Merger control in Finland: overview
A Q&A guide to merger control in Finland.
The Q&A gives a high level overview of merger control, regulatory framework and regulatory authorities, relevant triggering events and thresholds in Finland. It also covers notification requirements, procedures and timetables, publicity and confidentiality, third party rights, substantive test, remedies, penalties, appeals, joint ventures and proposals for reform.
For information on restraints of trade, monopolies and abuses of market power in Finland, visit Restraints of trade and dominance in Finland: overview.
This Q&A is part of the multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Merger Control Q&As visit www.practicallaw.com/mergercontrol-mjg. For a full list of jurisdictional Restraints of Trade and Dominance Q&As visit www.practicallaw.com/restraintsoftrade-mjg.
For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-mjg.
Mergers and acquisitions are subject to merger control under the provisions set out in Chapter 4 of the Finnish Competition Act (948/2012, as amended) (Competition Act) that entered into force on 1 November 2011.
A merger that is defined as a concentration and exceeds the relevant turnover thresholds (see Question 2) must be notified to the Finnish Competition and Consumer Authority (FCCA). The FCCA provides a first instance review of the concentration. It can clear the concentration (either unconditionally or conditionally) or ask the Market Court to prohibit it.
There are two regulatory authorities:
The Market Court (a special court hearing market law, competition and public procurement as well as intellectual property rights (IPR) cases). The Market Court hears first appeals from decisions of the FCCA.
The Supreme Administrative Court (SAC) is the highest appellate court in competition cases. The SAC reviews the FCCA's decisions on second appeal and the decisions of the Market Court (such as a decision on fines) on first (and only) appeal.
See box, The regulatory authorities.
The provisions of Chapter 4 of the Competition Act apply to all concentrations that meet the turnover criteria (see below, Thresholds). A concentration is defined as:
The acquisition of control of an undertaking.
The acquisition of the whole or part of the business operations of an undertaking.
The setting up of a full-function joint venture.
The provisions on the control of concentrations do not, however, apply to intra-group arrangements.
A concentration is subject to control if both:
The combined worldwide turnover of the parties to the concentration exceeds EUR350 million.
The turnover generated in Finland of each of at least two parties to the concentration exceeds EUR20 million.
Parties to the concentration include the:
Acquirer of control.
Acquirer of the whole or part of the business operations.
Undertaking where control is being acquired.
Business operation (or part of the business operation), which is being acquired.
Founders of a full-function joint venture.
The Competition Act has specific provisions concerning the calculation of the turnover. In general, the turnover of the acquirer's entire group is relevant. In contrast, for the seller, only the turnover attributable to the target company (including any companies over which the target company exercises control) or the business operations that are being acquired is taken into account.
Turnover is, as a rule, allocated geographically according to the customer's location at the time of the transaction. Therefore, turnover that is generated from the sale of products or services to Finnish customers (regardless of where the seller is located) qualifies as turnover generated in Finland for the purposes of the thresholds.
Mandatory or voluntary
It is mandatory to notify concentrations that meet the turnover criteria of the Competition Act (see Question 2), except for those that fall within the exclusive jurisdiction of Regulation (EC) 139/2004 on the control of concentrations between undertakings (Merger Regulation).
The notification must be submitted to the Finnish Competition and Consumer Authority (FCCA) after entering into a binding acquisition agreement, acquiring control of an undertaking or announcing a public bid, and before the implementation of the concentration. However, the notification can also be submitted before the entry into a binding acquisition agreement, if it is sufficiently certain that the parties will enter into an agreement or arrangement giving rise to the notification obligation.
Generally, the concentration cannot be implemented before competition clearance has been received.
The notifying party is entitled to receive additional information and guidance from the FCCA in relation to a contemplated concentration before submitting the notification. In particular, this applies to guidance concerning the:
Applicability of the Competition Act's provisions.
Scope and extent of the obligation to notify.
Pre-notification negotiations with the FCCA are advisable, as they usually help in completing the notification and contribute to the FCCA processing it quickly.
