KP allows Fortum Latvia to buy three thermal power producers in Daugavpils

26. In June, the Competition Council (KP) decided to authorize a merger by which Fortum Latvia Ltd. acquires exclusive control of SIA BK Enerģija, SIA Energy & Communication and SIA Sprino. The authorization is given because the merger will not significantly impede the competition in the affected market.

Fortum Latvia Ltd., BK Enerģija Ltd. and its subcontractor Energy & Communication Ltd produce energy in the cogeneration process, simultaneously producing heat and energy. SIA BK Enerģija and SIA Sprino also produce heat energy in chip boilers.

According to the information provided in the merger report, the activities of the mergers overlap in the production and supply of thermal energy. In badessing the market for thermal power generation and supply, the KP found that the market affected by the merger was a result of the production and supply of thermal energy. market in the district heating network of Daugavpils. Ltd. "Fortum Latvia", which operates in Jelgava, does not overlap BK Enerģija, LLC "Energy & Communication" and "Sprino" Ltd. However, the three companies that previously competed with the heat supply at the Daugavpils Heat Transmission Networks (DST) have superimposed the operating areas at Daugavpils

DST, which produces and supplies heat to the end consumers of the district heating network of Daugavpils. more than 40% of the total market. Also active on the market are major heat producers such as SIA Cefus and SIA Latneftegaz, SIA Mamas D, which supply them to DST.

The merging parties and their competitors provide heat energy to the district heating operator DST contracts guaranteeing their ability to operate in the market and provide heat to the DST long term at the contract price. The overall market share of the merging parties after the merger will be lower than the DST's market share of more than 30%.

The merger will also not be affected by the final energy tariff for consumers. the provision of a particular service. In badyzing the information provided by the companies and available to KP, the KP concluded that the merger would not lead to a strengthening of the dominant position of the merging parties or a significant reduction of competition in the production of electricity. and the wholesale market under the compulsory purchase and on the market of production and heat supply in the Daugavpils district heat network, the merger is therefore allowed.