Changes to the Finnish Act on Competition – what is the impact of new jurisdictional thresholds on mergers and acquisitions?
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Partner
Finland
As a partner in our Helsinki office and head of our Competition & EU Law group in Finland, I specialise in complex competition and corporate matters.
Senior Counsel
Finland
I am a senior Counsel in our Competition and EU Law group in Helsinki, where I advise our clients in various competition law and regulatory matters.
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The government has issued a proposal on 19 September 2022 to amend the Finnish Act on Competition. The government proposes to decrease the jurisdictional thresholds for an obligation to notify a concentration to the Finnish Competition and Consumer Authority (FCCA). According to the proposal, a concentration needs to be notified to the FCCA, where: (i) the combined turnover in Finland of all the parties concerned exceeds EUR 100 million; and (ii) the turnover in Finland for each at least two of the parties exceeds EUR 10 million.
According to the proposal, the obligation to notify a concentration in Finland shall be based only on turnover accumulated from Finland, and the current threshold for worldwide turnover will be removed. In addition, the threshold for parties’ individual turnover will be considerably lower than the current threshold of EUR 20 million. Based on the proposal, the current jurisdictional thresholds are too high as some industry sectors and local markets in Finland are currently escaping completely from the application of the merger control rules.
The new jurisdictional thresholds will increase the number of notifications to the FCCA and thus increase the number of mergers and acquisitions that need to be notified in Finland. This will also increase the costs relating to mergers and acquisitions, delay the execution of the transactions, and potentially some contemplated transactions might not realise due to the regulatory requirements. On the other hand, some foreign investments might also escape the obligation to notify under the new thresholds, if the buyer has only limited Finnish turnover. In many foreign investments the current requirement for the worldwide turnover might be more likely fulfilled than the proposed EUR 100 million thresholds for combined domestic turnover in Finland.
The proposal does not include the highly debated FCCA’s right to require notification in cases where the jurisdictional thresholds are not met. This will enhance the legal certainty for companies active in mergers and acquisition as the obligation to notify is always based on the predefined jurisdictional thresholds.
The proposed amendments should come into force at the beginning of year 2023. It is recommended to take the new jurisdictional threshold into account in ongoing or contemplated acquisitions and execute them, if needed, during year 2022.
The government proposal includes also other amendments to the Finnish Act on Competition which relate to commitments, collection of fines from associations of undertakings and a right to appeal. In addition, the merger notification form is currently under revision process. The intention is to reduce the amount and level of information required in the notification form in cases where the parties do not have significant horizontal overlaps or vertical relationships.
