Finland: economist perspective
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Over the past year, the Finnish competition policy discussion has largely revolved around the amendment of the Finnish Competition Act and the subsequent updates to the merger guidelines published by the Finnish Competition and Consumer Authority (FCCA). The amendment of the Finnish Competition Act resulted in a significant lowering of the merger notification thresholds and was followed by an increase in the number of mergers notified to the FCCA.
The role of economics in Finnish competition policy enforcement has remained pronounced in merger cases, where the FCCA employs quantitative techniques, for example, for the purposes of market definition. The authority remains committed to the use of economic analysis outside merger control, too, as exemplified by a recent launch of quantitative tools aimed at facilitating cartel detection.
This article is based on interviews with the FCCA and with prominent competition law practitioners from the law firms Castrén&Snellman, DLA Piper Finland, Hannes Snellman, Krogerus and Merilampi, conducted between May and August 2023.
Amendment to the Competition Act lowered notification thresholds
A substantial change to the Finnish competition policy enforcement in the recent year has been the amendment to the Finnish Competition Act, which resulted in a significant reduction in the merger notification thresholds. Under the amended legislation, a merger needs to be notified if the parties’ cumulative national turnover exceeds €100 million and at least two parties have a national turnover of at least €10 million. This is a notable change from the previous thresholds of €350 million globally and €20 million nationally.
The recent amendment to the Competition Act did not empower the FCCA to call in mergers that fall below the notification thresholds but could have negative effects on competition. The FCCA noted that it continues to advocate a call-in option similar to that in many other EEA countries, including Norway and Sweden.
In the beginning of 2023, despite the economic uncertainty, the number of filed mergers has increased from average number of filings in line with the forecasts of the FCCA during the legislative process. By the end of August 2023, the FCCA has accepted 35 mergers, compared to 30 the same time last year.
Alongside the amended notification thresholds, the FCCA has updated its merger notification form and the accompanying guidelines. At first glance, the most notable change in the merger notification form is that it requires the notifying party to provide information for all plausible alternative product and geographic market definitions. However, the FCCA and the competition law practitioners interviewed for this article concur that the requirement simply codifies the FCCA’s recent practices.
Overall, most of the interviewed practitioners find the new notification thresholds proportionate given the size of the economy and the new notification form and guidelines to be better structured.
Three merger notifications withdrawn
Over the past 12 months, three merger notifications have been withdrawn midway through the review process.
First, in December 2022, a notification of a proposed joint venture between energy producer Helen and heating solutions provider LämpöYkkönen was withdrawn after the FCCA had decided to proceed with a Phase II investigation of the proposed JV on the back of conglomerate concerns. Based on the FCCA’s preliminary findings, the proposed joint venture could have led to foreclosure within the municipality of Helsinki where Helen, the municipal energy company, holds a natural monopoly on the market for district heating. According to the FCCA, market investigation and other evidence suggested that Helen could have had the incentive and the ability to exclude competitors from the provision of more energy-efficient heating solutions to reinforce the JV’s position on the growing market. After abandoning the notification, the parties restructured the JV such that it did not meet the merger notification thresholds, and the deal was concluded without the need for regulatory approval from the FCCA.
Second, a notification of a proposed acquisition of Voimatel by Enersense International was withdrawn in February 2023, after the FCCA’s decision to proceed with a Phase II investigation in January 2023. According to the FCCA’s preliminary findings, the proposed merger could have led to a significant impediment of effective competition in various markets related to construction and maintenance of telecommunications networks. The FCCA’s preliminary view was informed by bidding analysis in addition to structural analysis of market shares.
Third, Optigroup, a Swedish B2B wholesale supplier of consumables announced its decision to abandon the proposed merger of Finnish Pamark following an in-depth investigation. According to the FCCA’s investigation, the proposed merger would have led to adverse competitive effects on wholesale of cleaning and hygiene products in Finland. The FCCA made use of both sales data of the parties and their competitors, and procurement materials from the parties’ customers. Prior to abandoning the transaction, the parties held preliminary negotiations with the FCCA over suitable remedies to alleviate the competition concerns but considered finding suitable commitments unlikely.
