Slovenian Court Ruling Eases Path for Russian-Owned Fortenova Group to Re-Acquire Major Slovenian Economic Asset

On June 22, the Ljubljana district court in Slovenia reduced a $60 million fine imposed in 2019 by Slovenia’s competition authority, AVK, on Croatian-based (but Russian-controlled) conglomerate, Fortenova Group (formerly Agrokor) to $1.13 million.  The decision seemingly offers Fortenova Group an easier path to pursue the re-acquisition of a major economic asset in the region, the Slovenian retailer, Mercator, which carries significant weight in the country regarding employment and downstream supply chain implications.  There are still additional steps, however, to AVK and the EU releasing their control of the company’s shares (the seizure of which was extended by 6 months in mid-June).

In December 2019, AVK temporarily seized Mercator using an anti-competitive allegation from 2016 seemingly to prevent it being absorbed by Fortenova Group as a result of the extensive bankruptcy proceedings of its predecessor entity (i.e., Agrokor).  Mercator was part of Agrokor prior to the company’s collapse, which followed exorbitant lending to the company by two Russian banks, Sberbank and VTB.  These two banks ultimately took ownership of the company, translating their position as the strategic company’s largest creditors into becoming the its largest shareholders.

The recent ruling, although limited to penalties imposed due to an earlier transgression, is being seen as a possible sign that the barriers to Fortenova retaining its ownership claim and control over the company are falling.  Days earlier, on June 20, Fortenova Group (formerly Agrokor) announced that it would challenge the seizures of Mercator’s shares by AVK and expected to receive Mercator back under its umbrella by the end of the year. 

Slovenian media has indicated that Mercator is seen by Fortenova’s new Russian operators as crucial to the company’s rehabilitation and financial survival.  Critics of the potential asset transfer fear that Fortenova’s ownership of the company could jeopardize the integrity of the company as a Slovenian retailer and also leave local Slovenian suppliers vulnerable to losing Mercator’s business – a potentially significant setback to Slovenia’s retail supply chain, jobs, and revenues.  Either way, if Mercator is fully absorbed back into Fortenova, these fortunes would be left in the hands of the company’s new Russian owners.

In 2019, then Slovenian Prime Minister, Marjan Sarec, sought assurances from his Russian counterpart, President Dmitry Medvedev, that Mercator’s Slovenian supply chain would remain protected in the event of an ownership transfer. Although vague assurances were offered, without a binding agreement, the acquisition of Mercator comes with dependencies on the discretionary decisions of Russian actors.