CGATES DOES NOT GET PERMISSION TO ACQUIRE ITS COMPETITOR SPLIUS

The Lithuanian competition authority Konkurencijos taryba refused to clear the acquisition of 100 per cent of the shares and sole control of SPLIUS by Cgates.

On 11 December 2020, Konkurencijos taryba received a merger notification from Cgates, a company providing fixed Internet access, pay-TV and telephony services in Lithuania, on the acquisition of 100 per cent of the shares of SPLIUS, which provides the same services in various cities and districts of the country. Along with the notification, Cgates proposed merger commitments.

Commitments were submitted by Cgates due to the fact that when examining the aforementioned transaction in 2019, the authority had provisionally concluded that the intended merger would lead to a significant restriction of competition in the relevant retail market of pay-TV services in Šiauliai and in the relevant market of retail fixed Internet services in the same city. According to Konkurencijos taryba, after the merger Cgates would be able to increase the price of its services to consumers in Šiauliai as one of the lowest-price operators in the market would cease to exist and the company would face lower competitive pressure. Following the preliminary conclusions, Cgates abandoned its plans to implement the transaction.

The same competition concerns have also been identified in the present merger notification submitted by Cgates. Having assessed all information gathered during the examination of the transaction, Konkurencijos taryba concluded that the buyer of the part of the business proposed in Cgates commitments would not be able to remedy the competition concerns mentioned above because it would not exert the competitive pressure currently exerted on competitors by SPLIUS.

Haven taken into account the aforementioned circumstances, Konkurencijos taryba decided that the intended merger would significantly restrict competition in the relevant market of pay-TV services in Šiauliai and in the relevant market of retail fixed Internet services in the same city, and since the proposed commitments would not eliminate the identified competition concerns, the authority refused to clear the transaction.

The decision of Konkurencijos taryba may be appealed to court within one month of its publication on the authority's website.

The intended merger must be notified to Konkurencijos taryba and clearance must be obtained if the combined aggregate income of merging parties in the business year preceding the merger exceeds EUR 20 million and the aggregate income of each of at least two merging parties in the business year preceding the merger exceeds EUR 2 million.