Competition Council grants Eesti Gaas permission to acquire Gaso

Operator of the gas supply system AS Gaso. Photo: Zane Bitere/LETA

The Competition Council has granted Estonia's Eesti Gaas to acquire a decisive control over Gaso, the natural gas distribution system operator in Latvia owned by Latvijas Gaze natural gas utility, the Competition Council informed LETA.

The Competition Council authorized the transaction as it did not find any significant distortion of competition.

Having assessed the information provided by the companies and obtained by the Competition Council, the Council concluded that the merger would not result in a significant change in the market structure, lessen competition or create or strengthen a dominant position in the affected markets in Latvia, and that the merger should therefore be cleared.

Companies of Eesti Gaas Group sell pipeline gas, compressed natural gas (CNG), compressed biomethane (CBM) and liquefied natural gas (LNG) to customers and operate the largest gas distribution network in Estonia. Eesti Gaas Group is also an active gas wholesaler on the international market. The group is also active in the production and sale of solar energy and in the retail sale of electricity.

Eesti Gaas' subsidiary Elenger sells natural gas and electricity to household and corporate customers in Latvia. In addition, Elenger and Elenger Marine Estonia offer off-grid LNG solutions to corporate customers. Other Eesti Gaas Group companies, namely its parent company Infortar, are involved in electricity generation and other activities in Latvia.

Gaso is the only natural gas distribution system operator in Latvia, delivering natural gas from the transmission system to end consumers. Gaso develops the distribution infrastructure, builds natural gas connections, operates the system, keeps natural gas metering records and provides emergency services.

Since Gaso and Elenger Latvija, a subsidiary of Eesti Gaas, operate in two successive stages of the gas supply and distribution process, the markets in which the merging parties operate are vertically integrated.

The Competition Council concludes that due to effective laws and regulations, a vertical integration of Eesti Gaas and Gaso cannot in fact be achieved - the merging parties will not benefit from vertical integration.

As reported, Latvijas Gaze has signed a definitive agreement to sell Gaso to Estonian gas company Eesti Gaas.

For the transaction to be completed, a government approval is needed for the handover of national security assets and clearance from the competition authority.

Latvijas Gaze started the process of selling Gaso earlier this year, as under the current laws Gaso cannot be managed by Russian or Belarusian shareholders, but Latvijas Gaze has Russian shareholders.

In 2022, Gaso turned over EUR 52.46 million and sustained a loss of EUR 1.751 million.

Gaso is the only natural gas distribution system operator in Latvia. The company ensures the safety of gas networks, provides technical services and measures gas consumption. Gaso launched operations in December 2017. Its sole owner is Latvijas Gaze gas utility.