We are pleased to provide you with this Quarterly EU & Competition Newsletter, which summarises selected key highlights and recent developments in Finnish and EU competition law. We hope our newsletter will help you stay on track and welcome you to contact us for any questions or comments.
ANTITRUST & MERGERS
UEFA and FIFA found to have breached EU competition law and freedom to provide services
On 21 December 2023 the Court of Justice issued a preliminary ruling, according to which the rules of FIFA and UEFA making the European Super League and any other new interclub football project subject to their prior approval and prohibiting clubs and players from playing in those competitions infringe Articles 101, 102 and 56 of the TFEU.
The Court of Justice found that FIFA and UEFA are engaged in economic activity consisting in the organisation of sporting competitions, the marketing of the sports event, the distribution thereof and the placement of advertising. The Court of Justice also noted that the same conduct may give rise to an infringement of both Article 101 TFEU and 102 TFEU, even though they pursue different objectives and have distinct scopes.
Article 101 TFEU concerns collaboration by several undertakings, namely agreements between undertakings, concerted practices and decisions by associations of undertakings. The Court of Justice found that the measures adopted by FIFA and UEFA were liable to restrict competition and, thus, caught by Article 101(1). Regarding the possibility to invoke efficiency gains pursuant to Article 101(3), the Court of Justice stated that it is for the national court to examine whether the conditions are fulfilled. However, the Court of Justice sent a very clear message to the referring court in Madrid stating that the mere fact that there are no rules on prior approval, participation and sanctions concerning other football projects enables FIFA and UEFA to prevent any and all competition on the market for the organisation and marketing of interclub football competitions in the EU, which alone suffices to rule out the exemption provided for in Article 101(3).
Article 102 prohibits abuse of dominant position. In this regard, the Court of Justice held that FIFA and UEFA have the power to determine the conditions in which potentially competing undertakings may access the market or to make determinations in that regard on a case-by-case basis, through a decision on prior authorisation or refusal of such access. In order to comply with Article 102, the associations should use that power within a framework of substantive criteria which are transparent, objective, non-discriminatory and proportionate.
The Court of Justice also found that the FIFA and UEFA rules constitute an obstacle to freedom to provide services provided in Article 56 TFEU since those rules enable FIFA and UEFA to exercise control over the possibility for any third-party undertaking to organise and market interclub football competitions in the EU and the possibility for any professional football club to participate in those competitions. The conditions laid down by the Court of Justice for the justification of the restriction were similar to those justifying a restriction of competition.
Press release of the Court of Justice: The FIFA and UEFA rules on prior approval of interclub football competitions, such as the Super League, are contrary to EU law (europa.eu)
Link to the judgment in case C-333/21, European Superleague Company: CURIA – Documents (europa.eu)
Commission imposed fines on cartels in the chemical, banking and pharmaceutical sectors and manufacturers of military hand grenades
In the autumn 2023, the Commission made decisions on four cartel cases (there were no final cartel decisions by the Commission during the first half of 2023).
In December, a penalty payment of EUR 47.7 million was imposed on Lantmännen over an ethanol benchmarks cartel. According to the Commission, Lantmännen together with Alcogroup and Abengoa between 2012 and 2014 artificially increased the ethanol price in the port of Rotterdam and the Amsterdam-Rotterdam-Antwerp barge market which were the most important trading locations for ethanol in the EU. While a settlement decision was made against the two other companies, Lantmännen did not confirm the content of the settlement statement of objections and the Commission eventually reverted to the ordinary procedure for Lantmännen.
Rabobank was fined in the amount of EUR 26.6 million for participating in a cartel concerning the trading of Euro-denominated SSA bonds and Government Guaranteed bonds in the European Economic Area. Rabobank and Deutsche Bank had between 2006 and 2016 exchanged commercially sensitive information and coordinated their trading and pricing strategies. Deutsche Bank was not fined, as it revealed the cartel to the Commission under the leniency program.
