AB „ROKIŠKIO SŪRIS“ PERMITTED TO EFFECT MERGER SUBJECT TO CONDITIONS AND OBLIGATIONS
In its administrative meeting of April 3, 2003 the Competition Council examined the notification of AB “Rokiškio sūris” filed on March 12, 2003 on intended merger by acquiring up to 35.3 percent of holding in AB “Panevėžio pienas”. The Competition Council adopted a decision on the issue pursuant to which AB “Rokiškio sūris” is permitted to effect the merger by acquiring up to 35.3 percent holding in AB “Panevėžio pienas” subject to certain conditions and obligations deemed necessary in order to prevent the creation of a dominant position.
The Competition Council imposed an obligation upon AB “Rokiškio sūris” to abstain from voting by all previously and additionally acquired shares of AB “Panevėžio pienas” at general meetings of shareholders of AB “Panevėžio pienas” on issues which in terms of concentration are deemed to be control.
In acquiring any additional shares of AB “Panevėžio pienas” and (or) performing other actions of concentration (e.g. coordinating decisions relating to their economic activity) AB “Rokiškio sūris” is obligated to apply to the Competition Council and obtain permission for such actions.
Conditions imposed by the Competition Council in relation to the permission issued to AB “Rokiškio sūris” to effect concentration according to the submitted notification, creates preconditions that following the concentration by increasing the holding of AB “Panevėžio pienas” from 24.9 to 35.5 percent the Company would not obtain the rights to control AB “Panevėžio pienas”. AB “Rokiškio sūris” has waived the possibilities afforded by the veto right and has been obligated to abstain from voting in the general meetings of shareholders of AB “Panevėžio pienas” on issues which in terms of concentration are considered as control, which fully justifies the acquisition of a 35.3 percent shareholding as financial investment.
The decision has established that both merging companies operate in the same markets, those of milk purchase and dairy products. The Competition Council considered the intended merger as horizontal merger having a significant impact upon the level of concentration in relevant markets of milk purchase and unskimmed milk products. Following the merger according to par.11 of Article 3 of the Law on Competition AB “Rokiškio sūris” and AB “Pieno žvaigždės” would enjoy a dominant position in the market holding about 61 percent of the milk purchase market and about 60 percent share of the market for unskimmed milk products, respectively, and being the major players of the market would acquire certain advantages against their competitors. The sole comparable competitor to the companies is AB “Žemaitijos pienas”, other market participants being quite small.
Commenting the adopted decision Rimantas Stanikūnas, Chairman of the Competition Council, said that by imposing conditions and obligations in relation thereto the Competition Council was seeking to prevent the dominance by the two major market players in the milk purchase and unskimmed milk products markets, also preclude them from jointly controlling and managing AB “Panevėžio pienas”, or even acting to the prejudice of the operations thereof.Competition Council Spokesperson