Legal Updates

Legal updates covering current topics.

Legal Updates / 13.07.2017

Proposed changes to the Finnish merger control regime – increased scrutiny in the social and healthcare sector

A Government Bill issued on 15 June 2017 proposes a temporary amendment to the Finnish merger control regime. According to the proposal, the merger control regime would, subject to certain exceptions, be applicable to all concentrations where at least one party provides social or healthcare services, or imaging or laboratory services related to healthcare services, in Finland regardless of the turnover of the parties concerned.

The proposal is related to the overall reform of the Finnish social and health care system, which is currently being considered by the Finnish Parliament. The proposal seeks to limit further consolidation in the sector and maintain a competitive landscape with a sufficient number of competing service providers.

The concept of “social and health care services” is broadly defined in the proposal and the scope of application of the amendment would, thus, cover a wide range of undertakings active in the sector. Moreover, the notification obligation would apply regardless of whether the turnover thresholds of the Competition Act are exceeded. This marks a significant departure from the main turnover based regime. A short-form notification form is expected to be introduced to alleviate the administrative burden of notifying parties.

The proposed new notification obligation does not apply to small operators or undertakings within the same group of companies. Moreover, the notification obligation does not apply to transactions where the target company, the merging party or the joint venture company to be established does not operate in the Finnish market for social, healthcare, imaging or laboratory services, or in any related markets. The latter exemption is intended to exclude from the notification obligation acquisitions by conglomerates and private equity companies of targets active in the social and healthcare sector outside of Finland and targets in Finland, which are not active in the social and health care sector.

The following concentrations are excluded from the scope of application of the proposed new notification obligation:

(i) concentrations where all parties are self-employed persons;
(ii) concentrations within the same company or the same group of companies;
(iii) concentrations, which involve only two parties and where one of the parties is a service provider with only five health care professionals;
(iv) concentrations where the target, the merging party or the joint venture company to be established is not active in the Finnish market for social or health care services, or
imaging or laboratory services, or any related markets.

The proposal also includes an amendment to the processing times of the competition authority in respect of concentrations in the social and healthcare sector. According to the proposal, the current Phase 1 period of one month is proposed to be extended to 45 working days.

No amendments are proposed to the substantive assessment of concentrations and, accordingly, the SIEC-test (“significant impediment to effective competition”) will be applied also to concentrations caught by the amended regime. Consequently, the competition authority will likely be able to intervene only in respect of a limited number of notified transactions. The authority is expected to scrutinize regional market conditions very closely and, apart from horizontal mergers, also vertical mergers and conglomerate mergers where the parties operate in neighbouring markets will likely be subject to detailed review.

The amendment is proposed to enter into force as soon as possible and will be applicable to transactions entered into after the amendment has entered into force (likely in autumn 2017) and before 1 January 2019. The Government Bill is currently still pending with the Finnish Parliament.

For further information, please contact

Matti Siiteri
Associate
Tuurna