Selected companies had an unfair advantage in accessing state-owned timber, distorting competition in the market.
Latvia’s Competition Council has fined state-owned forestry company Latvijas Valsts Meži (LVM) €7.86m for giving companies with long-term logging agreements preferential access to timber resources.
LVM manages Latvia’s state-owned forest land and is wholly owned by the Latvian state, with the Ministry of Agriculture acting as its shareholder.
The authority said six companies benefited from the arrangements: Pata Saldus, Pata Strenči, Pata Jēkabpils, Berivs, Krebsar and ACA Timber.
According to the Competition Council, these companies were granted access to specific timber resources and logging rights without having to take part in public auctions. Other market participants had to compete for the same types of resources through auctions and did not have equivalent access.
The authority said the arrangements gave the long-term agreement holders an unfair competitive advantage, reduced their business risks and limited the availability of softwood sawlogs to other companies.
It has ordered LVM to end the advantages created by the agreements and introduce timber sales procedures that give all market participants equal opportunities to buy timber.
The Competition Council said 11 long-term logging agreements were still in force in 2023, with the longest due to run until 2096. It began investigating LVM’s implementation of agreements dating from after 1 Jan 2020 in Feb 2026.
However, the dispute had been under discussion for more than a year before formal proceedings began.
In Dec 2024, the Competition Council began negotiations with LVM over concerns that the agreements breached Latvia’s Competition Law. The authority subsequently held several meetings with LVM and urged it to find a solution.
In Jun 2025, it warned LVM and the Ministry of Agriculture about the agreements’ impact on competition and asked them to develop proposals to address the issue. The ministry said it would work with LVM and submit proposals by Aug, but no proposals were received.
The Competition Council raised the issue again in Sep and met the then Minister of Agriculture Armands Krauze in Nov to discuss possible solutions. The authority said the minister considered legislative changes to strengthen competitive neutrality in the use of forest and other environmental resources, but no concrete proposals followed.
In Dec, the Competition Council gave LVM until 23 Dec to submit proposals and warned that formal proceedings and sanctions could follow if the concerns were not addressed.
The authority also pointed to a Dec 2022 warning from Latvia’s Prosecutor General’s Office, which had raised concerns about the restructuring of the long-term agreements and called for rules to prevent unequal treatment of market participants.
It said this meant both LVM and the Ministry of Agriculture had been aware of the issue since 2022.
LVM has argued that it inherited the agreements rather than creating them. The contracts were originally concluded by Latvia’s State Forest Service following the country’s return to independence and were intended to provide stability for state-owned companies involved in primary timber processing during the privatisation process.
LVM was established in 1999 and said legislation required it to assume the obligations arising from the existing agreements. It maintains that it has not signed any new long-term logging agreements and has instead administered historical contracts.
The company has previously said it sought ways to terminate the agreements because of their unusually long duration and the way some were extended by regional State Forest Service structures.
In Feb 2026, LVM told the Competition Council that it had filed claims with Riga City Court seeking to terminate the agreements. It also asked the court to suspend them until a final ruling.
LVM said the agreements had also been the subject of court proceedings and that it had been unable to terminate them unilaterally.
The company intends to appeal the Competition Council’s decision on the fine.
Source: Baltic News Network (BNN)
