Foodstuff, Latvia, Legislation, Markets and Companies, Mergers and take-overs

The Competition Council has ordered several restrictions so as to prevent the possible negative effect of the merger on farmers and small retailers. The companies will have to observe the restrictions until March 31, 2015, informs LETA/Nozare.lv.

The Competition Council notes that, given the fragmented dairy industry in Latvia, and the fact that many dairy companies do not operate at full capacity, the consolidation of two companies is a positive development.

In most market segments, the merger will not pose threat to competition. The companies' shares of cheese, curds, butter, cream and sour cream, yogurt market segments are not large; the merger will also not affect ice-cream and various dessert market segments, informs the Competition Council.

On the other hand, in those market segments where the merged company will have a larger market share than the two companies currently have – wholesale of milk and kefir – tough competition will continue. To ensure that the merged company does not use its larger market share to force its conditions upon smaller cooperation partners, the Competition Council has ordered certain provisions that the merged company will have to observe in relations with farmers and retailers.

According to these provisions, the new entity will have to inform suppliers 15 to 30 days in advance if it wants to terminate a contract with a supplier, the company's pricing policy will have to be equal for all farms in Latvia, and suchlike.

The merged company will have to observe these provisions until March 31, 2015. The merger will have to be carried out within six months.