Finland Competition & Regulatory newsletter autumn 2024
This newsletter features a look into notable recent case law and other developments in Finnish competition law and other regulatory issues.
The Finnish Competition and Consumer Authority proposes a first ever fine for an alleged obstruction of a dawn raid
In May 2024, the Finnish Competition and Consumer Authority (FCCA) proposed that the Market Court imposes an infringement fine of approximately EUR 4.4 million for an alleged obstruction of the FCCA's unannounced inspection. This is the first time that the Finnish authority has proposed a fine for breaching the procedural provisions in the Finnish Competition Act. The possibility of an infringement fine for a procedural breach was introduced in 2021.
The FCCA carried out several dawn raids in the care services sector in January 2023 and January 2024. According to the fine proposal, an employee of a care service company deleted work-related WhatsApp messages and phone log during an inspection. The FCCA alleges that the deletion delayed and compromised the FCCA's investigation.
Following the deletion of the data, the care service company cooperated with the FCCA to recover the deleted data. The FCCA took this cooperation into account in the amount of the proposed fine, reducing it by 20%.
The Finnish Competition and Consumer Authority finds a serious breach of competition law in cosmetics sector but takes the rare approach not to propose a fine
In April 2024, the FCCA found that two competing Finnish importers of cosmetics products had breached competition law by agreeing on recommended resale prices, product ranges and the scope of monthly special offer campaigns. The unlawful co-operation lasted over three years.
One of the companies provided information and proof of the prohibited co-operation to the competition authority. As a result of its successful leniency application, no infringement fine was proposed for Careliána Oy.
The other party to the prohibited co-operation, Rising Sun Oy, also avoided an infringement fine, as the FCCA held that the broader economic impact of the conduct was limited. The case marks the first time the FCCA does not propose a fine is for a company which has seriously infringed competition rules and has not applied for leniency.
Such approach is likely to remain a rare exception. Moreover, the risk of liability for damages caused by the unlawful co-operation and other consequences remains even if the authority abstains from further measures.
The Finnish Market Court rejects the Finnish Competition and Consumer Authority's penalty payment proposal
On 28 August 2024, the Market Court gave its judgement in a competition law case concerning alleged prohibited cooperation between companies on the market for plastic infrastructure pipe products in Finland.
By its judgement, the Market Court did not consider the evidence submitted by the FCCA in this case to be sufficient and rejected the penalty payment proposal by the FCCA. In addition, the Market Court ordered the FCCA to reimburse part of the companies' litigation costs.
The judgement relates to the FCCA's proposal in 2022 to the Market Court to impose infringement fines totaling approximately EUR 44 million to two manufacturers and three wholesalers of plastic infrastructure pipe products. According to the FCCA's allegations, the companies acted in mutual understanding to restrict competition on the Finnish market in years 2009–2016.
The Market Court's judgement in Sarastia – Clarifications regarding in-house procurement
In March 2024, the Market Court gave its judgement in a case concerning the conditions for in-house procurement in Finland. The central question in the case was whether the wellbeing services county of Vantaa and Kerava (a regional administrative body responsible for social and healthcare matters in a particular area in southern Finland) exercised control over Sarastia Oy, an alleged in-house company, with which it had entered into a contract without a prior tendering procedure.
Under Finnish and EU public procurement rules, for a company to have an in-house relationship with a contracting entity, the contracting entity must exercise control over the in-house entity either alone or jointly with other contracting entities. As purchases from such entities are considered comparable to the contracting entity producing the service itself, competitive tendering is not required when purchasing goods or services from in-house entities.
In the case at hand, the wellbeing services county of Vantaa and Kerava had an ownership stake of 0,04 % in Sarastia. According to the Market Court, the wellbeing services county had very limited possibilities to influence Sarastia's activities through its shareholding or through any of Sarastia's governing bodies. The Market Court held that since the wellbeing services county did not exercise control over Sarastia under the meaning of the public procurement rules, Sarastia was not its in-house entity, and the procurement had constituted an unlawful direct award. An appeal concerning the Market Court's judgement is pending in the Supreme Administrative Court.
The ruling is significant considering that there are several large in-house companies with widely dispersed ownership active in Finland, the lawfulness of direct awards to which the judgement now calls into question. The FCCA, which has a role in supervising public procurement rules in Finland, has held that incorrect application of the in-house entity exemption has become widespread in Finland. Furthermore, the current Finnish Government set the objective in its official programme to reform the rules concerning in-house procurement in Finland, including the introduction of a minimum ownership threshold.
New legislation extends the time period during which the FCCA can investigate and bring cases regarding direct awards
In June 2024, an amendment to the Finnish Act on Public Procurement and Concession Contracts (1397/2016) extending the time period during which the FCCA can investigate and propose sanctions for unlawful direct awards entered into force.
From 1 June 2024, the FCCA has twelve months from the signing of the procurement agreement to start its investigation and another twelve months from the start of the investigation to bring a case into the Market Court, up from the previous six months.
Finnish Government proposes amendments to national legislation concerning recovery of state aid
The Finnish Government is contemplating amendments to the Finnish state aid legislation, which will codify into national law Finnish authorities' obligation to recover unlawful state aid even in the absence of a recovery decision by the European Commission.
Key objectives and legislative changes
The primary purpose of the amendments is to ensure that national provisions concerning recovery of state aid are consistent with EU law and in particular the European Court of Justice’s Eesti Pagar judgment (C-349/17). In the Eesti Pagar judgment, the ECJ confirmed that Article 108(3) of the Treaty on the Functioning of the European Union requires national authorities to recover unlawfully granted aid on their own initiative.
At present, Finnish national rules on the recovery of unlawful aid are not fully in line with the approach taken in Eesti Pagar. For example, there are no provisions concerning loans and guarantees, the rules on interest to be charged are overly formulaic.
The amendments will be implemented through the adoption of a new law, which will replace the Act on the Application of Certain State Aid Rules of the European Community (300/2001) currently in force.
