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02 10 2003

The Competition Council examined the notification submitted on August 22, 2003 by UAB “Mineraliniai vandenys” concerning the merger by acquiring up to 100 percent shareholding of AB “Stumbras” by way of privatisation (on August 6, 2003, the State Property Fund announced UAB “Mineraliniai vandenys” a winner of the open tender concerning the acquisition of shares of AB “Stumbras” owned by the State of Lithuania).

The Competition Council passed a decision to authorise UAB “Mineraliniai vandenys” to effect the merger by acquiring the 100 per cent interest of AB “Stumbras” according to the submitted notification subject to certain conditions and obligations. The intended merger was assessed by the Competition Council as the vertical and horizontal merger in the market of strong alcoholic beverages which will cause a moderate increase in the degree of concentration in the market concerned. It was also concluded that the intended merger may have an impact upon the markets of strong alcoholic beverages and increase the market power of the dominating AS “Stumbras” during the period pending the abolition of the State monopoly on alcohol product manufacture scheduled at January 1, 2004. The conditions and obligations imposed in respect of the said merger are intended to prevent the possible abuse of the dominant position also concerting of actions by competitors in the relevant market since AB “Stumbras” holds over 10 per cent of interest of UAB “Artio-2”. Therefore the Resolution of the Competition Council provided that following the acquisition of the controlling interest of AB “Stumbras” and taking over of the management thereof UAB “Mineraliniai vandenys” is obligated to sell all shares of UAB “Artrio-2” and recall the representative of AB “Stumbras” delegated to the Board of UAB “Artrio-2” to eliminate the possibility of participation in the management of this company. It was established that in accordance with the requirements of the Law on Competition the shares concerned must be sold to an undertaking not associated with UAB “Mineraliniai vandenys”. UAB “Mineraliniai vandenys” shall be obligated to notify the Competition Council of all actions related to the sale of the shares and obtain its appropriate approvals.

A requirement was provided for that prices and other terms related to the transactions between AB “Stumbras” and UAB “Mineraliniai vandenys” shall be established in the same manner as in transactions of similar nature with other undertakings to avoid the discrimination of such undertakings and placement thereof at a competitive disadvantage.

In accordance with the provisions of the Law on Alcohol Control the monopoly of State controlled enterprises in the strong alcoholic beverages market will remain in force until the beginning of 2004. The right to produce strong alcoholic beverages is granted only to enterprises in which the State owns a shareholding carrying not less that 2/3 of the total votes.

According to Rimantas Stanikūnas, Chairman of the Competition Council the authorisation to effect concentration was issued having assessed the prospects that liberalisation of the strong alcoholic beverages production market will stimulate the possible competition therein. Such assumption has repeatedly been proved by experience of the neighbouring countries. Some producers of alcoholic and soft beverages could launch the production of strong alcoholic beverages with only sparing investment. Furthermore, upon the accession of Lithuania into the European Union and the abolition of all trade limitations alcoholic drinks of AB “Stumbras” and other producers will face competition from the part of the EU producers, as well as from the part of products imported from some neighbouring countries outside the EU which are subject to a zero tariff import duty.

Competition Council Spokesperson