In the pharmaceutical industry, the Commission has imposed penalty payments in total of EUR 13.4 million on Alkaloids of Australia, Alkaloids Corporation, Boehringer, Linnea and Transo-Pharm in a settlement procedure. C2 PHARMA revealed the cartel and was not fined. The investigation continues as regards Alchem which did not participate in the settlement procedure. The cartel concerned sale of N-Butylbromide Scopolamine/ Hyoscine to distributors and generic drug manufacturers between 2005 and 2019. The companies coordinated and agreed on the minimum sales price of the medicinal substance, allocated quotas and exchanged commercially sensitive information.
The fourth cartel concerned military hand grenades. Diehl was imposed a fine of EUR 1.2 million for illegal cooperation with its rival RUAG. RUAG was not fined as it revealed the cartel to the Commission under the leniency programme. The companies had agreed, between 2007 and 2021, on the allocation of territories so that a party was not entitled to sell the products in the territory allocated to the other party without the other party’s consent.
The Commission’s press releases are available at:
Penalty payment of EUR 1.5 million imposed on six bus companies for participating in bidding consortia
The case concerned three public tenders in 2013–2016 organized by Föli, which manages public transport in the Turku region. During that time, local bus transport was opened up for competition in accordance with Regulation (EU) No 1370/2007 on public passenger transport services by rail and by road.
Six incumbent bus companies had a joint venture Turun Linja-autoilijain Osakeyhtiö (“TLO”), which submitted tenders on behalf of its owners in two public tender procedures. Further, four of the six companies had established LS-Liikennelinjat Oy (“LSL”), which submitted the third tender under investigation.
The Finnish Competition and Consumer Authority (“FCCA”) considered that the six bus companies were potential competitors since they had, with some exceptions, a possibility to individually make the necessary investments in order to operate the routes being tendered. Therefore, submitting the joint bids consisted in a restriction of competition.
The Market Court agreed with the FCCA and imposed penalty payments between EUR 120,000 and 380,000 on five bus companies and on LSL. One of the bus companies was not fined since it did not generate any turnover in the fiscal year preceding the Market Court’s decision. TLO was not fined separately as it had merged with LSL in 2020.
The Market Court acknowledged that the bidding consortia could have produced cost savings and economies of scale. However, this line of argumentation was rejected on the basis that the bus companies had not demonstrated that the restrictions on competition were necessary in order to achieve the efficiency gains or that the companies had considered different options in order to find the measures which had the least restrictive effect on competition on relevant market. For example, it was not established that the participation of all the six companies (or four companies in case of LSL) was necessary in order to obtain the efficiency gains and to ensure sufficient resources for the operation of the routes in question.
Link to the decision of the Market Court (in Finnish): MAO:530/2023 – Markkinaoikeus
Press release of the FCCA: The Market Court imposed EUR 1.5 million in penalty payments
The FCCA proposes a penalty payment on Valio for breaching commitment related to the acquisition of Heinon Tukku
In 2021, The FCCA approved an acquisition of Heinon Tukku by Valio, a significant diary producer. Heinon Tukku imports and distributes groceries, including products from Valio’s competitors, to foodservice customers, such as hotels, cafés, restaurants and public institutions. Valio committed to protect the competitors’ pricing information and the content of commercial agreements so that the information would not be passed on to the persons responsible for pricing Valio’s products.
Since the beginning of 2022, Valio has continued the operations of Heinon Tukku under its own brand Aimo. In November 2022, Valio informed the FCCA that due to an error in the data system firewall, persons responsible for pricing Valio’s products had access to price information of Valio’s competitors whose products Aimo distributed in Finland.
The FCCA considered this flaw in the data system as a serious breach of competition law, since the firewall was a main condition of the approval of the acquisition. The FCCA also referred to the European Commission’s decision in a case concerning Microsoft (No AT.39530) where the Commission held that, regardless of the specific circumstances of the case, a failure to comply with a commitment decision is, in principle, a serious breach of EU law as it is likely to undermine the effectiveness of merger control.
The FCCA proposed, on 4 December 2023, that the Market Court impose a penalty payment of EUR 900,000 on Valio. It is the task of the Market Court to determine whether the penalty payment shall be imposed and, in case the answer is in the affirmative, the amount of the fine.
