The Buzz in the Baltics

The Baltic region proved to be one of the most interesting areas to research in terms of the differing approaches of the authorities in neighbouring jurisdictions.

Perhaps the key difference was that Estonia was still in the process of implementing the ECN+ directive – which enables the competition authorities of European Union states to be more effective enforcers – whereas Latvia and Lithuania had already implemented this directive in previous years.  Lawyers in Estonia were hoping that by giving the authority the new powers from the ECN+, this would lead to an increase in cartel investigations, which are currently very rare in Estonia.  By contrast, the Estonian authority is very active in abuse of dominance cases, with one source estimating that there had been more abuse of dominance investigations in Estonia than there had been in Lithuania and Latvia combined!

While the Estonian authority appears to be focused on abuse of dominance investigations, in Lithuania the big focus is on merger clearance work.  One source regarded the Lithuanian authority as the strictest in the entire Nordic-Baltic region when it came to examining merger filings, and there was certainly a general feeling that merger filings in Lithuania are tricky, with many being blocked or subject to remedies.  The Lithuanian authority also has the power to review mergers that fall beneath the usual threshold and seems quite keen to exercise this power.  However, despite the authority currently carrying out a limited number of behavioural investigations, lawyers were hoping to see the number of investigations increase in future.  This is based on the authority having recently concluded the biggest cartel decision in its history and – returning to the theme of the authority’s strictness – a belief that the authority was looking to start imposing higher fines than any other authority in the region.

The Latvian authority appeared to have a broader focus than its regional neighbours, investigating bid-rigging cartels, as well as a high-profile abuse of dominance case against Latvian Railways and an increase in merger control work.  Possibly the unique aspect that came out of our research in Latvia was the role of public authorities – either acting as plaintiffs in the rising number of damages actions, or as the targets for investigations under the competition neutrality principle to ensure they are not distorting competition.

Although we have particularly highlighted the differences between the three jurisdictions so far, there are some trends that were visible across the region and reflect the general trends across Europe as a whole.  Key sectors of focus in the Baltics were around price rises in the energy and food retail industries, as well as more broadly focusing on the technology and life sciences industries.  The Lithuanian authority is following the trend from the US and UK by looking closely at non-compete agreements in employment contracts, while lawyers in Estonia (in common with most European jurisdictions) reported that they were dealing with a high number of questions around foreign direct investment.

For foreign clients or lawyers looking to do business in the Baltic region, there are therefore some key themes that are common to all European jurisdictions.  But, perhaps to a greater extent than in many other regions in Europe, there are significant differences between each jurisdiction that will make specific local expertise extremely beneficial.