Latviski English По-русски
Wednesday 26.06.2019 | Name days: Inguna, Inguns, Ausma, Ausmis

EC slaps Lithuanian railways with heavy fine, Lithuania weighs response options

(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Linas Jegelevičius for the BNN

Lithuania’s reluctance to turn ear to the European Commission’s long demands has fired back – the European Union’s executive body imposed Monday, October 2, a 27.87 million euro fine for the state-run company Lietuvos Geležinkeliai (Lithuanian Railways) for restricting competition by dismantling a railway stretch between the town of Mažeikiai, where Poland’s oil refinery Orlen operates, and the Latvian border village of Renģe in 2008.

«It is unacceptable and unprecedented that a company dismantles a public rail infrastructure to protect itself from competition,» EU Competition Commissioner Margrethe Vestager said after the ruling.

The EC concluded that the absence of railways forced the Polish refinery to transport its freight to Latvia on a much longer route. The Commission states that Lithuania’s national railway company failed to prove that the railways had to be dismantled for objective reasons.

Inquired by BNN on further actions following the EC decision, Lietuvos geležinkeliai replied that the company will decide within two months whether to contest it.

«It is one of our options, however, whether we will resort to it will be clear only after we carefully scrutinise the EC arguments and all legal possibilities, striving for as little harm to Lietuvos geležinkeliai as possible,» Tadas Valančius, a representative of the company’s Communications department, said in a written reply.

He also accentuated that the rebuilding of the demolished railway stretch is also one of alternatives.

«We will analyse is it…It is worth noting that the Rengė stretch had not been used as the quantity of oil freights from Lithuania to Latvia fluctuated from 480,000 to 941,000 tons a year,» Valančius added.

Last year, Lithuania transported 844,000 tons of oil products to Latvia. Meanwhile, in 2007, with the Rengė stretch in operation, the amount was 675,000 tons.

«The current connections with Latvia are used only at 20 percent of their capacity,» the company representative said.

Lithuania can appeal the EC decision with the Luxembourg-based Court of Justice of the European Union (EU).  Payment of the fine would not, however, eliminate the duty for Lithuania to restore the stretch.

Meanwhile, Lithuania’s officials continue to maintain that the railway line had been dismantled for security reasons. At the time, the government was headed by Gediminas Kirkilas, Algirdas Butkevičius served as transport and communications minister, while Stasys Dailydka was the CEO of Lietuvos Geležinkeliai.

A multi-million fine, expert agree, would become a real challenge for the new management of Lietuvos Geležinkeliai, however, Ričardas Degutis, the deputy minister of Lithuania’s Ministry of Transport and Communications, exhorts not to rush with far-reaching conclusions and predictions.

He, however, admitted a possibility that Latvian companies that have suffered loss due to the dismantling can lodge with Latvian courts lawsuits demanding to pay them a compensation.

This is likely as, ahead of the EC decision, Latvia, which had filed the appeal against Lithuania, intensified pressure and handed Lithuania an official note with a demand to rebuild the railway stretch and restore the possibility of transporting freight on Latvian railways.

However, Latvia’s Prime Minister Maris Kučinskis said in an interview with LNT commercial TV channel that Latvia has not yet discussed the possibility of claiming compensation from Lithuania for the revenue Latvia has lost since 2008 as a result of the dismantling of the Mažeikiai-Rengė railway section.

The premier said that Latvia had raised the issue with Lithuania from time to time, noting that the decision to dismantle the railway section had been unfair and that it had crippled competition.

The reconstruction of the dismantled railway section would have cost Lithuania significantly less than the fine imposed by the European Commission, prime minister underscored.

«It is therefore a pity Lithuania did not heed these demands earlier and we could not resolve this in a normal, peaceful way,» PM said.

Asked about additional compensations Latvia might possibly claim from Lithuania based on the European Commission’s ruling, Kučinskis said that there have been no discussions on such a possibility yet.

«Of course, the European Commission’s decision means that we might claim our unearned profit, calculate the losses. But this has not been discussed as yet, and we have not seen the full text of the European Commission’s decision either,» Kučinskis said.

However, Latvia’s national railway company has already confirmed it was discussing a compensation claim over railway maintenance and unreceived income.

Poland’s Orlen concern, which besides oil refinery in Mažeikiai also operates the Būtingė terminal, has also reported Lithuania about the dismantled railway to Brussels.

Brussels has also urged Lithuania to separate Lietuvos geležinkeliai operations, however, Lithuania balked to do so, arguing it could lose the profitable freight haulage operations.

