OWNER OF DELFI.LT WILL HAVE TO GET PERMISSION FOR A CONCENTRATION FROM THE COMPETITION COUNCIL OR SELL THE SHARES OF LRYTAS
The Competition Council recognised that the Estonian company Ekspress Grupp, which controls the news portal delfi.lt, violated the Law on Competition by acquiring the company Lrytas, which controls the news portal lrytas.lt, without notifying the institution and obtaining its permission.
The investigation was initiated on 8 August of this year, following the notification provided by the company 15min and gathering sufficient data that led to suspicion that Ekspress Grupp, in a transaction on 9 December, 2022, where the Estonian company acquired 100% of the shares of Lrytas, had to obtain permission from the Competition Council because the companies' revenues exceeded the limits set by the Law on Competition.
The Law on Competition stipulates that it is mandatory to notify the Competition Council about a planned transaction and obtain its permission if the combined total revenue of the companies involved in the concentration in the Republic of Lithuania in the last business year preceding the transaction exceeds EUR 20 million, and if the total revenue of each participant in the transaction in the Republic of Lithuania exceeds EUR 2 million. The notification of the concentration must be submitted to the Competition Council before the implementation of the transaction.
Ekspress Grupp held the opinion that it was not obligated to notify the Competition Council about the concentration because the combined revenues of the transaction participants did not exceed 20 million Euros. The company argued that the revenues of Lrytas from the sale of advertising space to foreign-registered clients should not be attributed to revenues obtained in the Republic of Lithuania.
Nevertheless, according to the assessment of the Competition Council, the revenues obtained by Lrytas from foreign-registered clients should be considered as revenues obtained in the Republic of Lithuania. This is because, in calculating total revenues, it is important to consider where the competition takes place rather than the registration address of advertising space buyers. According to the experts of the Authority, competition for advertising revenues among Lithuanian online news portals occurs in the Republic of Lithuania. This is because foreign-registered buyers of advertising space through the lrytas.lt portal expect to reach the audience of our country, specifically interested in Lithuanian and international news.
The Competition Council concluded that Lrytas' revenues from foreign buyers of advertising space are to be considered as revenues generated in the Republic of Lithuania, and that the total revenues of the parties to the concentration in 2022 exceeded the limit of EUR 20 million provided in the legislation.
Having evaluated all the circumstances gathered during the investigation, the Competition Council determined that Ekspress Grupp violated the Law on Competition when it acquired 100% of the shares of Lrytas without notifying the institution and without obtaining its permission for the concentration. As a result, the Estonian company was fined EUR 140,460. The company is also obligated to remedy the violation within 2 months by either ceasing the infringement or restoring the previous situation or eliminating the consequences of the violation.
Jolanta Ivanauskienė, the Chairwoman of the Competition Council, said that merger control is not a formality – it is an important instrument to protect effective competition in the market. The implementation of a concentration without notifying the Competition Council and obtaining its authorisation is considered to be a serious infringement, as confirmed by the case law of the European Commission, the European Union, and national courts.
"Business representatives planning transactions cannot ignore their obligation, as stipulated in the Law on Competition, to approach the Competition Council and obtain permission before implementing a concentration. This obligation is included in the law to allow our institution to assess the potential consequences of the concentration on the market, to determine whether there is a threat that a certain transaction could significantly reduce competition, leading consumers to face higher prices, a limited choice of goods and services, and lower quality," emphasised J. Ivanauskienė.
She pointed out that if business representatives planning a transaction have questions about whether they need to obtain a clearance from the Competition Council, they can seek consultation from the institution's experts – something that the parties involved in the mentioned concentration case did not do.
The decision may be appealed to the Vilnius Regional Administrative Court within one month from the date of its delivery or publication on the Competition Council's website.
