Börsiteade

Pealkiri

Judgment of the Administrative Regional Court of the Republic of Latvia regarding KIA Auto AS and TKM Grupp AS

Teade

On  5(th) 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      August      21, 2014
(https://view.news.eu.nasdaq.com/view?id=621312&lang=en)).  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               September               16, 2014
(https://view.news.eu.nasdaq.com/view?id=624596&lang=en))  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               December               22, 2021
(https://view.news.eu.nasdaq.com/view?id=1132056&lang=en)).  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                             September                            15, 2022
(https://view.news.eu.nasdaq.com/view?id=1180973&lang=en)).
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 5(th) 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  December  5, 2024
(https://view.news.eu.nasdaq.com/view?id=1331878&lang=en)). 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: +372 731 5000
[email protected] (mailto:[email protected])