Approached by Lithuanian media, Lithuanian lawyers claimed that the Lithuanian government should give a serious thought to the possibility of filing an appeal against the European Commission’s (EC) fine against the state-run company Lietuvos Geležinkeliai (Lithuanian Railways, LG), however, admitted that the available information does not give reasons to strongly expect a successful outcome.

Daivis Svirinas, partner at Sorainen law office, told BNS, a Baltic news agency, that the state-run company should use «every possibility, if there are any and are visible, before giving up.»

«In my opinion, there are possibilities (to appeal) but to give a more detailed answer I would need to know all the material and the reasoning behind the commission’s ruling. The main dispute is about whether the railway stretch was dismantled to impede traffic on the track or whether there were other technical reasons,» Svirinas.

Andrius Ivanauskas, partner at Glimstedt law office, concurred, saying the commission’s argumentation should be checked in court.

«…In any case, the commission’s vision should be checked in court to see whether everything was done correctly and whether there were procedural breaches,» Ivanauskas said.

Nevertheless, Marius Juonys, partner at Ellex Valiūnas law office, cautions that that long duration of writing conclusions means that «the EC probably repeatedly weighed all pros and cons before making the decision.»

In his opinion, the statistical probability of rebutting the European Commission’s decision was slim.

Lithuania has 70 days to decide on an appeal.

The Lithuanian Parliament’s speaker Viktoras Pranckietis is so far the only Lithuanian official who has hinted that Lithuania may be forced to obey and rebuild the stretch.

«It seems like we will have to rebuild it,» Pranckietis told Žinių Radijas news radio on Wednesday, October 4.

The parliamentary speaker said he had noted back in spring that rebuilding the railway stretch could be cheaper than paying a fine, however, «the train had already left the station and we already knew that we might be imposed the fine.»

Pranckietis expressed doubt whether politicians could be made personally accountable for the decisions nearly a decade after the removal of the railway stretch.

EU Competition Commissioner Margrethe Vestager is expected to visit Vilnius next week. She will meet the Lithuanian leaders, including President Dalia Grybauskaitė, Prime Minister Saulius Skvernelis and Lithuanian lawmakers. She will also take part in a conference organised by the Lithuanian Competition Council.

Ref: 020/

Leave a reply

Baltic States should discuss tax on alcohol together, prime ministers agree

Latvia’s Prime Minister Krišjānis Kariņš has discussed with Estonia’s Prime Minister Jüri Ratas the need to resolve the alcohol excise tax issue by all Baltic States together, said the leader of Latvia’s government at a press-conference on Tuesday, 25 June.

Latvian PM says it’s time to stop putting friends of politicians in charge of companies

It is time to put an end to the practice of putting people close to politicians in leading posts of companies, said Latvian Prime Minister Krišjānis Kariņš in an interview to public broadcaster LNT programme 900 seconds, commenting on the future of Latvenergo after the suspension of its council.

Baltic states condemn renewal of Russia’s rights in Council of Europe

The foreign ministers of the three Baltic sates have condemned the restoration of Russia’s voting rights in the Council of Europe Parliamentary Assembly pointing to Moscow’s continued military aggression and disrespect to rule of law and human rights.

Latvia’s Fiscal Discipline Council predicts slight drop for country’s economy

Fiscal Discipline Council expects Latvia’s economy to drop slightly in the coming years. For 2020, the expected drop is -0.2 percentage points and -0.1 percentage points in 2021 and 2022. GDP growth rate for 2019 has not been changed.

U.S. city prohibits e-cigarette sales

The city of San Francisco has passed as the first city in the U.S. a ban on e-cigarette sales until their health effects are better studied.

Lembergs’ lawyer abandons ship right before the finish line of criminal proceedings

One of the lawyers serving the suspended Ventspils Mayor Aivars Lembergs’ interests in proceedings of the so-called Lembergs criminal case has «abandoned the ship», so to say, right before the finish line. With Raimonds Krastiņš’ departure it may take longer to properly review the case, as reported by public broadcaster Latvian Television.

New force in Riga: excluded party members and independent deputy form a new faction

Deputies excluded from New Conservative Party’s faction in Riga City Council Druvis Kleins and Imants Keišs, as well as independent deputy Oskars Putniņš have decided to found their own faction, as confirmed by deputies.

Researchers expect one-third of UK-based Latvians to apply for British citizenship soon

In the next five years, one-third of Latvian citizens who now live in Britain plan to apply for British citizenship, according to a survey performed by researchers of the University of Latvia Institute of Philosophy and Sociology to determine the opinion of Latvian emigrants towards Brexit and its consequences.

