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Middle East Paper Co. announces the issuance of a judicial ruling in favor of its subsidiary in the appeal submitted before the Administrative Court of Appeal in the Makkah Al-Mukarramah Region against the General Authority for Competition
| Element List | Explanation |
|---|---|
| Introduction | Middle East Paper Co (“the Company”) is pleased to announce the issuance of a final judicial ruling from the Administrative Court of Appeal in the Makkah Al-Mukarramah Region, canceling a preliminary ruling and canceling a fine of 10 million SAR based on the administrative decision that had previously been issued against its subsidiary, Waste Collection and Recycling Company (WASCO) (a company fully owned by the Middle East Paper Co.). The company had previously disclosed in its annual financial statements for the year 2022 under the heading of COMMITMENT AND CONTIGENCIES, that one of its subsidiaries was fined 10 million SAR for claiming its participation in fixing prices. Also the prospectus related to the capital increase of the Middle East Paper Co, which was announced on the Tadawul website on December 10, 2023, included on page 12, “Risks related to lawsuits,” included the issuance of a decision by the General Authority for Competition to fine Wasco Company in the amount of 10,000,000 million SAR for the violation. The first paragraph of Article Five of the Competition Law allegedly agreed with competitors to fix the carton purchasing prices. |
| Lawsuit Opponent | General Authority for Competition |
| Name of the Plaintiff | Waste Collection & Recycling Company (WASCO) |
| Type of the Lawsuit | Appealing an administrative decision |
| Name and Location of the Competent Judicial Authority | Administrative Court of Appeal in the Makkah Al Mukarramah Region |
| Date of Submitting the Lawsuit | 2023-02-16 Corresponding to 1444-07-25 |
| Summery of the Lawsuit and its Reasons | The subsidiary company (Wasco) was accused by the Public Prosecution of the General Authority for Competition with violating Paragraph (1) of Article Five of the Competition Law, and the Authority’s Board of Directors Resolution No. 523 dated 28/12/2021 AD was issued to initiate a criminal case against Wasco and others. Resolution No. 222 was issued on 06/18/1444 AH corresponding to 11/012023 AD by the Committee for Adjudication of Competition Law Violations, and its text reads, “The second defendant Waste Collection and Recycling Company (WASCO) is punished with a fine of 10 million Saudi riyals...” On 25/07/1444 AH, corresponding to 16/02/2023 AD, WASCO filed an administrative lawsuit requesting the cancellation of Resolution No. 222, dated 18/06/1444 AH, corresponding to 11/01/2023 AD, issued by the aforementioned committee, and a preliminary ruling by the court was issued rejecting the lawsuit. On 14/08/2023, an appeal request was submitted and registered with the Administrative Court of Appeal in Mecca, and the case was referred to the tenth Digital department, which ended in canceling the appealed ruling and ruling again to cancel the administrative decision issued against Wasco Company (Cancelling the 10 million SAR fine). |
| Expected Financial Impact Including the Claimed Sums, Fees and any other Charges | This will reflect a reversal of provision expense of SAR 10 million |
| Any Substantial Legal, Regulatory, or Operational Risks that may Result from the Lawsuit, including the Results of such Impact on the Company's Financial, Legal or Operational Standing | No substantial impact. |
| Measures Taken by the Company, including the Estimation of the Potential Liability Resulting from the Lawsuit | The case has already been referred to an external lawyer, and the issued ruling referred to in this announcement is final. |
The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.
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