Competition legislation framework of dairy sector integration in the Baltic States
2010
Ozolins, J., Latvia Univ. of Agriculture, Jelgava (Latvia)
Appropriate resources, availability of infrastructure, economic significance and food market forecasts determine the rationale for development of the dairy sector in the Baltic States. The sector is faced by significant economic problems; inter alia, production structure fragmentation, lack of investments and low labour productivity. Several sector's problems can be directly or indirectly solved by integration. Competition legal acts setting strict penalties directly and widely apply to integration processes, imposing a high level of legal risks on integrating parties. Thus, competition legislation forms a central framework limiting and guiding integration. As the subject has not been explored earlier, the author researched the Baltic dairy sector integration options at primary and secondary levels as influenced by the EU and Baltic national competition legislation and its implementation practice. Abstract-logical, monographic and interview methods have been used. The author concludes that law-compliant cross-border integration opportunities for the Baltic dairy sector exist to form larger integrated undertakings with higher market power. Reference to market shares in the competition legislation in countries with lower aggregate crude milk market sales puts the dairy sector participants at a disadvantage in case of integration processes resulting in smaller absolute size of the allowable integrated undertaking. Integration by agreements, decisions and concerted practices is appropriate for national level arrangements but is with limited applicability in the Baltic states cross-border integration at both levels of the dairy sector. In case of concentration, integration may be used to create cross-border integrated structures increasing concentration at every level of the Baltic dairy sector.
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