Risk of coordinated effects identified in a merger inquiry
In July 2022, the FCCA approved a merger between BEWI and Jackon, two Norwegian manufacturers of insulation and packaging materials active in Finland. The merger was approved subject to commitments whereby BEWI agreed to divest one of its Finnish subsidiaries as proposed by the merging parties during the pre-notification phase. The same merger was notified in Sweden and Norway, where the Norwegian Competition Authority imposed further commitments to the parties.
According to the FCCA’s assessment of the proposed acquisition, the acquisition would have significantly impeded competition in Finland’s EPS insulation market, resulting in both unilateral and coordinated effects. The FCCA described competition in the market as Cournot competition and relied largely on structural analysis to evaluate the unilateral effects of the acquisition.
Due to the limited product differentiation, market transparency and limited bargaining power of buyers, the FCCA considered the market to be prone to coordinated effects. Notably, in 2022, the Supreme Administrative Court ruled that EPS insulation providers had engaged in price-fixing. The FCCA identified a high likelihood of collusion in the already concentrated market and highlighted the previous cartel in the same market, which is conducive to augmenting the risk of coordinated behaviour in the EPS insulation market.
The FCCA made use of quantitative economic analysis for the purposes of geographic market definition. For instance, the FCCA analysed the geographic scope employing catchment area analysis for markets of XPS and EPS insulation. On product market definition, the authority made use of technical evidence to inform market definition. However, given that the commitments offered by the parties resolved all potential competition concerns, the FCCA did not formally define precise product or geographic markets.
New cartel screening toolset introduced by the FCCA
In January 2023, the FCCA issued a policy brief about the introduction of its new cartel screening toolset. According to the authority, the new toolset employs various statistical methods in identifying potentially suspicious bidding behaviour in public procurements. The FCCA’s own studies on past cartels suggest that one of the statistical methods included in the screening toolset could have helped uncover these cartels earlier by identifying suspicious bidding behaviour, limiting the negative impacts of these cartels. The authority will use and further develop cartel screening tools and continues international collaboration in further developing the screening toolset.
Most of the interviewed practitioners did not have strong opinions on the introduction of the new tool and had not heard any reactions from their clients. Some raised concerns about the risk of false positive identification of potential cartels, fearing that the use of such tools could result in an unreasonable burden on companies suspected of cartel behaviour.
Suspected infringement of competition rules on the market of plastic HVAC pipes
In September 2022, the FCCA proposed sanctions in the total amount of €44 million to six companies active in the manufacturing and wholesale of HVAC infrastructure pipeline products for primarily outdoor uses (plastic heating, ventilation and air conditioning (HVAC) pipes) for infringements of article 101 of the Treaty on the Functioning of the European Union. According to the FCCA’s proposal to the Finnish Market Court, the major manufacturers and wholesalers of plastic HVAC pipes had a common understanding to restrict competition and share markets in Finland between 2009 and 2016 through coordination, limitations of direct sales to end customers and other anticompetitive behaviour. While the FCCA did not present economic analysis of anticompetitive effects in its decisions, the parties presented economic evidence to the court. The case is currently under consideration in the Finnish Market Court.
The second half of 2022 saw updates to cases covered in previous years’ articles. First, in August 2022, the Finnish Market Court ruled on the retail price maintenance (RPM) case, where Isojoen Konehalli (IKH), a wholesaler of hardware store goods, had imposed retail prices on online and brick-and-mortar retailers. According to the ruling, the FCCA had not sufficiently proved RPM for the brick-and-mortar retailers but confirmed the existence of RPM in online retail. Second, in December 2022, the Finnish Market Court ruled on the property management cartel, confirming the existence of the cartel but decreasing the sanctions from €22 million, as proposed by the FCCA, to around €5 million. The FCCA and three of the companies involved have appealed the case to the Finnish Supreme Administrative Court.
