Judgment of the Administrative Regional Court of the Republic of Latvia regarding KIA Auto AS and TKM Grupp AS
On 5th of June 2025, the Administrative Regional Court of the Republic of Latvia delivered a judgment in a case that has been ongoing for over ten years, concerning the legality of the decision made by the Latvian Competition Council on August 7, 2014, regarding TKM Grupp AS and its subsidiary KIA Auto AS (initial company announcement dated ). KIA Auto AS and TKM Grupp AS express their regret that, despite the extensive explanations, statements, and additional evidence they submitted, these were not taken into account, and the decision of the Latvian Competition Authority was upheld. KIA Auto AS and TKM Grupp do not agree with the findings set forth in the judgment and will submit a cassation claim to the Supreme Court of the Republic of Latvia.
The Competition Council alleged in its 2014 decision that in order not to lose warranty and in accordance with the warranty conditions that were in place during the time period of 2004-2009, KIA passenger car owners were required to have regular maintenance of KIA passenger cars only in KIA authorized services and that only KIA original spare parts can be installed in KIA cars. With it’s aforementioned decision, the Latvian Competition Council imposed a fine of 135 thousand euros on KIA Auto AS, of which 95 thousand euros were imposed jointly on TKM Grupp AS.
KIA Auto AS and TKM Grupp AS disagreed with the findings of the Latvian Competition Council and appealed the decision, as the whole case was based only on one single refusal of warranty by a third party who acknowledged at the court that KIA Auto AS was not involved in the refusal decision and the decision was made only by themselves taking into account objective matters regarding to the case. According to the warranty conditions of KIA that were valid in the period of 2004–2009, KIA passenger vehicles could also be serviced at independent service centres, but in order to ensure the quality of maintenance works and passenger safety, the manufacturer required maintenance works performed at independent service centres to be inspected at an authorized centre free of charge as a prerequisite of the validity of the warranty in order to verify their compliance with the standards established by the manufacturer. However, in the opinion of KIA Auto AS and TKM Grupp AS, the Latvian Competition Council did not analyze the referred warranty conditions in an elaborated manner and interpreted the whole set-up of the warranty rules as a restriction on maintenance at independent service centres. In addition, there were also no legal grounds for the Latvian Competition Council to find TKM Grupp AS jointly and severally liable since TKM Grupp AS was not involved in decisions regarding the matter of the warranty conditions of KIA Auto AS and is merely a holding company.
As a result, KIA Auto AS and TKM Grupp AS contested the decision of the Latvian Competition Council both in the Latvian Administrative Regional Court (company announcement dated ) and in the Supreme Court of Latvia. The Supreme Court of Latvia referred the case back to the Administrative Regional Court for re-examination, citing the need to conduct a comprehensive analysis of the alleged anti-competitive behavior and to verify whether the assessment by the Latvian Competition Council was thorough, accurate, and whether a proper market analysis had been conducted (company announcement dated ). In September 2022, the Latvian Administrative Regional Court decided to suspend the proceedings at the request of the Latvian Competition Council in order to seek a preliminary ruling from the Court of Justice of the European Union (company announcement dated ).
After receiving the preliminary ruling from the Court of Justice of the European Union, the Latvian Administrative Regional Court resumed the proceedings, analyzing, among other things, whether the 2014 decision of the Latvian Competition Council had sufficiently demonstrated a significant impact on competition. The court, in its decision of 5th of June 2025, kept in force the decision of the Latvian Competition Council, ignoring extensive explanations, submissions and supplementing evidence submitted by KIA Auto AS and TKM Grupp AS, as well as the guidance provided by the Court of Justice of the European Union in its judgment of 5 December 2024 in case No. C-606/23, based on which the Competition Council must demonstrate potential and sufficiently appreciable anti-competitive effects (company announcement dated ). An initial review of the judgment of the Latvian Administrative Regional Court indicates that, despite the request for a preliminary ruling from the Court of Justice of the European Union and the ruling issued in the case, the Latvian court has failed to apply the guidance provided. TKM Grupp AS will present detailed arguments on this matter in its cassation appeal to the Supreme Court of the Republic of Latvia.
TKM Grupp AS will inform the stock exchange of the next important steps related to this litigation in accordance with the procedure set out in the stock exchange regulations.
Raul Puusepp
Chairman of the Board
Phone:
