The Saeima’s Legal Affairs Committee will consider the issue of whether materials from operational cases may be used in other proceedings, according to the committee’s meeting agenda.
Last week, Prime Minister Evika Siliņa (New Unity, JV) stated on social media that the Saeima must return to addressing cartel-related issues. She said she had agreed with the Chair of the Saeima Legal Affairs Committee, Andrejs Judins (JV), that the matter would be reconsidered in the near future. “An important discussion is needed both on how existing legal norms are applied in court and on strengthening liability,” the Prime Minister said.
Siliņa recalled that New Unity had previously put forward a proposal to introduce criminal liability for prohibited agreements as the most serious competition law violation. The head of the JV parliamentary faction, Edmunds Jurēvics, added that the party’s position on this issue has not changed and that JV is ready to resubmit its proposals.
The chair of the Progressive Party’s Saeima faction, Andris Šuvajevs, also announced that the Progressives support introducing criminal liability for individuals involved in cartels and are calling on other Saeima factions to back stricter accountability in order to strengthen the fight against cartels in Latvia’s economy.
Meanwhile, the head of the Green and Farmers Union (ZZS) parliamentary faction, Harijs Rokpelnis, told the news agency LETA that
ZZS does not support introducing criminal liability for company employees involved in prohibited market agreements.
As the initiative still lacks ZZS support, adoption of the relevant amendments would depend on opposition parties, which had previously rejected a draft law submitted by Judins.
As previously reported, the Supreme Court has overturned a ruling by the Administrative Regional Court that had rejected applications by construction companies seeking to annul a decision of the Competition Council (KP), and has referred the case back to the Administrative Regional Court for a new hearing. The Supreme Court identified the main problem as the fact that evidence used to prove the cartel had been gathered using criminal-law methods, while the law does not provide for such possibilities.
According to the Supreme Court’s interpretation, both the Competition Council and the Administrative Regional Court unlawfully used information obtained through operational activities conducted by the Corruption Prevention and Combating Bureau (KNAB) to prove a competition law violation—namely, secretly recorded conversations and their transcripts. In the Court’s view, uncovering a competition law infringement such as a cartel agreement does not fall within the objectives and tasks listed in the Operational Activities Law, for which information obtained through special operational measures may be used.
The Supreme Court insists that such information, even if attached to criminal case materials, cannot be freely transferred for use for purposes unrelated to operational activities. Otherwise, this would open up “broad and uncontrolled opportunities to pass on information obtained through operational activities—without limiting the type or volume of data—via criminal proceedings to an indefinite circle of recipients for use in virtually any other process where it might ostensibly be needed.”
This would create a significant risk of arbitrary interference and abuse of authority
and would not meet the legal quality requirement of foreseeability, the Court held.
The Supreme Court emphasized that information obtained as a result of operational activities retains its special legal status and usage restrictions even after being attached to criminal case materials, as occurred in the case at hand.
Moreover, the Court’s earlier case law has already established that operational wiretapping may only be carried out to detect crimes, not criminal misdemeanours. Since the legislature has repeatedly and deliberately rejected the option of criminalising prohibited agreements in competition law, the use of operational activities to uncover such violations is prohibited, the Supreme Court maintained.
The Court also stated that the legal framework does not provide a clear basis for transferring information obtained through operational activities to the Competition Council for use in administrative proceedings.
LETA has previously reported that in 2021 the Competition Council, with the help of information collected by KNAB, uncovered a cartel of construction companies whose members were involved in at least 70 procurement procedures with a total contract value of €687 million.
The Competition Council fined the ten companies involved in the cartel a total of €16,652,927.
The sanctioned companies included SIA Skonto būve, SIA Latvijas energoceltnieks, SIA Velve, SIA Arčers, SIA Rere būve, SIA Re&Re, SIA RBSSKALS būvvadība, SIA Abora, LNK Industries, and SIA Merks. RBSSKALS būvvadība had already been liquidated, so no fine was imposed. Eight of the ten sanctioned companies appealed the Competition Council’s decision to the Administrative Regional Court.
The consolidated case was initiated following applications by Skonto būve, Latvijas energoceltnieks, Rere būve and its parent company AS Rere grupa, Arčers and its parent company AS UGN, LNK Industries and its parent company SIA LNK (Latvijas novitātes komplekss), Abora and its parent company SIA Tehnocentrs, Re&Re, as well as Merks and its parent company Merko Ehitus.
The Administrative Regional Court rejected the applications of 13 construction companies seeking to overturn the Competition Council’s decision of 30 July 2021 in the construction cartel case.
Two of the ten sanctioned companies did not appeal the Competition Council’s decision: Velve, with which the Council reached a settlement and issued a positive assessment of the company’s measures to “restore the client’s trust,” and RBSSKALS būvvadība.
Had the applicants received an unfavourable ruling, they would have been required to pay the fines, would have been barred from participating in public procurements for a certain period, and could also have faced claims related to projects already implemented.
Read also: Cartels seen by all, but no longer provable? Supreme court ruling shakes established practice