Latvia’s Competition Council (KP) has imposed a 7.86 million euros fine on state-owned forestry company Latvijas valsts meži (LVM) for creating unjustified competitive advantages for companies holding long-term logging agreements, Competition Council chairwoman Ieva Šmite announced at a press conference on Thursday.
The authority found that LVM’s long-term logging agreement partners – AS Pata Saldus, AS Pata Strenči, SIA Pata Jēkabpils, SIA Berivs, SIA Krebsar and SIA ACA Timber – were granted access to specific timber resources and logging rights without having to participate in public auctions or compete for those resources with other market participants.
Other companies, meanwhile, could obtain the same types of resources only through public auctions, where they had to compete for limited supplies and did not enjoy equivalent access.
For the infringement, the Competition Council imposed a 7.86 million euros fine on LVM and ordered the company to fulfil two legal obligations: end the advantages arising from the long-term logging agreements and introduce timber sales procedures that provide all interested market participants with equal opportunities to purchase timber.
According to the Competition Council,
the arrangements gave certain long-term agreement partners unjustified competitive advantages
and reduced their business risks, while discriminating against other companies.
The authority also found that the volume of softwood sawlogs available to other market participants was reduced. The infringement distorted competition in the timber market over a prolonged period and also had negative effects on related markets.
In total, the Competition Council found that 11 long-term logging agreements remained in force in 2023, with the longest running until 2096. The Competition Council opened its investigation into LVM implementation of long-term logging agreements after the 1st of January 2020 in February 2026.
Before formally opening the case, the Competition Council began negotiations with LVM on 14 December 2024 in an attempt to address the company’s non-compliance with Latvia’s Competition Law. During the negotiations, the authority met and corresponded with LVM several times, repeatedly calling on the company to find a solution to the long-term logging agreement issue.
In June 2025, the Competition Council sent a letter to LVM and the Ministry of Agriculture warning about the negative impact of the agreements on competition and asking the two institutions to jointly develop proposals to eliminate the competition law concerns.
The ministry said it was working with LVM and planned to submit proposals by August 2025.
However, no proposals were received by the deadline, and in September the Competition Council again reminded the parties of the need to ensure free and fair competition in the timber market.
In November 2025, Competition Council representatives met then-Agriculture Minister Armands Krauze to discuss the issue and possible solutions. According to the authority, the minister considered proposing legislative amendments that would ensure fair competition not only in the use of forest resources but also in relation to other environmental resources. However, no concrete proposals followed.
On the 5th of December, 2025, the Competition Council again wrote to LVM, reiterating that the long-term agreements violated the principle of competitive neutrality and giving the company until the 23rd of December to submit concrete proposals.
The authority also warned that if no proposals were submitted,
it could launch formal proceedings and impose sanctions if a violation of competition law was established.
The Competition Council noted that negotiations giving LVM an opportunity to address the competitive neutrality concerns lasted for more than a year before the case was formally opened.
The Competition Council also referred to a December 2022 letter from the Prosecutor General’s Office. Following an investigation, prosecutors had issued a warning to LVM concerning procedures for restructuring the long-term logging agreements, drawing attention to legal requirements applicable to state-owned companies and questioning the justification for the procedure used.
The Prosecutor General’s Office also sent a letter to the Ministry of Agriculture, as Latvia’s highest authority responsible for the forestry sector, calling for regulations governing the operation of long-term logging agreements and preventing unequal treatment of market participants.
Thus, according to the Competition Council,
both LVM and the Agriculture Ministry had been aware since the end of 2022 that the issue required a solution.
In early February this year, LVM informed the Competition Council that it had filed court claims seeking the termination of the long-term agreements. However, citing restricted-access information, the company did not provide further details about the claims.
As LVM failed to demonstrate within the deadline set by the Competition Council that the competition concerns had been eliminated, the authority formally opened proceedings.
LVM has previously said that, taking into account the Competition Council’s position on ensuring free and fair competition in the timber market, it had applied to Riga City Court seeking to have the agreements declared invalid. The company also asked the court to suspend the agreements until a final ruling enters into force.
LVM has stressed that the long-term logging agreements predate the company itself and were originally concluded by the State Forest Service. According to LVM, when the company was established 26 years ago, legislation required it to assume obligations arising from those agreements.
LVM maintains that it has not concluded any new long-term logging agreements during its existence
and has merely administered historical contracts inherited from the State Forest Service.
The company has also said that since the beginning of its operations it has sought ways to terminate the agreements, considering both their disproportionately long duration and the manner in which they had been extended by regional State Forest Service structures to be problematic.
The issue gained wider public attention in September 2025, when TV3 programme Nekā personīga, citing the Competition Council’s assessment, reported that LVM’s long-term agreements did not comply with competitive neutrality requirements.
The historical agreements were signed after Latvia regained independence and were originally intended to provide a degree of stability to state-owned companies involved in primary timber processing during the privatisation process.
LVM later inherited the long-term contracts but did not terminate them,
as a court had ruled that it could not do so.
Some of the exclusive agreements were restructured by LVM beginning in 2013. Others remained unchanged and are still valid for several decades. These arrangements continue to grant certain market participants special rights to purchase roundwood without participating in the state-owned company’s auctions, while the guaranteed timber supplied to these partners is unavailable to their competitors.
LVM reported revenue of 604.585 million euros in 2025, up 3.2% year-on-year, while profit increased by 37.7% to 206.73 million euros.
Latvijas valsts meži was established in 1999 and has share capital of EUR 525.989 million. The company manages state-owned forest land. LVM is wholly owned by the Latvian state, with the Ministry of Agriculture acting as the shareholder.
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