The new Foreign Subsidy Regulation will concern a limited number of Finnish cases
At the beginning of this year, the new Foreign Subsidy Regulation (FSR) entered into force. The new instrument, enforced by the European Commission, is designed to address distortions arising from foreign subsidies within the internal market. The fundamental concern is that subsidies granted by non-EU states, which fall outside the scope of EU state aid rules, have the potential to undermine fair competition between companies subject to internal market regulations and those from non-EU nations. Despite the discussions surrounding the topic, the interviewed practitioners believe that the new regulation will only impact a limited number of Finnish mergers or public procurements.
With some notable state aid complaints filed in previous years still pending at the Commission, some lawyers noted that the use of economic and financial evidence is likely to increase in state aid matters. 
Pan-European developments: cases concerning sustainability agreements still yet to surface
In June 2023, the European Commission released the much-anticipated revised Guidelines on Horizontal cooperation agreements. Of particular interest is a new chapter outlining the conditions in which competitors can collaborate on sustainability-related matters. To address the uncertainty surrounding the substantiation of benefits in proposed sustainability agreements, the chapter offers stylised examples of such agreements, acceptable evidence and approaches to quantifying different types of benefits.
Despite the substantial pan-European interest in the topic, the number of sustainability agreements processed by most European competition authorities remains low. According to the Finnish practitioners, there have been some instances where sustainability arguments have been considered but ultimately not pursued. According to some of the interviewed practitioners, companies are hesitant to test the waters by being the first to substantiate sustainability benefits from collaboration with their competitors. Moreover, the application of these new guidelines remains to some extent uncertain, according to the lawyers we interviewed. The interviews nevertheless suggest that forms of ‘green collaboration’ between competitors requiring evidence of sustainability benefits are likely to emerge in due course.
In relation to pan-European developments, the FCCA noted its interest in the Commission’s ongoing work on updating the notice on relevant market definition and the amendments to the Commission’s enforcement priorities in applying article 82 of the EC Treaty (currently article 102 of TFEU) to abusive exclusionary conduct by dominant undertakings. In particular, the FCCA has contributed to the development of the notice on market definition, an area where the FCCA has a long track record in employing economic tools.
Concerning the cases mentioned in this article, Copenhagen Economics has acted as an economic adviser to a party in the Enersense/Voimatel merger and to Yleisradio Oy in the context of the state aid complaint concerning video-on-demand and learning services.
 See the FCCA press release on 29 December 2022. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/markkinoiden-haitallista-keskittymista-voidaan-ehkaista-aiempaa-tehokkaammin-yrityskauppojen-ilmoituskynnys-alenee-1-1-2023/.
 See e.g., presentation of FCCA’s Director General during Finnish Government formation talks on 5 May 2023, p. 6. Available at: https://www.kkv.fi/uploads/sites/2/kkv_03052023_hallitusohjelmaneuvottelut.pdf.
 See the FCCA guidance on merger notification, section 5. Available at: https://www.kkv.fi/uploads/sites/2/2022_ohjeet_4_ohje_yrityskaupasta_toimitettavista_tiedoista_ja_asiakirjoista_.pdf
 FCCA press release on 5 December 2022. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/helenin-ja-lampoykkosen-valisen-yrityskaupan-kasittely-kkvssa-rauennut/
 The concern pertained mainly to Helen’s incentives to delay or otherwise hamper integration of heating pumps into existing district heating system in apartment buildings. FCCA decision to initiate further proceedings, Helen Oy / LämpöYkkönen Oy (Joint Venture), Dnro KKV/815/14.00.10/2022 (15 August 2022). Available at: https://www.kkv.fi/uploads/sites/2/r-2022-10-0815.pdf and FCCA press release on 5 December 2022. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/helenin-ja-lampoykkosen-valisen-yrityskaupan-kasittely-kkvssa-rauennut/.
 See the FCCA press release on 15 February 2023. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/enersense-ja-voimatel-peruivat-kkvlle-ilmoitetun-yrityskaupan/ .
