Riga, December 10, 2025 — The Latvian authority has introduced new quantitative assessment tools to identify risky mergers more quickly, responding to rising deal volume and increasingly complex transactions in local markets. Additionally, the authority hinted at expanded use of the new tools in sectors such as telecoms, information technology, and pharmaceuticals.
The Konkurences padome (KP) said it is incorporating upward pricing pressure (UPP) and the gross upward pricing pressure index (GUPPI) into its merger review framework, marking a shift toward earlier, data-driven screening of deals that may weaken market conditions.
KP noted that UPP and GUPPI can signal whether a merged firm would have an incentive to raise prices, especially in markets with close substitutes. The authority emphasized that these tools do not replace full economic analysis but help identify transactions that require deeper review.
The tests weigh the incentive to raise prices after a deal against potential cost efficiencies, and KP said they are particularly useful in horizontal mergers where customer switching patterns are measurable.
Practical Application
KP applied UPP and GUPPI for the first time in a fuel-market case, using sales data, public price-structure information, and diversion ratios to estimate the merged firm’s pricing incentives for gasoline and diesel.
The authority stated that using these tools may reduce the need for broad information requests to third parties, though merging firms will face increased data requirements.
Broader Use Expected
KP anticipates expanded use of UPP and GUPPI in sectors such as telecoms, information technology, and pharmaceuticals, where product substitution is high. It added that the tools are less suitable in regulated markets or where one merging party is small.
The authority will continue to rely on established measures like market shares and the Herfindahl-Hirschman Index, but said quantitative indicators will now form a more central part of its evaluations.
