Since 2009, when the Competition Council first made its decision on breaches of competition rules – abuse of dominant position in organization of work of tugs within territories of Riga Freeport – expenditures of the port’s administration have exceeded EUR 1 million. EUR 850,000 of this amount consists of fines applied by the Competition Council and EUR 200,000 – costs of legal services in multiple attempts to appeal decision of the Competition Council in court.
After carrying out its audit ‘Behaviour of the management of Riga Freeport in fixing violations noted by the Competition Council’, the State Audit found that the fine of EUR 64,000 applied by the Competition Council was an opportunity for Riga Freeport to fix violations discovered by the Competition Council. It was possible to avoid any consecutive fines. In addition, there would not have been any additional court-related costs. Unfortunately, the management of Riga Freeport decided not to end the organization of tug services. Instead, the management founded a subsidiary, thereby continuing breaching regulations detailed in the Law on Competition.
The other option to avoid sizeable fines surfaced in 2013, after the audit carried out by State Audit. Had the management of Riga Freeport taken measures to end commercial activities of Riga Freeport Fleet in the field of tug services, the Competition Council would not have had to carry out an investigation in response to complaints from businessmen.
The management of Riga Freeport decided to act differently. The appeal of the decision of the Competition Council, non-compliance with recommendations provided by the State Audit and continued breaches of rules of competition have resulted in two more decisions from the Competition Council, including two more sizeable fines and three lost litigations.
State Auditor Elita Krumina: «Transport Ministry, as the institution responsible for supervision over the management of Riga Freeport, should have carried out an assessment of the level of responsibility of officials of the Freeport in the non-compliance with violations of the Competition Law and the completely irrational behaviour in relation to continued ignoring decisions of the Competition Council». No such assessment has been carried out as of yet.
«Although this is not the first time when violations that resulted in major financial losses were uncovered at Riga Freeport, ministries, municipalities and officials have not been all too eager to give an evaluation of the level of responsibility of officials. Systematic absence of any evaluation of violations of this scale and impunity of officials only service to discredit the rule of law and provides the wrong signals to heads of all institutions that work honestly,» – Krumina added.