The owner of the Latvian construction company SIA Merks has become the Estonian company Kose Männisalu, according to information from Firmas.lv. In turn, the true beneficiary was Estonian citizen Melis Olev. According to the agreement with the buyer, the parties will not disclose the amount of the transaction. The portfolio of Merks contracts has been exhausted, the company does not conduct any business activities, only litigation and the fulfillment of guarantee obligations secured by Merko Ehitus remain, according to the company's statement received by the Tallinn Stock Exchange. The company announced an adjustment to the group structure in order to improve the efficiency of management in each country and strengthen the focus on the core business – construction services and real estate development. On August 1, the management board of Merko Ehitus, together with the council, decided to cease construction services and investments in Norway. After the completion of the current construction contracts, the Norwegian subsidiary Peritus Entreprenor will be sold or liquidated. The Management Board also decided that Connecto Eesti, a subsidiary of Merko Ehitus Eesti, would be transferred from the group to Merko Ehitus. After the reorganisation, the main sales markets of Merko Ehitus are Estonia, Latvia and Lithuania. Construction services are provided by Merko Ehitus Eesti in Estonia, Merko būve in Latvia and Merko statyba in Lithuania. Real estate development is carried out by Merko Kodud in Estonia, Merks mājas in Latvia and Merko Būstas in Lithuania. Tallinna Teede in Estonia is engaged in the construction and maintenance of roads and structures. In turn, Connecto Eesti, 50% of whose shares belong to the Merko Ehitus group, designs, builds and maintains electricity, telecommunications and gas networks in Estonia, and its subsidiaries are engaged in the construction of electricity supply infrastructure in Latvia and Lithuania. The companies of the Merko Ehitus group are engaged in real estate development, building and infrastructure construction. At the end of 2023, the group employed 635 people, and the concern's revenue last year amounted to 466 million euros. As reported, Merks operated with a turnover of 58.379 million euros last year, which is 46.4% less than in 2022, and the company's profit increased by 36.9% and amounted to 3 million euros, Firmas.lv reports. Merks was registered in 1996, its share capital is one million euros. Over more than 12 years, Merks has built at least 120 public facilities in Latvia, including municipal buildings with social functions, as well as industrial buildings and boiler houses. Merks was reportedly associated with the so-called construction cartel. On July 30, 2021, the Competition Council made a decision on the so-called "construction cartel" case, finding that ten companies had colluded in participating in public and private procurement. The cartel participants were involved in at least 70 purchases worth a total of 686.99 million euros. The Competition Council fined 10 companies involved in the cartel a total of 16.65 million euros. The Competition Council found violations in the activities of the following companies: SIA Skonto būve, SIA Latvijas energoceltnieks, SIA Velve, SIA Arčers, SIA Rere būve, SIA Re&Re, SIA RBSSKALS Būvvadība, SIA Abora, AS LNK Industries and SIA Merks. Velve cooperated with the authority and provided all the information at its disposal. In this regard, the companies reduced the amount of the fine, and a settlement agreement was reached to end the legal dispute. SIA RBSSKALS Būvvadība filed an application for recognition of insolvency, therefore, a decision to impose a fine was not made with respect to this company. As reported, at the beginning of this year, the Administrative District Court upheld the decision made by the Competition Council to several large Latvian construction companies that had filed cassation appeals. The Competition Council has at its disposal Competition received information that all parties involved in the case appealed the verdict in cassation. This information was confirmed to the Delfi portal by the department itself. Accordingly, the final outcome of the case will have to wait a little longer. However, as Joren Jaunozols, partner at the Sorainen law firm, admits, the builders who have been charged are already feeling the consequences: "There are developers who, despite the stage of the trial, take this into account. And those who finance developers also point out that builders should not be involved in this reputational risk." In addition, last year, amendments to the Public Procurement Act came into force, which, among other things, improve the legal framework regarding the reasons for excluding candidates and participants in auctions. Among the reasons, the law also provides for the following situation: the customer has sufficiently convincing grounds for concluding that the candidate or participant in the tender has entered into an agreement with other suppliers aimed at hindering, restricting or distorting competition. According to Joren Jaunozols, in a sense, now is the time for new players to enter the market. "It has become noticeable that regional players have become more active in construction. They have accumulated good experience in the regions and are now participating in projects that they did not have before," the expert says. In addition, there are several mid-level companies that are trying to take advantage of this opportunity and expand.
