Kalev left high and dry

  • 2009-01-21
  • Staff and wire reports
TALLINN - AS Kalev, a major Estonian food producer and media company, has filed a complaint with the competition council accusing water company Elveso over allegedly unfair business practices after the utility shut off the company's water supply.
Elveso shut off the taps to Kalev's production plant in the Rae rural municipality on Jan. 15 after a stand off over the company's outstanding debt. The water was turned back on when Kalev repaid the debt in full on Jan. 16.

Kalev Kommivabrik (Kalev Chocolate Factory) reportedly had trucks ship in hundreds of tons of water in order to resume production at the site. The company would have needed eight 25-ton cisterns of water per day to maintain its production levels.

The water company claimed that Kalev had not paid its bill since Sept. 20, and that the debt had grown to some 828,065 kroons (53,000 euros). Kalev reportedly paid just over half of the sum 's a total of 450,000 kroons 's on Jan. 14 and the remainder on Jan. 16.
"We're not a bank that could credit their business activity," Toomas Heinaru, CEO of Elveso, told the Baltic News Service.

Though water has been restored to the candy factory, Kalev representatives said that the company planned on following through with its complaint to the Competition Authority.
"We've filed the application to Competition Authority. They must give their estimation of the legality of AS Elveso's activities," said Karin Leemet, the press secretary at Kalev.
The company claimed that Elvso overlooked the principle of good faith and the laws, Allan Viirma, legal advisor of Kalev, told ERR News. Viirma accused the water company of using tactics similar to "blackmail" during its stand-off with the candy producer.

"Firstly, the water company said yesterday that if Kalev shows any initiative to solve the question, the water company is willing to negotiate and keep the water tap open. Kalev showed initiative and good will by paying more than half of the debt to Elveso. Despite that, Elveso continues actions that are similar to blackmailing and closed the water tap," Viirma said in a press announcement.
The Competition Authority stressed in a ruling issued to Elveso in November that water supplies can not be cut simply for debts, Viirma noted.

"If that doesn't lead to open water tap, AS Kalev considers going to court to oblige Elveso giving us service. And when we go to court we probably have to oblige them to compensate us the losses for leaving us without water baselessly," Viirma said.

Kalev's dispute with the water company came alongside an announcement that the ailing company would be forced to suspend the production of 10 of its magazines in an effort to save money.
The company, which bought the south eastern Estonian-language newspaper Tartu Ekspress and the Sun FM radio station in December, said the move would save some 3.5 million kroons per month.
"The management is looking for options to continue operating, but the current situation is that there is no money for investments and as a manager I have to make decisions," Alar Pink, Kalev Meedia CEO told kalev.ee. He said this decision is not unexpected.

The company said on Jan. 15 that it would immediately halt the production of 10 of its magazines 's Just, Arlielu, Sporditaht, Basket, Moto, Avenuu, Avenuu Professional, Praktiline Arvutikasutaja, Muumi, and Muumi drawing book. The Kalev Sport TV channel, the kalev.ee Web site, Tartu Ekspress and Sun FM will continue as usual.
Although some employees will be given the chance to work for the Web site or TV channel, about 100 people will lose their jobs. Subscribers will get their money back.