LITHUANIAN COMPETITION AUTHORITY TERMINATES MERGER REVIEW PROCESS IN CINEMA MARKET

The Lithuanian competition authority Konkurencijos taryba has terminated the review of a merger notification under which the Estonian company MM Grupp intended to acquire another Estonian company Forum Cinemas Lithuania, which owns and operates cinemas in the cities of Vilnius, Kaunas, Klaipėda and Šiauliai in Lithuania. Since the merger review process has been terminated, the companies will not be able to implement the transaction.

On 8 March 2021 Konkurencijos taryba received the merger notification. MM Group intended to acquire 51 per cent (together with the currently owned shares – 100 per cent) of the shares of Forum Cinemas Lithuania and indirect control over the Lithuanian branch of the latter company.

Undertakings related to the holding company MM Group operate in different business areas: one of the firms owns the Apollo brand and conducts cinema activities in Panevėžys, the others distribute films of Hollywood studios (The Walt Disney, Paramount, Universal) and independent filmmakers.

The Lithuanian branch of Forum Cinemas Lithuania operates cinemas in Vilnius, Kaunas, Klaipėda and Šiauliai.

The experts of Konkurencijos taryba collected information and data from companies operating in the film demonstration and distribution markets in Lithuania, as well as from the Lithuanian Film Centre under the Ministry of Culture and various real estate developers, seeking to assess the effect of the transaction on competition in the aforementioned sectors. Since the parties to the transaction did not provide all the required information within a set deadline, the authority suspended the merger review.

Konkurencijos taryba continued to analyse the information it had collected, the authority also sent further information requests to market participants asking them to provide clarifications, additional information or arguments, and assessed the merging parties‘ provisional commitments intended to address potential competition concerns. However, within more than 3 months of the formal suspension of the merger review, the authority had not received all the information necessary to assess the effects of the merger on competition from the parties to the transaction.

Konkurencijos taryba terminated the merger review process in accordance with the Law on Competition, which stipulates that if the merger review has been suspended for more than 3 months, the merger review process is terminated and it is considered that the merger notification has not been submitted.

Šarūnas Keserauskas, the Chairman of Konkurencijos taryba, notes that a business transaction cannot be completed before the authority's clearance has been obtained, otherwise this may lead to sanctions.

“Merger review process is not a formal procedure, businesses should not expect that in each case the competition authority will sooner or later grant clearance. Companies that are intending to merge must provide correct and complete information in a timely manner so that we can assess the effects of a merger on markets, competition and consumers, and decide whether such a transaction can be implemented", said Š. Keserauskas.

This decision of Konkurencijos taryba is not subject to appeal. This is the first time in the authority’s practice when the merger review had to be terminated halfway through the process after having not received all the necessary information from the merging parties within the maximum suspension period.