Finland Competition & Regulatory newsletter Winter 2023
This newsletter features a look into Finnish competition law developments and recent enforcement practice.
2023 starts with reforms in Finnish merger control
Lower turnover thresholds enter into force
Revised merger control turnover thresholds entered into force in Finland on 1 January 2023. The thresholds are applicable to all transactions signed on or after this date. Under the new thresholds a transaction is notifiable to the Finnish Competition and Consumer Authority (FCCA) if the parties' combined turnover accrued from Finland exceeds EUR 100 million, and the turnover accrued from Finland by at least two parties separately exceeds EUR 10 million per party.
The FCCA has estimated that the amendment will double the number of transactions notified annually.
New notification form and reforms to the handling of notifications
A revised merger control notification form setting out which information must be provided in the notification was also introduced in the beginning of 2023. According to the FCCA, the new notification form should simplify and reduce the information required in cases unlikely to have any effects on competition. However, the information requirements increase in many cases where there are horizontal and vertical links. For example, information should be provided when one party is a potential competitor in a market where the other party has a market share of 30% or more.
Further, the FCCA's old merger control guidelines from 2011 were replaced by a set of new guidelines and instructions.
The reform will also affect the FCCA's procedure in their merger reviews. Market testing in cases unlikely to result in competition harm will be conducted by publishing a summary of the notified transaction on the FCCA website. In cases where the FCCA estimates that problems cannot be easily ruled out, statements from competitors, customers and suppliers will be requested by email, as they have been in the past.
FCCA proposes a fine for an alleged competition restriction in the HVAC infrastructure plastic pipeline market
In September 2022, the FCCA made an infringement fine proposal to the Market Court concerning an alleged restriction of competition in the Finnish market for HVAC infrastructure pipeline products involving two manufacturers and three wholesalers. The total amount of the proposed fines is approximately EUR 44 million.
According to the FCCA, the manufacturers and wholesalers engaged in anticompetitive practices aimed at market sharing in 2009–2016 by directing sales of the products to each other, preventing market entry, or hindering operations of undertakings not participating in the alleged co-operation. The infringement was allegedly implemented through mutual actions by the manufacturers and the wholesalers operating on different levels of the supply chain. The FCCA's view is that this required mutual understandings on both levels.
Already at this stage the case has been a long-running saga, as the FCCA's investigation began in 2013 and dawn raids were conducted in 2015 and 2016. The Market Court's decision in the matter is expected in 2024 at the latest.
The Market Court's judgment on unlawful co-operation in real estate management draws boundaries on agreements and concerted practices
The Market Court in December 2022 fined six companies active in real estate management services and a trade association for a horizontal competition restriction (judgment MAO H409/2022, 15 December 2022). The fines totalled approximately EUR 5 million, in contrast to EUR 22 million originally proposed by the FCCA.
The Market Court held that the defendants engaged in unlawful co-operation in 2014‒2017. According to the Market Court, the companies had accepted and contributed to the trade association's actions intended to facilitate price increases, and some of the conduct had entailed unlawful information exchange. In addition, the defendants had uniformised the pricing of one individual service.
However, the Market Court rejected many of the FCCA's claims. According to the Market Court, much of the discourse in meetings and emails put forward as evidence of price-fixing by the FCCA was so vague and the evidence presented was so limited that no infringement was found. In particular, the Market Court took the view that the defendants' alleged common goal of increasing the share of individually priced services from their total turnovers (as opposed to services charged as part of a monthly fee) did not qualify as unlawful coordination that knowingly substitutes practical cooperation for the risks of competition. The Market Court paid attention to the fact that individually priced services can be set up in many ways in terms of service design and pricing principles.
Interestingly, the Market Court also held that insofar as some of the defendants' actions were assessed as concerted practices, the defendants had in some cases demonstrated the lack of a cause-and-effect relationship between the practice and subsequent market conduct. For instance, a company was considered not to have participated in a concerted practice on price increases one year because it had privately criticised the trade association's related actions and did not raise its prices that year.
The Market Court ultimately imposed infringement fines that were for most defendants a fraction of the sums proposed by the FCCA. This, at least for now, continues the tendency of the Market Court to impose significantly lower fines than proposed by the FCCA.