News

In late 2013, the Competition Council of Latvia (CC) concluded a sector inquiry into the market of milk production and processing. As part of the inquiry, the CC evaluated the level of competition after the merger of two large enterprises - AS ‘Rīgas piena kombināts’ (RPK) and AS ‘Valmieras piens’ (VP).

The CC scrutinized milk processing plant contracts with farmers in order to assess the balance of the market power, as an ex-post evaluation of the merger of RPK. As a result, the CC did not establish any abuse of market power against farmers. The sector inquiry also showed that the milk processing plants fulfil the binding conditions which were imposed in 2012 when the merger was cleared by the CC. 

In addition, the sector inquiry revealed some new trends in milk processing and the distribution market. Competition conditions in the market of raw milk purchasing generally show that given the high level of demand for raw milk, barriers to trading between the neighbouring countries Estonia, Lithuania and Poland are decreasing. The inquiry also showed that overall dairy exports from Latvia increased. In 2012, products were exported mainly to EU Member States. Milk and sour cream in terms of value booked the largest share of exports of dairy products from Latvia in 2012, followed by cheese and curds. As refers to imports, cheese and curds were the main products imported into Latvia in 2012. The second biggest dairy group imported into Latvia in terms of value in 2012 was milk and sour cream.

Following the merger of the above two companies, 40–50% of the total quantity of products sold has been exported by the merged market participant.