Press release of the FCCA: FCCA proposes penalty payment of EUR 900,000 on Valio
Wellbeing services county of Southwest Finland accused of illegal in-house procurement
The FCCA has brough an action before the Market Court concerning the procurement of debt collection services without prior publication (i.e. a direct award) made by the wellbeing services county of Southwest Finland. The service was purchased from Revire Perintä Oy, a subsidiary of Sarastia Oy, which is a publicly owned limited liability company. The value of the contract is EUR 1.9 million.
The contract was awarded without prior publication since the wellbeing services county of Southwest Finland considered that it exercises control over Sarastia Oy and Revire Perintä Oy similar to that which it exercises over its own departments. Thus, Revire Perintä Oy, which carries out business mainly with the owners of Sarastia Oy, would qualify as an in-house entity of the wellbeing services county of Southwest Finland.
The FCCA disagreed on this argument, since Sarastia Oy has approximately 280 owners and the share of ownership of the wellbeing services county of Southwest Finland was only 0.09%. The FCCA considers that such a minor shareholding does not entitle the countyto exercise control over Sarastia Oy as required under procurement law.
The FCCA has proposed to the Market Court that the duration of the contract be shortened to terminate in six months after a court’s decision that has gained legal force. The FCCA also proposed a penalty payment of EUR 1,000 to be imposed on the county. The amount of the penalty payment is symbolic since the FCCA acknowledges that there is broad uncertainty on the correct application of the provisions concerning the in-house exception.
The case is very similar to one announced earlier in 2023 in which the FCCA decided to challenge the procurement of personnel administration services by the wellbeing services county of Vantaa and Kerava from Sarastia Oy. The share of ownership of the wellbeing services county of Vantaa and Kerava in Sarastia Oy was only 0.04%. The purpose of the FCCA is to clarify the rules and to ensure that the in-house exception will only be used where a contracting authority exercises actual control over an in-house company.
Press release of the FCCA (in Finnish): KKV vie Varsinais-Suomen hyvinvointialueen suorahankinnan markkinaoikeuteen
Individual contracts must be awarded in the same proportion as provided in the framework agreement
The FCCA has issued a remark on the joint municipal authority Helsinki Region Environmental Services (“HSY”) for breach of the Act on Public Procurement and Concession Contracts by Entities Operating in the Water, Energy, Transport and Postal Services Sectors (1398/2016 as amended).
In a public tender process in 2019 concerning the procurement of house shut-off valves and some other products, HSY had chosen two suppliers. According to the framework agreement, HSY purchases two thirds of its needs from the primary supplier and one third from the secondary supplier.
However, HSY purchased most of the products from the secondary supplier. Consequently, the FCCA found that HSY had considerably departed from the framework agreement and given an undue economic advantage to the secondary supplier.
In its response to the FCCA, HSY argued that there had been defects in the products provided by the primary supplier and that the primary supplier had delivery difficulties. However, HSY had not given any notice on the defects to the primary supplier. Thus, HSY had not acted in accordance with the terms of the frame agreement concerning defects or delays.
The case highlights the importance of adhering to the terms of the framework agreement. If the contracting authority deviates from the terms, this may result in an amendment of the framework agreement in conflict with the public procurement laws..
Press release of the FCCA (in Finnish): KKV antoi HSY:lle huomautuksen erityisalojen hankintalain noudattamatta jättämisestä
Ceiling of de minimis aid increased to EUR 300,000
Commission Regulation (EU) 2023/2831 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid (the “De Minimis Regulation”) permits the Member States to grant small amounts of aid to companies for whatever purpose and in whatever form. The previous maximum amount of EUR 200,000, applicable since 2008, was increased to EUR 300,000 in the beginning of 2024.
Aid that remains below the ceiling is not deemed to have any effect on trade between the Member States and is not considered to distort or threaten to distort competition. As these criteria are not fulfilled, de minimis aid is not considered as state aid and can, therefore, be granted without approval of the European Commission.
The EUR 300,000 ceiling is calculated by taking into account all de minimis aid granted by one Member State to a single undertaking over any period of three years. For the purposes of competition law, an undertaking is any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. All entities that are controlled (on a legal or on a de facto basis) by the same entity are to be considered as a single undertaking.
