December 18, 2019 / 2:48 PM / a month ago

UPDATE 1-Croatia's Fortenova says Slovenia seeking to expropriate its Mercator stake

(Adds comment from Sberbank, Slovenian minister, competition body)

ZAGREB/LJUBLJANA, Dec 18 (Reuters) - Croatia’s largest food producer and retailer Fortenova Grupa, formerly known as Agrokor, said on Wednesday it feared Slovenia was trying to expropriate the stake it owns in Slovenia’s largest retail chain Mercator.

Agrokor became Fortenova in April 2019, two years after being put into state administration then rescued in 2018 through a deal with international creditors.

Earlier this year, the company launched a procedure in Slovenia to legally transfer the 69.57% of Mercator shares owned by Agrokor to Fortenova.

However, Slovenia’s Competition Protection Agency this week seized Agrokor’s Mercator shares over a disputed fine imposed on Agrokor in September.

The 53.9 million euros ($59.41 million) fine was for failing to report on time its revised market concentration after it acquired a small bottled water producer. Agrokor has appealed the ruling and a court decision is pending.

Fortenova said Slovenia had seized the shares as a guarantee for payment of the fine and it feared the competition agency had deliberately imposed the fine “as a means to expropriate Mercator’s shares”.

“The contested fine itself is disproportionate as the (Mercator) shares have an appraised value exceeding 140 million euros,” Fortenova said.

The Slovenian Competition Protection Agency said on Wednesday that it temporarily seized Mercator’s shares to ensure the payment of the fine which “represents about 1% of the maximum possible level of a fine” in such a case.

Slovenia’s Minister of Economy Zdravko Pocivalsek said in a statement that the agency is an independent institution and that he was sure it was acting in line with legislation.

Fortenova said it would continue to protect its property with all legal means and it had informed the embassies of all European Union member and states in Slovenia as well as the U.S. and Russian embassies.

Fortenova’s major shareholders are Russian banks Sberbank and VTB, as well as some U.S. investment funds.

Sberbank, which owns almost 40 percent of Fortenova, also voiced discontent with the action by Slovenia.

“We are currently studying the situation. But it is already clear that the actions of the Slovenian antitrust agency are disproportionate to the size and significance of the violation that occurred several years ago,” it said in a statement. ($1 = 0.9073 euros) (Reporting by Igor Ilic in Zagreb, Marja Novak in Ljubljana and Tatiana Voronova in Moscow Editing by Alexandra Hudson)

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