To secure the successful outcome of an intended merger/acquisition, it is of particular importance to comply with the mandatory M&A notification requirements set forth by Latvia's competition laws.
Latvian Competition Law requires that the following M&A activity be notified to the Competition Council: merging of two or more independent market participants in order to become one market participant; joining of one market participant to another; situations where one or more natural persons who already have a decisive influence over another market participant or one or more market participants acquire part or all of the fixed assets of another market participant or the right to utilize such, or a direct or indirect decisive influence over another market participant.
However, the above M&A activity has to be notified to the Competition Council only provided that a number of criteria are met. First of all, one must be certain that the enterprises engaged in the M&A activity are market participants within the meaning of the Latvian Competition law 's i.e., any legal/natural person (also foreign person) who performs or is preparing to perform economic activity in the territory of Latvia or whose activity can influence competition in the territory of Latvia.
Furthermore, the merger or acquisition must be of a particular magnitude 's either the combined turnover of the M&A participants during the previous financial year was not less than 25 million lats or the combined market share exceeds 40 percent in the particular market.
With regard to M&A activity requiring a mandatory notification requirement, the timing of notification is essential in Latvia. The Competition Council must be notified of the particular M&A before it actually takes place. M&A notification has to be done in accordance with a particular form approved by the Cabinet of Ministers and provides the Competition Council with such information as the financial and economic aspects of the M&A, analysis of the particular markets affected by the M&A, goals and possible consequences of the M&A, etc. The Competition Council examines the M&A notification and makes a decision to prohibit, permit or permit the M&A with certain conditions within four months time from the receipt of the notification.
M&A requiring notification that were not taken to the Competition Council are deemed to be illegal. A fine up to 1000 lats per day, starting from the day when M&A was carried out, can be imposed. Imposition of the fine does not mean that M&A no longer has to be notified; also, a subsequent approval of the M&A by the Competition Council does not exempt the enterprises concerned from the obligation to pay the fine.
Zane Veidemane is an associate at Kronbergs & Cukste, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms which includes Teder Glikman & Partnerid in Estonia and Jurevicius, Balciunas & Bartkus in Lithuania, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.