Aid comprised of loans can be calculated on the basis of reference rates (difference between the reference rate and actual rate). Alternatively, the De Minimis Regulation provides, under certain conditions, the possibility to grant a loan in an amount of up to EUR 1,500,000 to the beneficiary.
Accordingly, aid comprised of guarantees can be calculated on the basis of safe-harbour premiums laid down in the Commission’s notice on guarantees. Alternatively, a guarantee in amount of up to EUR 2,250,000 can be granted under certain conditions.
As of 1 January 2026, the Member States shall ensure that information on de minimis aid is registered in a central register at national or EU level. The purpose of the register is to enhance the control of the aid ceiling and to reduce the reporting obligations for companies.
Link to the De Minimis Regulation: EUR-Lex – 32023R2831 – EN
Ceiling of SGEI de minimis aid increased to EUR 750,000
Providers of services of general economic interest (SGEI) may be compensated up to an amount of EUR 750,000 under Regulation (EU) 2023/2832 (the “SGEI De Minimis Regulation”). The higher ceiling compared to the general De Minimis Regulation is justified by the facts that these services often serve local needs and that the “aid” is usually a compensation for the provision of the services. In fact, the compensation may be classified as state aid only on the basis that the service provider has not been chosen in a public tender procedure.
In order to benefit from the SGEI De Minimis Regulation, the compensation can only be granted against discharge of the service as agreed with the authority. Other provisions of the SGEI De Minimis Regulation are very similar to those of the general De Minimis Regulation. In case of loans and guarantees, the maximum amounts are, under certain conditions, EUR 3,750,000 and EUR 5,625,000 respectively. The new ceilings are applicable as of 1 January 2024.
The obligation to use a central register at national or EU level concerns also compensation granted in accordance with the SGEI De Minimis Regulation.
Link to the SGEI De Minimis Regulation: EUR-Lex – 32023R2832 – EN
Court of Justice: Restriction on freedom of establishment is not justified by the objective of ensuring the supply of gravel, sand and clay
Ensuring security of supply is, as a point of departure, an objective in the general interest, which may justify restrictions on the freedom of establishment. However, in case an investor is established in another Member State, the restriction must be necessary and proportionate to the objective of the restriction.
The Hungarian company Xella Magyarország (“Xella”) was prohibited from acquiring another Hungarian company Janes és Társa, which operates a gravel, sand and clay quarry, on the basis of the Hungarian Act on transitional provisions relating to the end of the state of emergency and to the pandemic crisis. The reasons for the prohibition were that Janes és Társa was a strategic company and that Xella was indirectly owned by a company established outside the EU. According to the facts of the case, Xella was owned by a German company, which was owned by a Luxembourg company, which in turn was owned indirectly by a parent company established in Bermuda, which ultimately belonged to an Irish national.
The first question was whether Xella could rely on the freedom of establishment under the TFEU since the said freedom is not applicable to a situation which is confined in all respects to a single Member State. In this respect, the European Court of Justice found that the cross-border ownership structure of Xella within the EU which characterises the situation is a relevant foreign element for the purposes of applying the freedom of establishment.
On the other hand, the fact that Xella was indirectly owned by a company established in Bermuda, did not prevent its subsidiaries established in the EU from invoking the freedom of establishment.
Consequently, the Court of Justice found that the prohibition of the acquisition was clearly a restriction of freedom of establishment. As regards justification of the restriction, the Court of Justice has held that, for example, in the case of undertakings active in the petroleum, telecommunications and energy sectors, the objective of guaranteeing the security of supply may constitute a public security reason and, therefore, possibly justify an obstacle to a fundamental freedom.
However, in the case of the supply of gravel, sand and clay and taking into account that the target’s national market share was only 0.52%, it was not surprising that the Court of Justice concluded that the provisions of the TFEU on the freedom of establishment precluded the prohibition of the acquisition.
Press release of the Court of Justice: The objective of ensuring the supply of gravel, sand and clay to the construction sector at the regional level cannot justify a restriction on the freedom of establishment (europa.eu)
Link to the judgment in case C-106/22, Xella Magyarország: CURIA – Documents (europa.eu)