Responsibility for notification
The following parties have an obligation to notify:
The acquirer of control.
The acquirer of the whole or part of a business operation.
The merging parties.
The founders of a full-function joint venture.
When several parties are obliged to notify, they can either:
Submit a joint notification.
Authorise one party to submit the notification.
However, all parties that must notify are responsible for the notification's accuracy and timely delivery.
The notification must be submitted to the FCCA.
Form of notification
The notification must be submitted, in writing, in Finnish or in Swedish. The FCCA generally accepts appendices to the notification that are in English.
The notification must comply with the requirements of the Decree by the State Council on the Obligation to Notify a Concentration (1012/2011), and include information on (among other matters):
The parties to the transaction.
The transaction and its impact on competition.
Suppliers and competitors.
The FCCA can grant waivers over the extent of information to be submitted in the notification if the:
Effects of the concentration on competition are likely to be minor.
Requested information is unnecessary to assess the concentration.
The FCCA has introduced a simplified notification form that reduces the amount of information to be submitted. This can be used where the notifiable concentration only has minor effects in Finland (in particular, if it concerns setting up a full-function joint venture outside of Finland).
There is no filing fee.
Obligation to suspend
The parties cannot generally implement the concentration before its approval.
The obligation to suspend does not prevent, in certain cases, the implementation of a public bid or the redemption of shares. The parties can also apply to the FCCA or the Market Court to allow them to take actions to implement the concentration, on the basis of the potential harm that suspending implementation may have on the concentration.
If the FCCA has proposed the prohibition of a concentration, the obligation to suspend lapses within one month from the proposal, unless the Market Court orders otherwise. Appeals of the FCCA's clearance decisions by third parties do not prevent the implementation of the concentration, unless the Market Court orders otherwise.
Procedure and timetable
The Finnish Competition and Consumer Authority (FCCA) must immediately examine a notification received. During an initial one-month investigation period, which starts to run from the submission of a complete notification (a substantially incomplete notification does not trigger the investigation period), the FCCA can:
Decide that the concentration does not fall within the scope of the Competition Act.
Clear the concentration unconditionally or conditionally.
Decide that further proceedings are required.
The FCCA is authorised to stop the time running at any stage of the investigation as set out below, which extends the relevant investigation period accordingly.
If the FCCA does not decide to start further proceedings within the above time limit, it is deemed to have approved the concentration. Usually, the FCCA issues a written decision before the end of the one-month period.
If the FCCA decides to start further proceedings it must, within three months, either:
Clear the concentration unconditionally or conditionally.
Ask the Market Court to prohibit the concentration (which the FCCA cannot do).
If the FCCA makes no decision it is deemed to have approved the concentration. The Market Court can suspend the three-month period for a maximum of two months. Furthermore, where information requested by the FCCA has not been submitted in time or the information provided is inadequate, the FCCA may decide to extend the above processing time limits with any amount of days corresponding to the delay in submitting the adequate information.
If the FCCA asks the Market Court to prohibit the concentration, the Market Court must issue its decision within three months of the FCCA's request. The Market Court can decide to:
Approve the concentration conditionally or unconditionally.
Prohibit the concentration or order the concentration to be dissolved.
Refer the concentration back to the FCCA.
If the Market Court makes no decision, it is deemed to have approved the concentration.
For an overview of the notification process, see flowchart, Finland: merger notifications.
Publicity and confidentiality
The general principle under Finnish administrative law is publicity. Therefore, unless there are statutory grounds for keeping the information confidential, the information is publicly available. The Finnish Competition and Consumer Authority (FCCA) decides whether to release information to third parties or keep it confidential in accordance with the Act on the Openness of Government Activities (621/1999, as amended). The rules in the Act on the Publicity of Administrative Court Proceedings (381/ 2007, as amended) determine how much of the procedure in the Market Court is publicly available. The parties involved have more extensive rights to access information than third parties: as a rule, they have access to all documents that may influence the determination of the matter concerned.
