A new Competition Act entered into force in Finland on 1 November 2011. It brings the country's competition regime ever closer to that of the EU. The most important changes relate to merger control, certain procedural rules, leniency and damages.
The most important change relating to merger control is a shift from the dominance test to the almost European-standard SIEC-test (Significant Impediment to Effective Competition). In practice, this means that the threshold for the Finnish Competition Authority ("FCA") to impose conditions may be lower than before and therefore there number of conditionally approved transactions is likely to increase. Another change of practical importance is that the new Competition Act no longer contains the requirement to file the notification within one week from the signing of a binding agreement. Section 23 of the new Competition Act provides that, the transaction must be notified to the FCA prior to its implementation and following the conclusion of a binding agreement, the acquisition of a controlling interest or the announcement of a public bid as referred to in Chapter 6, Article 2 of the Securities Market Act. A new feature of merger control is the possibility to notify the transaction even before the signing of the final agreement, if the parties are able with sufficient certainty to prove their intention to complete the business transaction.
The procedural rules on competition matters remain largely unchanged. Two amendments relating to the procedure adhered to in the review of competition issues are, however, worth mentioning. First, now the FCA has a legal obligation to prioritize its tasks. In practice the obligation to prioritize means that the FCA can focus on those restrictions to competition that are the most harmful for the economy and on the functioning of competition in general. Additionally, the FCA can decide to leave certain issues without further action thereby being able to speed up the lengthy duration of investigations by the FCA.
Second, the new Competition Act also broadens the FCA's right to conduct investigations. Where the FCA could previously investigate only business premises, the new Competition Act permits it to also investigate other premises including private homes. It is noteworthy that investigations conducted in premises other than business premises require prior permission from the Market Court regardless of whether it is the FCA or the officials of the EU Commission planning to raid the private premises.
As regards sanctions, the new Competition Act clarifies the previously confusing provisions on calculation of maximum fines. According the new Competition Act the maximum fine is based on the turnover (maximum 10 %) of the business undertaking or association of business undertakings concerned on the year in which the business undertaking or association of business undertakings last participated in the competition infringement. From now on it is easier for companies to predict the possible maximum amount of fines. Logically, both the gravity and the duration of the infringement play a crucial role in the calculation of the actual fines imposed.
The new Competition Act also brings necessary logic to the Finnish leniency system which now corresponds to the ECN Model Leniency Program and the EU Commission's Leniency Notice. Full immunity can be granted only to the first company to reveal the cartel and to provide sufficient evidence thereof. It is, however, also possible for other cartel participants that provide information to the FCA to benefit from reduced fines. Section 15 of the new Competition Act provides a decending scale for such reductions in cartel cases (30 - 50 %, 20 - 30 % and 20 %). Furthermore, it is possible to benefit from the leniency system, and even be granted immunity, even after the FCA has dawn raided either business or private premises. It is noteworthy that reductions from fines are also possible in competition matters other than cartels.
As regards provisions concerning damages in competition matters, the new Competition Act doubles the time to claim damages and broadens the scope of applicants. The right to seek damages is now limited to ten years from the day on which the infringement is committed or from the day when a continued infringement ceased as opposed to the previous five year limitation period. Additionally, the new Competition Act does not contain any limitation as to who can seek damages. According to the previous Competition Act only companies could see damages in competition matters. In the future these changes can cause unexpected claims, for example, in cases of acquisitions, several years after their completion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
