As of 1 September 2013, the Finnish Competition Act has a new addition—Chapter 4a. The purpose of the new chapter is to improve competitive neutrality, i.e. equitable operating conditions between public and private sector business activities.
Before the harmonization of the Finnish Competition Act with EU provisions in 2004, the former Finnish Competition Authority (FCA) had the possibility of intervening in anti-competitive behaviour in public sector business activities on the basis of the Article 9 of the old Act on Competition Restrictions. Article 9 was a general provision concerning competition restrictions, but its applicability was not limited to entrepreneurs and thus it could also be applied to public sector operators. The redraft of the Article 9 in 2004 attracted strong criticism from certain quarters.
On the basis of the new Chapter 4a, the Finnish Competition and Consumer Authority (FCCA) has the authority to intervene, in accordance with legally mandated requirements, in the supply of goods and services in public sector business activities if the operating procedures used or the operating structures prevent or distort competition in the market. The operating procedures refer to all such activities that result in a public sector operator gaining unfair competitive advantage over its private sector competitors. An operating structure includes, for example, business activities conducted as a municipal enterprise or authority, as these may entail tax benefits or bankruptcy protection.
The Competition Act does not prohibit public organisations from conducting business or competing with private enterprises in the same market. The objective is to establish neutral competitive conditions between public and private sector business activities. However, in the field of public procurement and cases involving state aid, the FCCA does not act as a supervisory authority, even though many problems related to competitive neutrality may stem from practices that violate these rules. In respect of public procurement, the situation may change in the future due to the requirements of the renewal of the EU public procurement directives.
The Competition Act applies to the business activities of municipalities, federations of municipalities, the Government and entities under their authority. A ban, order or obligation, which is used to rectify a situation involving the restraint or distortion of competition, is issued by the FCCA to a municipality, federation of municipality or the Government, not to a business entity, even if this entity has the status of an autonomous legal person. Because the Competition Act protects the conditions for healthy and functional competition in the market, the FCCA cannot intervene where protection against a public sector competitor is sought on the basis of neutrality provisions alone.
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.
