In may 1996 Kesko Oy purchased the majority of the shares of one of its main Finnish competitors, Tuko Oy, thus obtaining a market share of over 60 per cent of the Finnish perishables goods sector. After the purchase Finnish competition authorities submitted the deal to be examined by the European Union Commission.
On 20 November the Commission adopted a decision concerning the Kesko - Tuko deal, in which it considered it incompatible with the common market.
The Commission concluded, that "as a result of the concentration Kesko Oy would acquire a dominant position on the Finnish market for retail of daily consumer goods and cash & carry sales of daily consumer goods. As the concentration has already been implemented, the Commission will, in a separate decision based on Article 8 (4) of Regulation (EEC) No 4064/89, adopt appropriate measures in order to restore conditions on effective competition".
The subsequent decision by the Commission read: "The concentration by which Kesko Oy acquired sole control of Tuko Oy by purchase of shares is declared incompatible with the common market and with the functioning of the EEA Agreement."
According to sources in Kesko it will continue to find suitable arrangements to eliminated their dominant position in the Finnish market for retail of daily consumer goods and cash & carry sales of daily consumer goods.
Finland has currently no merger control legislation. The Commission's conclusions, prepared by a Finnish competition civil servant sent to the Commission for these purposes, could have an impact on the competition legislation as it is being revised in the Parliament for the moment. The competition authorities have been known to oppose a domestic merger control legislation as the EC merger control is deemed sufficient.
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Recent Mergers And Acquisitions In Finland - European Commission Does Not Accept Kesko - Tuko Deal
