On 22nd 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) 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), 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), 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 22nd 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), 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). 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). 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
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