Pre-notification negotiations with the FCCA are generally conducted on a confidential basis. Once the notification is made, information on the parties to the concentration and the notification date is published on the FCCA's website (see box, The regulatory authorities). The FCCA also gives the parties' main competitors, suppliers and customers an opportunity to comment on the concentration (this means releasing a summary of the notified concentration to those parties). In addition, interested parties often request a public version of the notification submitted to the FCCA.
The FCCA's final decision is published on its website, except for business secrets or other confidential information that it excludes from the public version. Public versions of the Market Court's decisions are generally published on the Market Court's website (see box, The regulatory authorities) and in a publicly available database (www.finlex.fi).
The FCCA and the Market Court keep a document confidential if there are statutory grounds for doing so (for example, it falls within a category of business secrets).
Confidentiality on request
Throughout the procedure, the parties can, and in practice almost invariably do, request that the FCCA or the Market Court keep certain information confidential. Usually, the FCCA and the Market Court agree to keep business secrets or other competitively sensitive information confidential.
Rights of third parties
When the Finnish Competition and Consumer Authority (FCCA) reviews the notification, it hears the parties' main competitors, customers and suppliers (usually indicated by the notifying party) and releases basic information on the concentration and its effects on competition to them (see Question 5).
Market participants that have not been contacted by the FCCA can, on their own initiative, contact the FCCA and give their statements and comments on the concentration. However, there is no guarantee that the FCCA will take these statements into account.
Third parties can generally access documents that are provided to the FCCA or the Market Court, unless they are business secrets or otherwise confidential (see Question 5, Automatic confidentiality and Confidentiality on request).
See above, Representations.
The competition authorities apply the significant impediment of effective competition (SIEC) test. This means that a concentration may be prohibited if it significantly impedes effective competition in the Finnish market, or a substantial part of the Finnish market, particularly as a result of the creation or strengthening of a dominant market position.
Efficiencies can be used to counter competition issues provided that the efficiency gains are passed on to Finnish consumers and cannot be achieved on the Finnish market without the concentration.
Efficiencies brought about by mergers can be production-related, such as improved product quality, more efficient production and distribution, the ability to offer a broader product portfolio with the same inputs, or other savings in production, supply or distribution costs. Consumers can also benefit from dynamic efficiencies, such as new and improved products resulting from innovations in production or distribution.
The weight given to efficiency claims depends on:
How substantial the claimed efficiencies are.
How likely they are to be achieved.
Whether they promote competition for the benefit of customers and consumers.
An otherwise problematic merger can be cleared if one of the merging parties is a failing undertaking. The basic requirement is that the deterioration of the competitive structure resulting from the merger cannot be said to be caused by the concentration. This is, generally, the case where the competitive structure of the market would deteriorate to at least the same extent in the absence of the merger. The Finnish Competition and Consumer Authority (FCCA) considers the following three criteria of particular relevance for the application of the failing firm defence:
The merger is the only economically feasible way to prevent the undertaking from exiting the market in the near future and the undertaking would exit the market even in the absence of the merger.
There is no less anti-competitive alternative.
In the absence of the merger, the assets of the failing firm would inevitably exit the market.
Remedies, penalties and appeal
The Finnish Competition and Consumer Authority (FCCA) and the Market Court can impose both behavioural and structural remedies, although structural remedies are generally preferred. To be accepted, the proposed remedies must be capable of removing the identified competition concerns.
The parties can offer, and the FCCA can accept, remedies both during the initial one-month investigation period and the further three-month investigation period. There are no statutory deadlines for proposing remedies but the parties should propose them early enough to enable the FCCA consider the proposed remedies in its determination of the matter. In cases that lead to competition concerns it is generally advisable to start negotiating remedies with the FCCA as early as possible. The parties can start discussing remedies with the FCCA in pre-notification negotiations. The FCCA can only impose remedies that are accepted by the notifying parties.
Although the parties must conduct negotiations concerning remedies with the FCCA, the Market Court can revise the conditions imposed in accordance with arguments raised in the Market Court.
