Legal updates covering current topics.
The Ministry of Economic Affairs and Employment (the “MEAE”) recently published its report regarding the national implementation of the Directive (EU) 2019/1 (the so-called “ECN+ Directive”). The purpose of the ECN+ Directive is to empower national competition authorities in the European Union to become more effective enforcers by introducing certain common investigative and enforcement powers. In its report, the MEAE proposes several changes to the Competition Act. The below non-exhaustive summary discusses certain interesting changes proposed by the MEAE, including imposition of structural remedies to end competition infringements, detailed provisions on the setting of competition infringement fines and enhanced cooperation between national competition authorities in the EU.
The changes would enable authorities to impose structural remedies to bring a competition infringement effectively to an end. Structural remedies would include, for example, the obligation for an undertaking to divest a business unit or share capital in a competing undertaking. The Market Court would have the power to impose structural remedies on the proposal of the Finnish Competition and Consumer Authority (the “FCCA”).
Competition infringement fines:
The MEAE also proposes the introduction of detailed provisions regarding the setting of the amount of competition infringement fines. The purpose of the new provisions is to provide undertakings with a possibility to assess the amount of a potential competition infringement fine in advance. A fine would consist of two parts: (i) the basic amount of the fine and (ii) adjustments to the basic amount of the fine. The basic amount of the fine would consist of a percentage-based amount up to 30% of the turnover attributable to the goods or services related to the competition infringement for the last year of the infringement. The basic amount of the fine would be assessed based on the infringement, whereas the adjustments would be determined based on the conduct of each undertaking participating in the infringement. The proposed new provisions would broadly correspond to the guidelines applied by the European Commission.
A competition infringement fine could also be imposed as a result of a violation of certain procedural rules of the Competition Act, e.g. by refusing to grant access to the undertaking’s premises in connection with a dawn raid. In addition, a fine could be imposed on an undertaking which submits false, inadequate or misleading information to the FCCA, upon its request, to investigate a restraint on competition. The fine for a violation of the procedural rules could amount to 1% of the global turnover of the undertaking violating the rules.
One of the most significant changes concern the fines that may be imposed on industry associations. According to the proposal, the combined turnover of the undertakings that are members of the associations would be taken into account when determining the amount of the fine. Moreover, where the industry association is unable to pay the fine, the FCCA would be entitled to require payment of the fine directly by any of the undertakings who were members of the decision-making bodies of the industry association at the time of making the decision on the competition infringement. Secondarily, the FCCA would have the right to require payment from any of the members of the association, which were active on the market on which the infringement occurred. However, the fine in respect of the infringement in question could not exceed 10% of an undertaking’s total annual global turnover. In addition, no payment could be requested from an undertaking which demonstrates that it did not implement the infringing decision, and either was not aware of it or actively distanced itself from it prior to the FCCA’s investigation. The proposed amendment significantly increases the potential liability of undertakings that are members of industry associations and highlights the need for competition compliance monitoring.
In its report, the MEAE also proposes provisions, according to which the FCCA could impose interim measures that would be in force until the FCCA gives its decision on the principal issue. Currently, interim measures issued by the FCCA may be valid only for 90 days within which the FCCA must make its decision regarding the principal issue in question. The current time period of 90 days has been considered insufficient and impractical considering the customary length of the FCCA’s investigations.
Cooperation between competition authorities:
The proposed changes would also increase cooperation between national competition authorities within the EU. For example, the FCCA would be granted a right under certain circumstances to carry out inspections at the request of competition authorities of other EU Member States. Moreover, officials of national competition authorities of other EU Member States could be permitted to attend and actively assist the FCCA’s officials in an inspection conducted by the FCCA.
The amendments are proposed to enter into force on 4 February 2021, which is the due date for the national implementation of the ECN+ Directive.
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