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FINLAND: An Introduction to Competition/European Law

Contributors:

Asta Siponen

Katariina Rontu

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Finland: Competition / European Law Overview

The legal landscape around Finnish competition law is predicted to evolve during 2022 and up to 2023 due to the impact of the amendments to EU competition law, such as upcoming new vertical block exemption regulations as well as the upcoming guidelines for market definitions and horizontal agreements.

Merger Control

At the national level, the merger control process is undergoing revision during 2022. The longstanding trend in the merger control process is of stricter enforcement and a more time-consuming process. Another trend in the market has been a growth in the number of deals. The Finnish Competition and Consumer Agency has expressed concern that Finnish merger control thresholds are too high and that some concentrations escape the scrutiny of the regulator to the detriment of consumers. The Agency is a driving force behind a proposal to lower and amend the current merger control turnover thresholds. The proposal – not yet formulated as an official government proposal – that is currently being discussed by stakeholders is that the national merger control regime would be amended to catch concentrations where the combined turnover of the parties from Finland would exceed EUR 100 million (the current threshold is at EUR 350 million globally). The second threshold of two parties having a Finnish turnover of EUR 20 million each is not proposed to be changed.

In addition to the lowering of the turnover thresholds, the proposal includes a mechanism to grant the Competition and Consumer Agency a right to require a notification and to investigate concentrations even when the national thresholds are not met. Up until now, the application of merger control has only been possible for transactions exceeding the national notification thresholds. The details for the review mechanism of such mergers below the official thresholds are open: an ongoing debate revolves around questions over whether to have a minimum transaction value or a certain minimum turnover requirement. If put into force, the new regime will have implications on deal certainty and time frame to get deals through while more and more concentrations will need clearance and possible prior checks with the Agency if they use their power to investigate a concentration below the national turnover thresholds. The new regime is not proposed to take effect until 1 January 2023.

Another key message as concerns merger control from the Finnish Competition and Consumer Agency is that for an effective remedy where a divestment is required, it will as a standard practice require an upfront buyer condition to be cleared with the Agency. This means that the parties cannot close the deal and get approval from the Agency prior to a binding agreement being made with a buyer and approved by the Agency.

Therefore, the merger control approval process is likely to become an even greater burden on merging parties in the future with rising transaction costs and a more time-consuming process.

Cartel enforcement

The amendments to the Finnish Competition Act, which came into force in 2021 due to the ECN+ Directive, strengthened the powers of investigations, decision-making and sanctioning of competition law infringements, are likely to have a significant impact on the enforcement of competition law in Finland. One of the key changes relates to the calculation of fines. The aim of the much-debated amendment is to increase the transparency of calculation methods so that the companies can better assess in advance the amount of the fine to be imposed for a restriction of competition. At the same time, this new rule may signify higher fines for companies, especially in cases of the most serious and long-term infringements. The new rules also set forth the method of calculation of fines and the payment mechanism in cases concerning an association of undertaking where the fine may also be calculated on the turnover of the members of an association of undertaking. The members represented in the decision-making organ of the association are first in line to pay the fine if the association is unable to pay. The Competition and Consumer Agency is yet to apply the new rules.

Overall, the recent amendments have increased the risk for higher fines for cartel infringements in Finland.

Public procurement

The annual volume of Finnish public procurement is estimated at around EUR 47 billion. The aim of the Finnish Procurement Act is to increase the efficiency of the use of public funds, but also to promote high-quality, innovative, and sustainable procurement. At the same time, the equal treatment of companies and other entities in tenders is a key focus.

A new amendment proposal for public procurement laws seeks to increase the integration of environmental and social considerations into procurement. The changes would affect both national and EU procurement above the thresholds and are expected to take effect in early 2023. The government's proposal will be submitted to Parliament during spring/summer 2022.

The proposed changes concern in particular the consideration of environmental aspects and the emphasis on quality factors. The public contracting entity retains the possibility to carry out its procurement in the way it deems best. However, to promote transparency, the contracting entity must justify how it takes quality into account in the procurement procedure.

The aim of the changes now being made is to further increase the social and environmental sustainability aspects of public procurement law. For example, environmental offences will be added to the criteria for excluding a tenderer from a tender. It is also intended that further clarifications in law shall be made as concerns the possible exclusion of subcontractors due to mandatory exclusion criteria.

The proposed changes are evidence of further legalisation of sustainability aspects into public procurement law.

Lotta Uusitalo Asta Siponen Katariina Rontu