MEPCO Subsidiary Successfully Appeals and Cancels SAR 10 Million Fine

Middle East Paper Co (“MEPCO”) announced on Tuesday the issuance of a final judicial ruling from the Administrative Court of Appeal in the Makkah Al-Mukarramah Region.

The ruling effectively canceled a preliminary decision and annulled a SAR 10 million fine that had been previously imposed on its subsidiary, Waste Collection and Recycling Company (WASCO), a company wholly owned by MEPCO.

The company highlighted that it had previously disclosed this matter in its annual financial statements for the year 2022 under the section labeled “COMMITMENT AND CONTINGENCIES.” The initial fine of SAR 10 million was imposed on WASCO based on an administrative decision alleging the company’s involvement in fixing prices.

Furthermore, the prospectus related to the capital increase of Middle East Paper Co unveiled on the Tadawul website on December 10, 2023, included crucial information on page 12 under “Risks related to lawsuits.” It detailed the General Authority for Competition’s decision to fine WASCO Company SAR 10 million for an alleged violation of Article Five of the Competition Law. The violation claimed that WASCO, in collusion with competitors, had fixed carton purchasing prices. The recent judicial ruling signifies a successful appeal, clearing the subsidiary of the imposed fine.

Summary 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 11/012023 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 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).

The company revealed that this will be reflected in the annual financial statements for the year 2023, in contrast to allocations worth 10 million riyals.