Lithuania's top court ruled on Thursday that a government move clearing the way in 1998 for Danish sugar group Danisco to buy stakes in local producers was unconstitutional due to technical reasons.
However, the court ruling called into question the procedures followed, rather than the government's decision, which allowed Danisco, Europe's fourth-biggest sugar producer, to take a dominant position in the local market.
"The Constitutional Court recognised that the cabinet's decision made according to a protocol as of July 22, 1998, regarding Dansico Sugar's request to buy sugar industry shares contradicts constitution article 95 in its form and signing procedures," the court said in a statement.
In 1998 Danisco bought stakes in all four of Lithuania's sugar refineries.
Initially, the country's competition authority blocked the deal, on the grounds of over-concentration of the market, but the government stepped in to give it clearance.
However, the court said the government should have sought a formal cabinet decision, rather than relied upon a protocol.
The protocol was also not published, breaching "the constitutional principle of a legal state," the court said.
Under Lithuanian law, the ruling renders the government decision invalid.
Danisco, declined to offer an opinion on the possible consequences."We are not a party to this case. We are a subject of this case and from that perspective we have no comment," Michael Persson, vice-president of Danisco Sugar responsible for Lithuanian operations, told Reuters.
"At the time we were buying the shares we were of course fully convinced and had no doubts that the government acted in compliance with the constitution and laws. So this is a problem of the government not of Dansico Sugar," he added.
No one at Lithuania's Economy Ministry was available for immediate comment.