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DURING 2006 – SEVERAL SECTORS NOTED FOR MOST ACTIVE CONCENTRATION PROCESSES

09 01 2007

During the year 2006, the Competition Council received 61 notifications on concentration from undertakings operating in a range of economic sectors. Having examined such notifications per year the Lithuanian competition authority passed 59 decisions authorising the concentration deals (59 and 54, respectively, in 2005 and 2004 permitions to implement concentration of market structures). Despite the comparable number of concentration authorisations, a number of  competition experts have noted that concentration processes have been more active due to the activity of foreign undertakings, in particular, foreign investment funds. In order to accelerate the responses to the requests of foreign applicants for concentration authorisations, on six occasions, and having assessed that the concentration in question will not result in the creation of the dominant position or a significant lessening of competition in the market concerned the authority permitted particular stages for implementing of concentration pending the final decision.

"Each year different sectors are observed to be exposed to more intense concentration deals. During 2006, a larger number of applications was received from undertakings operating in construction services, food industry, and retail trade sectors“, – said Aleksandras Jakūnas, Head of the Concentration Department of the Competition Council.

Notably numerous were applications for authorisations to implement the concentration in the context of the construction and real estate development business for the purpose of getting the return from their investment such markets. In this respect one of the most active was UAB MG Valda that had been granted a significant number of authorisations to effect concentration deals in a range of construction services markets. For instance, such authorisations were issued for the market structures concentration in the road and street building and maintenance, the market for viaduct and tunnel building. Thus UAB Kelesta was permitted to acquire 100 percent of shares of AB Kauno tiltai.

Mergers were also effected among certain entities operating in the food production sector. UAB Vilkyškių pieninė was authorised to acquire the 100 percent holding of UAB Modest, UAB Grūdainė acquired up to 35 percent of holding in AB Malsena; a merger was authorised for Natanga and Grimeda, etc.

Within the trading sector, most frequently concentration were recorded in the market for retail trade in medicines and medical goods. Relatively few applications for the authorisation of concentration were filed by undertakings operating in the information technology service sector, financial services and the transport market. The event that caused special attention within the transport market, in particular the passenger transport by scheduled buses on local, long distance and international routes, was the authorisation to Kautra to acquire 100 percent of TOKS (Tolimojo keleivinio transporto kompanija), another long-distance coach carrier in the market.

Concentration processes have been also observable in the printed media market. For instance, Shibsted Baltics AS was authorised to acquire a nearly 51 percent holding in UAB Ekstra žinios; UAB Lietuvos rytas thus took over 34 percent of shares and acquired the joint control in connection with Shibsted Baltics AS of UAB 15 minučių.

In certain cases when issuing the authorisations for the concentration deals the Competition Council imposes upon the undertakings concerned certain obligations and conditions with a view to preventing the creation or strengthening of a dominant position in the relevant markets. In theses cases the Competition Council refers to monitoring of the compliance by the undertakings with the obligations imposed and analyses the impact of the decisions passed thereby upon the competitive situation in the market. For instance, at the close of 2005, acting in accordance with the provisions of the Law on Competition the Competition Council authorised Elion Ettevõtted AS, a major Estonian telecommunications and information services provider to implement concentration by acquiring 100 percent of MicroLink AS¸ in that relation imposing an obligation upon AB Lietuvos telekomas to sell UAB MicroLink Lietuva. The latter was sold prior to the expiry of the established term limit, and today UAB MicroLink Lietuva offers the fixed telecommunication service MetroTel performing as a successful competitor to TEO LT.

In October 2005, with a view to preventing the creation of a dominant position, the Competition Council authorised the Finnish company Rautakirja Oy to concentrate by acquiringthe 100 percent holding in the Vilnius agency of UAB Lietuvos spauda subject to specific obligations and condition attached to the concentration deal. Certain obligations were fulfilled within the established time limits (control by an independent observer, elimination of restricting provisions from 26 agreements, etc.). However, at the close of 2006, upon receipt of a number of complaints from publishers concerning certain terms and obligations, the competition authority launched a review of the compliance with the provisions of its previous decision in relation to Rautakirja Oy and the undertakings controlled thereby. In that connection the authority also imposed interim measures in order to maintain the competitive situation in the market and prevent the substantial and irreparable damage to other undertakings.

The Competition Council also pointed out the trend that has been shaping itself during the year 2006. Undertakings have been quite unreasonably taking a risk by delaying to submit the notifications on concentration to the Competition Council in cases they are under an obligation to in accordance with the provisions of the Law on Competition. Under the provisions of Art. 12(2) of the Law all transactions and actions of the undertakings and controlling persons shall be deemed invalid and having no legal consequences where the concentration was subject to the notification and was implemented prior to taking of the relevant decision of the Competition Council. Even though in 2006, having regard to the relevant circumstances, the Competition Council refrained from imposing any sanctions upon undertakings delaying the concentration notifications, this does not exclude the possibility to impose the same in the future.

Competition Council Spokesperson