Tallinn City Government has filed suit against budget retail chain Lidl, after the latter refused to pay a fine connected with public road and other infrastructure work the company was contractually obliged to carry out, at a site in the Lasnamäe district of the capital. While Lidl reportedly completed the required work by late April, the city government is saying this should have been done by early March.
Lidl, headquartered in Germany but with over 12,000 outlets across Europe and the U.S., has been preparing to enter the Estonian market for several years.
The city government had issued a fine over the matter in late April, but Lidl has declined to pay it, prompting the city government to take the matter to court.
The supermarket chain has not yet said exactly when its outlets will open in Estonia, but it announced in January that this would happen some time in 2021, while it started hiring in summer 2020.
The company denies the Tallinn fine and court case is delaying the opening of any outlets
Lidl said that fulfilling its contractual obligations, which required it to complete the construction of public roads, as well as landscaping, outdoor lighting and storm drainage work, had been hindered by the contractors carrying out the work and also poor weather conditions.
This prompted Lidl to propose amendments to the agreement made with Tallinn City Government, adding that if the latter did not waive the fine, Lidl could demand compensation from the city government.
Instead, the city government declined to waive the fine, and has recoursed to the first-tier administrative court, for judgment.
Lidl spokesperson in Estonia Janika Jaago was unable to issue comment on the ongoing case.
Lidl Lasnamäe development quick facts:
- In 2018 Lidl and the City of Tallinn sign contract on plot at Raadiku 11/11a in Lasnamäe.
- In order to acquire a building permit, Tallinn city authorities required infrastructure work be completed.
- March 5 2021: Lidl applies for permit.
- Tallinn Environment and Public Utilities Board (Keskkonna- ja kommunaalamet) finds the required work had not been completed, and notifies Lidl of a breach of contract within the application procedure, issuing a financial penalty and requirement for contractual obligations to be fulfilled.
- Late April 2021: Lidl says the required work has now been completed and no fine needs paying.
Janika Jaago says that Lidl has invested around €500,000 in public infrastructure in Tallinn, including surrounding the Raadiku site, infrastructure whose use has been handed over to city authorities.
Lidl Eesti OÜ started buying up plots in 2016, and reported losses in 2019, which the company said it would be able to recoup once the stores were up and running.
Editor: Andrew Whyte