On 18 January, the Competition Council of Latvia (the CC) imposed a fine of 32,200 euros on OÜ “MM Grupp”, a company registered in Estonia, which is the owner of the Latvian news agency SIA “LETA”. During the assessment of merger notification of OÜ “MM Grupp” and SIA “LETA”, the Estonian company did not provide the CC with essential information about extensive recruitment of employees from the segregated companies and respectively prevented the authority to make objective considerations about possible changes to the market structure.

In 2015, the CC adopted a positive decision for OÜ “MM Grupp” to acquire the news agency service provider SIA “LETA”. Prior to submission of the merger notification, the Estonian company owned competitors of SIA “LETA” – SIA “BNS-Latvija” and SIA “Mediju Monitorings”. In the case of implementation of the merger, two only news agencies in Latvia would merge and monopoly position would arise. Therefore, OÜ “MM Grupp” structurally segregated SIA “BNS-Latvia” and SIA “Mediju Monitorings”, selling these companies to a third party – Estonian company OÜ “AMP Investeeringud”.

The CC detected that, despite such segregation of SIA “BNS-Latvija” and SIA “Mediju Monitorings”, SIA “LETA” recruited 79% or 30 employees of SIA “BNS-Latvija” and 94% or 16 employees of SIA “Mediju Monitorings” during the period of assessment of the merger transaction. Majority of these persons entered into new employment relationship on the next day after termination of the previous employment.

Annual reports of SIA “BNS-Latvija” show, that majority or two thirds to three quarters of the company costs are related to staff. Consequently, the CC concludes, that employees of news agencies are the most significant resource of their economic activity, which is essential for competitiveness and existence of news agencies on the market.

According to the Merger Regulations, the submitter of the merger notification is obliged prior to submission of the notification and during its assessment to provide the CC with the entire information at its disposal, which completely reveals the nature and most significant stages of the merger transaction, so that the authority could adopt an objective decision, which is the most beneficial for preserving the market competition structure. The CC detected – although OÜ “MM Grupp” segregated the companies to a third party, it transferred the most important resource of the disposed companies, i.e., majority of employees, to SIA “LETA” during the period of assessment of the merger notification.

This infringement of Merger Regulations by not reporting about changes to conditions and facts of the merger transaction prevented the authority from making objective considerations about preserving of the market structure of the news agencies service market in Latvia. According to the merger regulatory framework, OÜ “MM Grupp” implemented a merger transaction contrary to the positive decision of the CC regarding acquisition of SIA “LETA”, adopted in 2015, therefore imposing a fine of 32,200 EUR on the company registered in Estonia.