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Tuesday 18.09.2018 | Name days: Liesma, Elita, Alita

Riga Freeport not scared by laws or fines

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Although the Latvian Competition Council (CC) has already fined Freeport of Riga Authority (FRA) a total of 150 000 lats (283 018 dollars) for violations of the Competition Law, its management is not willing to give up power and keeps doing what it pleases. So far, no obvious sanctions have been imposed on the Freeport in spite of its activities that can deprive FRA of huge money.

“In a private company, shareholders would immediately address the management if its activities resulted in large fines. A rhetorical question arises – has anyone in FRA been punished for decisions that led to violations of the Competition Law?” Sergejs Odincovs, AS PKL Flote Board Chairman, said in an interview to the portal BNN.

Concerning his company, the Freeport has been imposed fines of 45 000 (84 905 dollars), 10 000 (18 867 dollars) and 105 000 lats (198 113 dollars).

The CC fined FRA 45 000 lats back in March 2009. It had found that, having acquired the tugs Santa and Stella, the Freeport launched business activities and changed the rules of collaboration with no objective reasons. Thus, the Freeport got advantage over the provider of tugboat fleet services – PKL Flote. FRA challenged the CC’s decision, but the Supreme Court ruled on July 1, 2011, that it was well-grounded.

“FRA issued an order that high-tonnage vessels (over 20 000 tons) must be served by two tugs, with a total capacity of 7 300 kilowatts. We met the requirement and ensured the tugs. When the Freeport realized that it was losing the fight, it issued yet another order. This time it increased the required number of tugs once again. Although the Freeport itself had required four tugs, it was using only two for almost a year,” says AS PKL Flote Board Chairman.

Another fine of 10 000 lats was imposed on FRA in April 2010 for failure to meet legal demands stipulated in the CC’s decision taken in 2009. It had concluded that four of six obligations were not met, while two were met too late. FRA challenged the decision in court but lost, when the Administrative Regional Court left the CC’s decision in force. In May 2012, the case will be heard in the last instance, so the Freeport can lose.

The third and the largest fine of 105 000 lats was imposed on FRA for the abuse of a dominant position. It limited PKL Flote’s operations within the territory of the Freeport. FRA has appealed against the ruling and the case is yet to be heard in court. When imposing the fine, the CC said that FRA did not have any grounds to prevent PKL Flote from launching services of a tugboat that had not previously operated in the Freeport.

Besides, the CC also recognized that the Freeport management did not have any eligible reasons to refuse or limit vessels’ possibility to choose the provider of towing services. In four cases fully and in ten cases partially, when clients had chosen PKL Flote’s tugs, the Freeport management provided the services itself. This way, FRA deprived PKL Flote of earnings and created a risk of losing clients.

In addition, the CC also concluded that such activities presumably generated losses to businesses, which had chosen PKL Flote services but had to pay more for the ones provided by the Freeport.

“We do need port reforms, but the funniest thing is that no one but FRA manager Leonids Loginovs and Association of Ports CEO Karlis Leiskalns claim that they will lead to privatization of Latvian ports. They have found a painful issue and keep pressing on it in a bid to stick to the same old system,” says Odincovs.

“As usual, Loginovs keeps coming up with false facts. He has been telling the media that our tug got stuck in ice this spring in Skulte port. He says the Freeport’s tug had to pull it out. These are shameless lies. In fact, it was Skulte port, which addressed us in March, because ice jams in the Gulf of Riga hampered its work. They asked us to help with our tug, which unfortunately could not do it alone. So the port had to seek help from FRA, which has a 2.5 times more powerful tug,” he explains.

BNN already reported, there is growing concern that Latvian ports are in an urgent need for improvements in management. “Reforms on ports come so slow, because the issue is politicized. The three things we stand up for – clear goals of ports, fair competition and transparent management are not such a complex issue,” says Liga Smildziņa – Bertulsone, Executive Director at the American Chamber of Commerce.


Leave a reply

  1. Maedhros says:

    Fining the FRA, you are fining taxpayers. Why should they care about it?

    Fine the managers, they will listen at once!

    Of course, don’t hold your breath!
    Such a rule will never be implemented.

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