 FCCA decision to initiate further proceedings, Enersense International Oyj/Voimatel Oy, Dnro KKV/728/14.00.10/2022 (13 January 20213), paragraphs 36 and 39. Available at: https://www.kkv.fi/uploads/sites/2/r-2023-10-0728.pdf and FCCA press release on 15 February 2023. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/enersense-ja-voimatel-peruivat-kkvlle-ilmoitetun-yrityskaupan/.
 Optigroup press release on 21 August 2023. Available at: https://www.optigroup.com/press/optigroup-and-pamark-decided-abandon-proposed-transaction-2151285.
 FCCA press release on 22 August 2023. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/optigroup-ja-pamark-peruivat-kkvlle-ilmoitetun-yrityskaupan/.
 Optigroup press release on 21 August 2023. Available at: https://www.optigroup.com/press/optigroup-and-pamark-decided-abandon-proposed-transaction-2151285.
 FCCA decision to approve conditionally, BEWI ASA/Jackon Holding AS, Dnro KKV/1493/14.00.10/2021 (1 July 2022), paragraphs 163 and section 9 on commitments. Available at: https://www.kkv.fi/uploads/sites/2/r-2021-10-1493-ehdollinen.pdf .
 Ibid., paragraph 161.
 Ibid., paragraphs 144–146.
 Ibid., paragraph 147.
 See the ruling of the Supreme Administrative Court, KHO:2022:86. Available at https://www.kho.fi/fi/index/paatokset/vuosikirjapaatokset/1656411862181.html.
 FCCA decision to approve conditionally, BEWI ASA/Jackon Holding AS, Dnro KKV/1493/14.00.10/2021 (1 July 2022), paragraphs 82–84.
 The FCCA press release on 31 January 2023. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/kkv-yha-useampi-kartelli-jaa-kiinni-uusien-menetelmien-avulla/.
 FCCA Policy Brief 1/2023, ISSN 2814-4937. Available at: https://www.kkv.fi/uploads/sites/2/2023-01-policybrief-tilastollisten-menetelmien-hyodyntaminen.pdf and Buri et al. (2023), Complementary Bidding and Cartel Detection: Evidence from Nordic Asphalt Markets, Working papers 1/2023. Available at: https://www.kkv.fi/uploads/sites/2/2023-01-working-papers-detecting-collusion-from-nordic-procurement-auctions.pdf.
 HVAC infrastructure pipeline products are used, for example, in pressure pipelines, storm water, drainage and sewer systems and for cable protection underground.
 And the corresponding provisions of the Finnish Competition Act and Finnish Act on Competition Restrictions. FCCA proposal to the Finnish Market Court, Dnro 279/KKV14.00.00/2013 and KKV/1229/14.00.00/2020, paragraph 3. Available at: https://www.kkv.fi/uploads/sites/2/r-2020-00-1229.pdf.
 Ibid, paragraphs 4–11.
 See the FCCA press release on 11 August 2022. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/markkinaoikeus-maarasi-isojoen-konehallille-175-miljoonan-euron-seuraamusmaksun-jalleenmyyjien-hintojen-maaraamisesta-verkkokaupassa/.
 See the FCCA press release on 15 December 2022. Available at: https://www.kkv.fi/ajankohtaista/tiedotteet/markkinaoikeus-maarasi-isannointiliitolle-ja-isannointialan-yrityksille-noin-5-miljoonan-euron-seuraamusmaksut-kartellista/
 See the article on Kiinteistölehti on 19 January 2023. Available at: https://www.kiinteistolehti.fi/isannointikartellipaatoksesta-useita-valituksia.
 Including the complaint of The Finnish Food and Drink Industries' Federation concerning alleged unlawful state aid to state-owned Suomen Viljava Oy's oat mill investment, and the complaint of Sanoma Media Finland Oy concerning video-on-demand and learning services provided by Yleisradio Oy, the Finnish public service broadcaster. See, eg, https://www.etl.fi/ajankohtaista/tiedotteet/2021/etl-kantelee-komissiolle-suomen-viljavan-kauramyllyinvestoinnista.html and https://lvm.fi/-/suomi-julkaisi-neljannen-vastauksensa-sanoman-yle-kanteluun-1825007.