Amendments to Competition Act would prevent harmful market concentration

Mergers and acquisitions that exceed certain turnover thresholds must be notified to the Finnish Competition and Consumer Authority (FCCA). The FCCA will intervene in the transaction if it is deemed to prevent effective competition in Finland. The Government proposes that the notification threshold for mergers and acquisitions be lowered under the Competition Act.

The Government submitted its proposal to Parliament on 19 September 2022.

“As a result of this amendment, the FCCA would receive more notifications of mergers and acquisitions and also investigate more of them in future. The goal is to prevent harmful market concentration and increases to consumer prices. By strengthening competition, we can promote a well-functioning Finnish market in line with the objectives of the Government Programme,” says Minister of Employment Tuula Haatainen. 

In future, the FCCA would investigate transactions where the parties’ combined turnover generated in Finland exceeds EUR 100 million and the total turnover generated in Finland of at least two parties exceeds EUR 10 million per each party. Now, a notification must be submitted to the FCCA if the parties’ combined worldwide turnover amounts to EUR 350 million. The limit for the turnover generated in Finland of at least two parties to an acquisition would fall from the current EUR 20 million to EUR 10 million per party.

As concerns the combined turnover of the parties, the notification threshold would be determined on the basis of the turnover generated in Finland, instead of globally. The purpose of the national supervision of mergers and acquisitions is to prevent harmful market concentration in Finland. In future, the notification threshold would be more strongly linked with the Finnish market and the transaction’s negative effects in Finland.

The proposal would also clarify and amend three other sections of the Competition Act. The amendment to the notification obligation would not affect the assessment of acquisitions or the intervention threshold.  

Aim is to prevent rising prices and harm to consumers 

The current turnover limits for the notification obligation are high in relation to the size of Finland’s national economy. As a result, certain sectors and product and geographical markets are below the notification thresholds. The amendment would improve the FCCA’s ability to investigate transactions that are currently below the notification threshold and that could lead to harmful market concentration and price increases. 

With the current notification threshold, about 30 mergers and acquisitions are submitted to the FCCA each year. After the amendment, the number of notifications would increase by about 30–40 per year. Extending the notification obligation is estimated to result in direct consumer benefits of EUR 50–67 million. The amendment would prevent 4–6 more acquisitions deemed harmful to competition each year. 

While the growing number of notifications would increase the administrative burden of companies, the increase would be moderate compared to the benefits achieved by the reform. Additional resources will be allocated to the FCCA to respond to the increased number of notifications in the budget proposal for 2023.

The changes would come into force at the beginning of 2023. During the preparation of the proposal, stakeholders were consulted in two consultation rounds and two hearings. The comments were considered in the preparation. 

Changes to the merger notification form at the end of the year

Simultaneously with the amendment to the notification threshold for mergers and acquisitions, the Ministry of Economic Affairs and Employment has prepared an amendment to the merger notification form. One of the aims of the amendment is to reduce the administrative burden of companies in notifying of transactions that are unlikely to cause problems to competition. The Government intends to issue the amendment to the merger notification form as a decree in late 2022. It would enter into force at the beginning of 2023. 

The merger notification form includes, among other things, information submitted by the parties, which the FCCA will use to determine whether the transaction exceeds the turnover limits under the Competition Act.  The reform of the merger notification form is beneficial for companies and the FCCA regardless of the proposed amendment to the notification threshold. 

Inquiries:
Iiris Niinikoski, Special Adviser to the Minister of Employment, tel. +358 295 047 372
Virve Haapajärvi, Senior Ministerial Adviser, tel. +358 295 047 027
Iiro Ihanamäki, Senior Specialist, tel. +358 295 047 217