Owner of LETA news agency fined over 2015 acquisition deal

Take note – story published 5 years and 5 months ago

On January 18 Latvia's competition watchdog, the Competition Council, fined MM Grupp, the owner if the LETA news agency, with €32,200 over company merging violations, LSM's Latvian-language service reported January 24.

According to the council, the Estonian company did not disclose important information over mass hires from related but legally separate companies, preventing the council to make objective judgement about possible changes in market structure.

In late 2015 the council allowed MM Grupp to buy LETA.

Before the merger proposal was put forth, the Estonian company owned two of LETA's competitors - BNS-Latvija and the Mediju Monitorings company. Should the deal have gone forward, the two sole news agencies in Latvia would have been merged, resulting in a monopoly. Effectively, this seems to have become the case.

MM Grupp sold BNS-Latvija and Mediju Monitorings to a third party, Estonia's AMP Investeeringud, but later LETA hired the vast majority of employees inside these companies.

The council notes that most of these employees started working at LETA a single day after leaving BNS-Latvija and Mediju Monitorings.

According to BNS-Latvija's annual reports, about two thirds to three quarters of its expenses are made up by personnel costs. The council therefore notes that newswire employees are the most important resource at the company's disposal and as such it affects the agencies' market competitiveness. 

Rules on merger reports require reporting any information that the companies have about the deal, revealing the nature and most important stages of the merger so that the watchdog can make an objective decision.

The council found that, despite the fact that MM Grupp sold the companies to a third party, LETA acquired their most valuable resource, i.e., most of their employees, during the merger.  

The company has therefore been fined €32,200 for violating the 2015 decision that allowed MM Grupp to buy LETA. 

In summer 2015, MM Grupp acquired a majority stake in LETA through the UP Invest holding company. 

LETA provides news and business information solutions for organizations and companies. Among the agency's clients are the largest enterprises, the media - including the LSM news portals in Latvian, Russian and English, - as well as state institutions, organizations, embassies, and international companies.

In 2014, LETA had 158 employees. The company's turnover was €3,087,968, and it made a profit of €9,714.

UP Invest is an investment company that has established several holding companies in media, retail, IT, and technology industries. The company's sole owner is Margus Linnamae.

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