Failure to notify correctly
An undertaking that fails to comply with the obligation to notify can receive an administrative fine of up to 10% of its total annual turnover. The Market Court imposes this fine on the recommendation of the Finnish Competition and Consumer Authority (FCCA). A fine is not imposed if either:
The failure is considered to be minor.
A fine is otherwise unjustified to safeguard competition.
This can be the case if the:
Notification obligation is subject to interpretation (for example, if it is unclear whether the transaction qualifies as a concentration under the Competition Act).
Notification does not include all requested information.
If the parties submit incorrect or misleading information that has had a material effect on the decision, the Market Court may, on the recommendation of the FCCA:
Prohibit the concentration.
Order the concentration to be dissolved.
The FCCA must submit its proposal to the parties within one year from the date when the decision became final or when the concentration was implemented.
Implementation before approval or after prohibition
An undertaking that implements a concentration in breach of the Competition Act can receive an administrative fine of up to 10% of its total annual turnover. The Market Court imposes this fine on the recommendation of the FCCA. A fine is not imposed if the failure is minor or it is otherwise unjustified (see above, Failure to notify correctly).
The Market Court can also, based on the FCCA's recommendation, either:
Order the dissolution of a concentration that has been implemented in breach of the Competition Act.
Attach conditions to its implementation.
Failure to observe
The FCCA's decisions can be made subject to a conditional administrative fine. The size of the fine is determined on the basis of (Act on Conditional Fines (1113/1990, as amended)):
The extent and nature of the obligation concerned.
The financial standing of the party concerned.
Other relevant factors.
If the party that receives the decision fails to comply with it, the Market Court can impose the fine. Failure to observe conditions attached to a clearance decision may also lead to the Market Court ordering the dissolution of the concentration.
The fines are administrative in nature. Criminal fines can be imposed under the Penal Code on individuals who submit false evidence to an authority.
Rights of appeal
The Finnish Competition and Consumer Authority's (FCCA) decisions can (subject to some exceptions) be appealed to the Market Court by both:
The party that the decision addresses.
Other persons whose rights, obligations or interests are directly affected by the decision.
The appeal must be filed within 30 days from receiving the decision. The following FCCA decisions are not subject to appeal:
Interim injunctions or temporary obligations.
Decisions determining whether further proceedings are required.
Decisions concerning the conducting of inspections in the undertaking's premises.
Decisions on extending processing time limits are not subject to separate appeal but may be appealed by a party who has the right to appeal the FCCA's decision in the main issue (that is, the actual merger control decisions).
The notifying parties cannot appeal against the FCCA's decision ordering conditions proposed by the notifying parties.
Subject to certain exceptions, the Market Court's decisions can be appealed to the Supreme Administrative Court by the parties and other persons whose rights, obligations or interests are directly concerned by the decision. The appeal must be filed within 30 days from receiving the decision.
Third party rights of appeal
According to the decisions of the Market Court and the Supreme Administrative Court, the FCCA's clearance decisions do not usually directly affect third parties' rights, obligations or interests. Therefore, third parties are not usually found eligible to appeal the FCCA's decisions in merger control cases.
Automatic clearance of restrictive provisions
Ancillary restrictions are not automatically cleared on the clearance of a concentration. The parties can ask the Finnish Competition and Consumer Authority (FCCA) to clear ancillary restrictions in the notification. However, in practice they tend to rely on their own judgement. As part of a concentration, the FCCA may approve restrictive provisions that are:
Directly related to the concentration.
Necessary for its implementation.
These provisions could include, for example, non-compete provisions on the seller, as long as their object, scope and duration do not exceed what is necessary for the implementation of the transaction.
Regulation of specific industries
The Competition Act sets out specific provisions in relation to:
Concentrations in the electricity market. A concentration in the electricity market is subject to the usual merger control rules. In addition, a concentration can be prohibited if, as a result of the concentration, the combined share of the transmission operations of the parties to the concentration and the entities and facilities related to them on a national level exceeds 25% of the amount of electricity transmitted at 400V in the transmission grid.
