest way of avoiding cartel liability is resistance from anti-competitive behaviour. However, there are instances when the shareholders are not even aware that their employees have, on their own initiative, engaged in communication with the employees of the competitors. Therefore, it is recommended to educate one’s management and employees in competition law and to implement internal competition compliance manuals to avoid unpleasant surprises when a seemingly harmless participation in the meetings of a trade association or an excessively diligent manager’s attempts to earn the annual bonus lead to a fine in the amount of up to 10% of the whole group’s yearly turnover.
