Dispute over mandatory cargo volume penalty of Tallinna Sadam’s cargo operator Worldwide Cargo Establishment continues in the Competition Authority

In an ongoing dispute between AS Tallinna Sadam (hereinafter referred to as “Tallinna Sadam”) and Worldwide Cargo Establishment (hereinafter “WCE”), WCE applied to the Competition Authority to initiate a surveillance proceeding. The Competition Authority has decided to initiate a surveillance procedure aimed at clarifying whether Tallinna Sadam, when offering use of infrastructure at Muuga Harbour to WCE, has the characteristics of a violation of § 16 (1) and (3) of the Competition Act.

On 30.05.2018, WCE filed a claim with the Harju County Court against Tallinna Sadam requesting that the minimum cargo volume in the cooperation agreement should be reduced retroactively from 2015 and that the contractual penalties paid for 2015-2017 in the amount of EUR 0.45 million should be repaid. WCE has requested the Harju County Court to suspend the proceedings until the position of the Competition Board becomes clear; the court has not yet ruled on the suspension of the proceedings.

This is not a dispute about new aspects, the Competition Authority's proceedings concern the same aspects that are the subject of the above litigation.

WCE is a cargo operator of Tallinna Sadam, which owns a grain terminal in Muuga Harbour and handles grain. According to the long-term co-operation agreement, WCE has a minimum annual cargo charge obligation of EUR 0.31 million, failing which WCE shall pay Tallinna Sadam a penalty in the amount of the difference between the mandatory and the actual cargo charge. In the opinion of Tallinna Sadam and its legal advisers, the claim is not substantiated and it is not probable that a liability will arise, therefore Tallinna Sadam has not considered it necessary to recognise a provision for the claim.

Tallinna Sadam is one of the largest cargo- and passenger port complexes in the Baltic Sea region, which in 2019 serviced 10.64 million passengers and 19.9 million tons of cargo. In addition to passenger and freight services, Tallinna Sadam group also operates in shipping business via its subsidiaries – OÜ TS Laevad provides ferry services between the Estonian mainland and the largest islands, and OÜ TS Shipping charters its multifunctional vessel Botnica for icebreaking and construction services in Estonia and offshore projects abroad. Tallinna Sadam group is also a shareholder of an associate AS Green Marine, which provides waste management services. Tallinna Sadam group's sales in 2018 totalled EUR 130.6 million, adjusted EBITDA EUR 74.4 million and net profit EUR 24.4 million.

Additional information:

Marju Zirel

Head of Investor Relations

AS Tallinna Sadam