Concentrations of financial institutions and insurance companies.
The creation of a joint venture that takes permanent control over all of the functions of an autonomous economic entity constitutes a concentration within the meaning of the Competition Act. A joint venture is subject to the merger control provisions if it is intended to operate on a lasting or permanent basis and has sufficient resources to operate independently of its founding members.
Joint ventures that do not have control over all of the functions of an autonomous economic entity are not notifiable, and the potential restraints on competition related to such arrangements are assessed under sections 5 to 7 of the Competition Act. The merger control provisions can, however, apply to these joint ventures when they acquire business assets from third parties. Moreover, the dissolution of these joint ventures can create an obligation to notify.
Proposals for reform
Finnish Competition and Consumer Authority (FCCA)
Description. This is the website of the FCCA, which is maintained by the FCCA. An unofficial English translation of the Competition Act can be found on the website. The translation is not legally binding.
The regulatory authorities
Finnish Competition and Consumer Authority (FCCA)
Head. Juhani Jokinen (Director General)
Outline structure. The FCCA is led by the Director General Juhani Jokinen. The Director of Competition Division is Timo Mattila. The following departments operate under competition affairs:
Enforcement 1, headed by Director Kirsi Leivo.
Enforcement 2, headed by Assistant Director Valtteri Virtanen.
Cartel Unit, headed by Assistant Director Mika Hermas.
Advocacy Unit, headed by Assistant Director Kalle Määttä.
International Affairs, headed by Assistant Director Rainer Lindberg.
Responsibilities. The responsibilities of the FCCA include implementing competition and consumer policy, ensuring good market performance, implementing competition legislation and EU competition rules, and securing the financial and legal position of the consumer. The FCCA is responsible for protecting sound and effective economic competition through:
Intervening with competition restrictions that breach the Competition Act.
Procedure for obtaining documents. The procedure for obtaining documents held by the FCCA is regulated by the Act on the Openness of Government Activities (621/1999, as amended). This requires the FCCA to respond to requests for documents without undue delay. If the FCCA decides not to provide a document, it must state its reasons.
General information is available at the FCCA's website (see above, Contact details).
Head. Chief Justice Kimmo Mikkola
Outline structure. The Chief Justice is head of the Market Court. Other members include 23 Market Court judges and two Market Court engineers. In addition, a number of expert members participate in the hearing of the cases.
Responsibilities. The Market Court is a special court that hears cases relating to market law, competition law and public procurement as well as intellectual property rights.
Procedure for obtaining documents. See above, Finnish Competition Authority (FCA): Procedure for obtaining documents. The Act on the Publicity of Administrative Court Proceedings (381/2007) determines the publicity of the procedure and documents in the Market Court proceedings.
Waselius & Wist
Professional qualifications. Finland, Solicitor, 2000
Areas of practice. EU and Competition law.
Non-professional qualifications. LLM Eur, King's College, University of London, 2005
- Numerous domestic, multi-jurisdictional and EU merger control analyses and filings predominantly in cross-border transactions.
- Regularly acts as counsel in proceedings before the FCCA and the Market Court.
- Acting as dawn raid counsel and providing compliance programmes and training for a number of multinational undertakings in the construction, consumer products, energy, pharmaceutical and technology sectors.
Waselius & Wist
Professional qualifications. Finland, Solicitor, 1998
Areas of practice. EU and Competition Law; M&A.
Non-professional qualifications. Postgraduate Diploma, EC Competition Law, King's College, University of London, 2002
Over the past 15 years, represented a number of leading international and domestic corporations subject to FCCA and European Commission investigations and proceedings before the Market Court, both in cases relating to alleged cartels and other horizontal competition restrictions and cases involving alleged abuse of dominant position.
Acting for both notifying parties and interested third parties in merger control proceedings before the FCCA, and for complainants and interested third parties in public procurement proceedings before the Market Court and the Supreme Administrative Court.