The Competition Council (KP) made a decision to allow logging and veneer sheet production company SIA “Stiga RM” to gain decisive influence over the sawmill “Norupe” of SIA “Rīgas meži”. KP did not find significant damage to competition, so it decided to allow the transaction.
In 2018, the KP advised and provided support within the scope of the legality audit conducted by the State Audit Office “Operations of SIA “Rīgas meži”, managing forest areas owned by the municipality, compliance with the requirements of regulatory acts”, concluding that the asset of SIA “Rīgas meži” or sawmill “Norupe” in the market may create risks of competitive neutrality and negative impact on competition. Taking into account that the planned operations of the sawmill would significantly exceed the initial goal of establishing the sawmill “Norupe” and would limit the availability of resources for sawmills already on the market, the State Audit Office and the KP stated that the municipal company should objectively assess the activity of the woodworking industry in Latvia.
As the most suitable investor for the purchase of the sawmill, SIA “Rīgas meži” chose the company SIA “Stiga RM”, which currently operates in the logging industry, as well as in the production of veneer sheets and plywood. On the other hand, sawmill “Norupe” is one of the organizational economic units of SIA “Rīgas meži”, a capital company belonging to the city of Riga, whose type of activity is the production and sale of lumber.
Evaluating the information provided by the companies and at the disposal of the KP, the KP concludes that the market structure will not change significantly as a result of the merger, competition will not decrease and a dominant position will not be created or strengthened in the markets of the wood resources extraction, processing and trade industry in Latvia, therefore the merger transaction is permissible.
In order to prevent a significant decrease in competition as a result of the merger of companies, merger transactions that meet the criteria set by the Competition Law require the permission of the Competition Council. Thus, the Competition Council ensures state control over market concentration, so that structural changes do not occur, as a result of which, in the long term, consumers are limited in their choices or have to purchase goods and services at an uncompetitive price. More information on merger control in Latvia is available on the website of the Competition Council in the section “Mergers of market participants”.
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