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Binding Conditions Set on Merger of Meat Processing Companies



On 8 June 2010, the Latvian Competition Council (CC) adopted a decision permitting a merger between the leading meat processing companies in Latvia – JSC Rīgas Miesnieks and JSC Jelgavas gaļas kombināts. To ensure free choice for retailers and avoid new barriers for potential marketparticipants, binding conditions were set.

In order to eliminate the potential negative effect of the merger on competition in the purchase/supply for retail and sales market of fresh meat, semi‐finished meat products and meat products (e.g. sausages, dumplings and smoked meat) in territory of Latvia, the CC stated that parties of the merger have to ensure that any wholesale or retail company, if it requires, could purchase any amount and assortment of certain products without obligation to buy additional products.

The relevant market was concluded to be concentrated, with descending demand and merger participants in leading positions. It was found that retailers cannot switch to products of other meat processing companies without suffering losses.

JSC Jelgavas gaļas kombināts' lack of financial resources and sufficient market share for successful further independent operation and the dependency of the merger participants from the largest retail chains was also considered.

100% of JSC Rīgas Miesnieks stock capital is owned by Estonian meat processing company Rakvere Lihakombinaat, in which a direct decisive influence belongs to Finnish JSC HKScan Oyj.