Market announcement

Title

Judgment of the Supreme Court of the Republic of Latvia in the case of KIA Auto AS and TKM Grupp AS

Message

On  22(nd) of  December  2025, the  Supreme  Court  of  the  Republic  of Latvia
delivered  its  judgment  in  the  proceedings  concerning  the  legality of the
decision  of  the  Latvian  Competition  Council  dated  7 August 2014 ((initial
company           announcement          dated          August          21, 2014
(https://view.news.eu.nasdaq.com/view?id=621312&lang=en))  with  respect  to TKM
Grupp  AS and its subsidiary  KIA Auto AS. The  Supreme Court decided to dismiss
the  cassation appeals  filed by  TKM Grupp  AS and  KIA Auto  AS and upheld the
judgment   of   the   Administrative  Regional  Court  of  4 June  2025 (company
announcement                  on                  June                  6, 2025
(https://view.news.eu.nasdaq.com/view?id=1367907&lang=en)),  which confirmed the
Competition  Council's decision to impose a fine of EUR 135 thousand on KIA Auto
AS,  of which EUR 95 thousand was imposed jointly and severally on TKM Grupp AS.
The  judgment  is  final  and  cannot  be  appealed.  TKM Grupp AS maintains its
position  that it has  not violated competition  law; however, KIA  Auto AS will
comply fully with the judgment and continue its normal business operations.

The  proceedings  began  in  August  2014 when  the  Latvian Competition Council
notified  TKM Grupp AS and KIA  Auto AS of its decision  to impose a fine for an
alleged  infringement of  competition law.  The Competition  Council found that,
under  the warranty conditions  applicable during the  period 2004-2009, KIA car
owners  were  required  to  carry  out  regular  maintenance  exclusively at KIA
authorised  service centres and to use only  KIA original spare parts. TKM Grupp
AS  and KIA  Auto AS  disagreed with  these findings  and appealed  the decision
(company          announcement         dated         September         16, 2014
(https://view.news.eu.nasdaq.com/view?id=624596&lang=en)),   arguing   that  the
Competition  Council  had  misinterpreted  the  warranty conditions and that TKM
Grupp  AS could  not be  held jointly  or separately  liable, as  it is merely a
holding company.

After  several years of litigation, on 22(nd) of December 2021 the Supreme Court
of  Latvia referred the case  back to the Administrative  Regional Court for re-
examination      (company      announcement     dated     December     22, 2021
(https://view.news.eu.nasdaq.com/view?id=1132056&lang=en)), emphasizing the need
for  a thorough analysis of the  alleged anti-competitive conduct and its impact
on  the market, as well as  verification of the Competition Council's assessment
and  market  analysis.  In  September  2022, the  Regional  Court  suspended the
proceedings  at the  request of  the Competition  Council to  seek a preliminary
ruling  from the  Court of  Justice of  the European Union (company announcement
dated                             September                            15, 2022
(https://view.news.eu.nasdaq.com/view?id=1180973&lang=en)).    The   preliminary
ruling  was issued on  5 December 2024, clarifying that  the Competition Council
must demonstrate potential and sufficiently appreciable anti-competitive effects
(company          announcement          dated          December         5, 2024
(https://view.news.eu.nasdaq.com/view?id=1331878&lang=en)). Following receipt of
the  preliminary ruling, the  Regional Court resumed  the proceedings and, on 4
June   2025, upheld   the   Competition  Council's  decision  despite  extensive
explanations,  submissions and additional  evidence provided by  KIA Auto AS and
TKM  Grupp AS. We turned to the Supreme Court for their assessment as we did not
agree with the ruling of the regional court.

The  Supreme  Court  has  now  concluded  that  the  Regional Court assessed the
Competition  Council's decision in accordance with  the guidance provided by the
Court  of Justice  of the  European Union  and established significant potential
anti-competitive  effects and does not need to identify actual consequences. The
Court  also stated  that the  100% shareholding of  the parent company creates a
presumption  of decisive influence over  the subsidiary's conduct. Consequently,
the Supreme Court found no grounds to initiate cassation proceedings.

Raul Puusepp
Chairman of the Board
Phone: +372 731 5000
[email protected] (mailto:[email protected])