Latvia’s prime minister expects minister to explain suspension of Latvenergo council

Latvia’s Prime Minister Krišjānis Kariņš intends to wait until the end of the week for explanations from Economy Minister Ralfs Nemiro in regards to the minister’s decision to suspend the council of the country’s energy giant Latvenergo, according to the prime minister’s issued resolution.

Key Turkish election won by opposition bringing change to largest city

In Turkey, the repeated mayoral election of Istanbul has been won by opposition candidate ending 25 years of the rule of the country’s governing AK party in largest city.

Latvia holds third highest growth rate in Europe’s innovation rating

Latvia is reported to have the third highest growth rate in the European Union, growing by 17.7 percentage points in the rating, according to outlooks of Europe’s Innovation Result and Regional Innovation Result.

Kaljulaid on Estonian Victory Day: Natural calamity more likely than warfare

Estonian president Kersti Kaljulaid has said in a speech on Estonia’s Victory Day remembering the hundred-year-old War of Independence that despite natural calamities being more likely than warfare in the country, everyone should be informed and prepared to help ensure Estonian.

Latvia’s Sigulda will not host part of 2026 Winter Olympic Games

The 2026 Winter Olympic Games will take place in Italy’s Milan and Cortina d'Ampezzo, which have won in the competition for the right to host Olympic Games with Sweden, which planned to delegate certain ice sports to Latvia’s Sigulda.

Latvia’s prime minister not prepared to increase country’s budget deficit

Latvia’s Prime Minister Krišjānis Kariņš is not prepared to increase budget deficit to satisfy growing budget requests from ministries. The prime minister says every ministry has provided arguments in favour of increasing funding for their respective sectors from the 2020 state budget.

Washington hits Iran with new sanctions, target’s country’s Supreme Leader

United States President Donald Trump has announced imposing of tough, new sanctions against Iran also on the office of the Middle Eastern country's Supreme Leader Ali Khamenei.

As scandals continue in Lithuania Latvian Railway praises company of ex-KGB agent’s wife

Latvian state company Latvian Railway (LDz) has had contracts worth dozens of million euros signed with the company owned by ex-KGB agent Yuri Simonenkov’s wife – SIA Sigmen – since 2005. While in Lithuania dealings with people who may or may not have ties to Russian President Vladimir Putin have caused a scandal...

Kazakhstan evacuates thousands of people after blasts at military depot

In Kazakhstan a munitions depot has been hit by a fire and major explosions, resulting in a mass evacuation of a town.

Week in Lithuania: Coalition expansion talks completed, Vilnius University up in global rankings

Last week, four parliamentary parties continued coalition negotiations, two men were sentenced for spying for Russia, Government vowed to reduce shadow income in construction and car sale sectors.

BNN weekly summary: Fall of Turlais, alcohol tit for tat, Latvenergo council sacked

This week a top theme in Latvia and Estonia was the alcohol excise tax. Latest events showed that Estonian Prime Minister Jüri Ratas does not plan to cut the tax rates an further, commenting Latvia’s possible 15%-reduction of liquor excise tax rate.

Estonia not to deepen its U-turn on alcohol excise, after Latvian move

Following Latvian plan to retaliate to Estonia’s sharp drop of its alcohol excise tax rates, Estonian Prime Minister Jüri Ratas has stated that Tallinn is not going to cut its rates any further.

Dombrovskis gives up MEP mandate to continue in European Commission

Valdis Dombrovskis, the Latvian politician having led in the European Parliament’s elections the list of New Unity, has decided to give up his mandate of a member of the European Parliament to continue in the European Commission for its remaining term.

Latvian State Audit tasked with damage recovery rights

The Saeima has passed in the final reading amendments to the State Audit Law authorising the public spending watchdog to recover damages from persons responsible for violations of law found during institutional inspections.

Latvia bans Soviet and Nazi uniforms in protests and meetings

The Latvian Saeima has passed in the final reading law amendments that would ban the wearing of the uniforms and elements of the armed forces and repressive institutions’ uniforms of the Soviet Union, its republics and the Nazi Germany.

Proposed EUR 40 mln compensation to Latvian Jewish community retracted

Latvian party alliance Development/For! has retracted its own draft law on the restitution in the amount of 40 million euros to the Latvian Jewish community for real estate confiscated by totalitarian powers in the mid-20th century in the then occupied Latvia.

Riga city Mayor Turlais loses post in no-confidence vote

The chairman of the Riga City Council, Dainis Turlais has not survived a no-confidence vote, which lead to him losing the post of the Mayor of the Latvian capital.

Newest comments