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In Focus
Home In Focus Finnish act on competition restrictions to be overhauled

Legal Updates05.05.2009

Finnish act on competition restrictions to be overhauled

A Working Group appointed by the Ministry of Employment and the Economy has recently published its proposal regarding a major overhaul of the Finnish Act on Competition Restrictions (the “Competition Act”). The Working Group proposes amendments, i.a., to the provisions concerning merger control, sanctions and leniency, actions for damages and certain procedural rules.

MERGER CONTROL

The most central proposal in relation to merger control concerns the test used in the substantive assessment of notified concentrations. The Working Group proposes the replacement of the current dominance test with the SIEC-test (significant impediment to effective competition), i.e. the substantive test applied by the European Commission and many national competition authorities in Europe. The proposed harmonisation with EC law is, as such, welcome. It can, however, be expected that certain concentrations in oligopolistic markets, which would not fall foul of collective dominance under the current dominance test, will be subject to more rigorous scrutiny in the future.

The rather short notification deadline of one week from the event triggering the notification obligation (most often, the entry into a binding acquisition agreement) is proposed to be abolished. There is, generally, no interest in requiring prompt notification as long as the concentration is not implemented before receiving competition clearance. Notification to the Finnish Competition Authority (the “FCA”) before implementing the concentration, coupled with an obligation to suspend implementation until clearance, would, accordingly, suffice. The proposal also includes an option to submit the notification before the entry into a binding acquisition agreement, if the parties with “sufficient certainty” will enter into an agreement or arrangement giving rise to a notification obligation. The proposal further includes various other changes to the rules governing the merger control procedure, including a possibility for the FCA to “stop the clock” in certain cases.

SANCTIONS AND LENIENCY

In terms of sanctions, the Working Group proposes new detailed provisions regarding the calculation of competition infringement fines. Such provisions are broadly in line with the European Commission’s fining guidelines. It is hoped that the proposed provisions will increase the foreseeability of the prospective fines for competition law infringements. The proposed provisions also aim at sanctioning hardcore competition restrictions, such as cartels, more heavily than before.

The current leniency regime is proposed to undergo some changes aimed at furthering the coherence of the national regime with the model leniency programme of the European Competition Network and increasing the incentives for undertakings to blow the whistle. The Working Group proposes detailed provisions on the conditions for receiving a reduction of competition infringement fines and outlines clear reduction percentage ranges (30-50%, 20-30% and up to 20%) available for leniency applicants who do not qualify for full immunity from fines. The proposed provisions would entail a clear improvement, since it is currently very difficult for undertakings to foresee possible reductions of competition infringement fines under the leniency regime.

ACTIONS FOR DAMAGES

In relation to actions for damages, the Working Group proposes that also other than undertakings, including individual consumers and public bodies, would be given a right to claim damages for competition law infringements under the Competition Act. The Working Group further proposes amending the statutory limitation periods applicable to the right to bring an action for damages based on the Competition Act. The proposed limitation periods are similar to those laid down by Council Regulation (EC) No 1/2003.

PROCEDURAL RULES

As regards the procedural rules governing the investigation of competition restrictions, the Working Group proposes increased possibilities for the FCA to prioritise matters and concentrate on the most significant competition restrictions. The FCA’s powers of investigation are proposed to be developed by allowing the FCA, subject to the Market Court’s authorisation, to conduct inspections also in other than business premises, such as in the homes of the employees of the undertaking subject to the investigation.

Information submitted in the context of leniency applications is proposed to be treated as confidential in order to ensure that leniency applicants will not be disadvantaged compared to other cartel members in respect of potential damages claims.

Certain provisions regarding the undertaking’s right of defence are also proposed to be added to the Competition Act. Such provisions are, however, mainly of informative nature, since the competition authorities are also presently obliged to take such rights into account under administrative law.

NEXT STEPS

The Finnish Government is expected to issue a Government Bill based on the Working Group’s proposal and, following parliamentary proceedings, the amended Competition Act is expected to enter into force in 2010.

For further information, please contact *#Ms. Lotta Pohjanpalo#* or *#Mr. Mikko Eerola#*.

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