Judgement of the Administrative Regional court of

On 10 March 2017, the Administrative Regional court of the Republic of Latvia delivered a judgment about the legality of decision of the Latvian Competition Council of 7 August 2014 with respect to Tallinna Kaubamaja Grupp AS and its subsidiary, KIA Auto AS (initial stock exchange announcement 21 August 2014).

The decision alleged that, in order not to lose warranty and in accordance with the warranty conditions that were valid in the 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. This was treated as violation of Article 11 of the Latvian Competition Law within KIA distribution and service network. KIA Auto AS and Tallinna Kaubamaja Grupp AS were sanctioned with a fine of 135 thousand euros, of which 95 thousand euros were imposed jointly and severally.

KIA Auto AS and Tallinna Kaubamaja Grupp AS disagreed with the findings of the Latvian Competition Council on the basis that the whole case was based 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, the Latvian Competition Council did not analyze the referred warranty conditions with elaborated manner and interpreted the whole set-up of the warranty rules as a restriction on maintenance at independent service centres. Finally, there were no legal grounds for the Latvian Competition Council to find Tallinna Kaubamaja Grupp AS jointly and severally liable since Tallinna Kaubamaja Grupp AS was not involved in decisions regarding the matter of the warranty conditions of KIA Auto AS and is merely a holding.

The Administrative Regional court kept in force the decision of the Competition Council, ignoring extensive explanations and submissions of KIA Auto AS and Tallinna Kaubamaja Grupp AS, as well as failing to take into account witness statements and customer surveys.

KIA Auto AS and Tallinna Kaubamaja Grupp AS disagree with the judgment and will submit cassation claim within one month from the receipt of the full text of the judgment. Subsequently the judgement of the Administrative Regional court of the Republic of Latvia dated 10 March 2017 has not become in force.

         Raul Puusepp          Chairman of the Board          Phone: +372 731 5000