The Latvian competition authority, known as KP, has approved the merger allowing Forum Cinemas Latvia OU to obtain rental rights for cinema spaces tailored for cinema needs in the AKROPOLE ALFA shopping center. This space is currently operated by Cinamon Operations Latvia SIA.

Both Forum Cinemas and Cinamon are involved in film screening and the sale of additional products such as snacks, drinks, and souvenirs in cinemas. Forum Cinemas operates in the territory of Riga, while Cinamon operates in Riga and Liepaja.

KP assessed the merger's impact on competition in the film screening market for multi-screen cinemas in Riga. Although the merger would eliminate direct competition between the merging parties, the overall market structure and competitive conditions indicated that this loss of competition would not significantly reduce competition in the affected market.

KP also evaluated whether the merger could facilitate coordinated actions in the affected market. Post-merger, two major multi-screen cinema operators would remain, leading to a more symmetrical market structure. Despite identifying several factors that could promote coordination, their significance was assessed in conjunction with the most likely market development scenario without the merger.

In considering the most likely market development scenario without the merger, KP first evaluated the possibility of a new cinema operator entering the AKROPOLE ALFA space if Cinamon ceased operations. However, the information obtained did not support this as a credible scenario.

Thus, KP identified two more likely scenarios without the merger: one where the AKROPOLE ALFA spaces would not be used for film screening services for a certain period, and another where the spaces would be taken over by Apollo Kino. In the first scenario, the number of multi-screen cinemas would decrease, reducing competitive pressure. In the second scenario, Apollo Kino would strengthen its market position by acquiring an additional multi-screen cinema.

Considering these scenarios, KP concluded that the market structure post-merger would be more favorable for competition, as two competing multi-screen cinema operators with comparable market positions would remain.

Based on the information provided by the companies and that available to KP, it was concluded that the merger would not significantly reduce competition or create or strengthen a dominant position in any of the markets in Latvia where the merging parties operate. Therefore, the merger is permissible.

To prevent significant reductions in competition due to mergers, the Competition Council's approval is required for merger transactions that meet the criteria set out in the Competition Law. This ensures state control over market concentration to prevent structural changes that could limit consumer choices or lead to non-competitive pricing in the long term.