The Latvian Competition Council has started an investigation into long-term logging contracts established by Latvian State Forests in the 1990s, citing potential violations of competition laws.
The Latvian Competition Council (KP) has initiated proceedings concerning long-term logging contracts made by Latvian State Forests (LVM) in the 1990s. These agreements have been flagged for possibly breaching legal regulations and principles of fair competition. The KP stated that the contracts granted exclusive rights for guaranteed timber supply to certain players in the forestry sector, which could distort market competition. The Council has the authority to impose a fine amounting to 3% of the previous year's turnover, which could equate to around β¬17.5 million.
Initially, there were many such long-term contracts in place, but only 11 remain active today. The investigation has not been without controversy, as the association of loggers expressed suspicions about the authenticity of some communication records from discussions between the KP and LVM. The KP has handed over audio recordings of the discussions to the prosecutor's office, which has reportedly found no evidence of wrongdoing thus far. This development leads to questions about transparency and accountability in the management of state resources and corporate governance within the forestry sector in Latvia.
Moreover, the Ministry of Agriculture's State Secretary, Armands KrΕ«miΕΕ‘, has not been a shareholder of LVM since late January due to a directive from the minister, which adds another layer of complexity to the situation. The KPβs investigation may result in significant financial implications for LVM and adds pressure on the agency to ensure fairness in competition while maintaining ecological considerations in forest management.
