Vertical Agreements. The regulation of distribution practices in 34 jurisdictions worldwide

Transcription

1 Vertical Agreements The regulation of distribution practices in 34 jurisdictions worldwide 2008 Contributing editor: Stephen Kinsella OBE Published by GLOBAL COMPETITION REVIEW in association with: Allende & Brea Altius Bán S Szabó & Partners Barenghi & Paton Blake Cassels & Graydon LLP Boekel De Nerée Cariola Díez Pérez-Cotapos & Cía Ltda Clayton Utz Fenech & Fenech Advocates Glade Michel Wirtz Golfinopoulos Law Office Gorrissen Federspiel Kierkegaard Hammarskiöld & Co Homburger Kim & Chang Lejins Torgans & Partners Matheson Ormsby Prentice Norcous & Partners Nörr Stiefenhofer Lutz Raidla & Partners Attorneys at Law Roschier Attorneys Ltd Salans Sidley Austin LLP Thommessen TozziniFreire Advogados Uría Menéndez Wardyński & Partners Werksmans Inc Wolf Theiss GlobaL Competition Review

2 Finland Christian Wik and Sonya Walkila Roschier Attorneys Ltd 1 What are the legal sources that set out the antitrust law applicable to vertical restraints? The Finnish Act on Competition Restrictions (480/1992) (the Competition Act) sets out the antitrust law applicable to vertical restraints. The Competition Act has been amended to reflect the changes introduced into the EC competition law enforcement regime by EC Regulation 1/2003 on the implementation of the rules laid down in articles 81 and 82 of the EC Treaty (Regulation 1/2003/EC). The revised Competition Act entered into force on 1 May Article 1A of the Competition Act provides that, where a restriction on competition affects trade between EC member states, the national authorities are to enforce articles 81 and 82 of the EC Treaty. Additionally, the amendments to the Competition Act have harmonised the substantive provisions of the national law with the Community competition rules. Thus, when acting on the basis of national competition law, the national authorities apply the same substantive criteria as when acting pursuant to articles 81 and 82 EC. Additionally, the Finnish Competition Authority (FCA) has issued guidelines on the application of article 5 of the Competition Act (the equivalent of article 81(3) of the EC Treaty) to vertical restraints which do not affect trade between EC member states (Guidelines). The Guidelines expressly state that the FCA will in its review of vertical restraints follow, in as far as possible, the rules and principles established in the EC Regulation No 2790/1999 of 22 December 1999 on the application of article 81(3) of the Treaty to categories of vertical agreements and concerted practices (Block Exemption Regulation) and the EC Guidelines on Vertical Restraints (Commission s Guidelines). 2 List and describe the types of vertical restraints that are subject to antitrust law. Are those terms defined and how? Is the concept of vertical restraint itself defined in the antitrust law? The Competition Act neither defines a vertical restraint as such nor identifies types of vertical restraints. However, the Guidelines state that the prohibition against competitively restrictive agreements in article 4 (the equivalent of article 81(1) EC) of the Competition Act applies also to vertical agreements. Following the amendments to the Competition Act, vertical restrictions are analysed in the same manner as any other agreement or arrangement between undertakings. Accordingly, vertical agreements that fall within the scope of the prohibition of article 4 of the Competition Act are forbidden unless they can benefit from an exemption under article 5 of the Competition Act. Moreover, the Guidelines name non-competition clauses and exclusive supply agreements as examples of vertical restraints and quote article 4 of the Commission s Guidelines verbatim. 3 Are there particular rules or laws applicable to the assessment of vertical restraints in specific sectors of industry? If so, please identify the sectors and the relevant sources. In Finland there are no particular rules or laws specifically aligned to the assessment of vertical restraints in specific sectors of industry. However, the Competition Act generally excludes agreements and arrangements concerning the labour market from its scope of application. Similarly excluded are the agreements and arrangements between agricultural producers, provided that such arrangements do not, to a significant extent, prevent sound and effective competition in the agricultural product market, or lead to an abuse of dominant position therein. 4 Is the only objective pursued by the law on vertical restraints economic, or does it also seek to protect other interests? The objective of the Competition Act is to protect sound and effective economic competition from harmful restrictive practices. It stipulates that in its application special attention shall be paid to the interest of the consumers and the protection of the freedom of business undertakings to operate without unjustified barriers and restrictions. 5 What entity or agency is responsible for enforcing prohibitions on anticompetitive vertical restraints? Do governments or ministers have a role? The two regulatory authorities responsible for the enforcement of competition rules are the FCA and the Market Court. The Competition Act lays down a two-tier institutional framework for the enforcement of competition law. The FCA acts as the first instance decision-maker, responsible for the conduct of investigations and the substantive assessment of suspected restrictions on competition. The competence to impose fines and periodic penalty payments falls into the exclusive competence of the Market Court, which can, however, act only on the FCA s initiative. Additionally, the municipal governments are involved in the enforcement of competition law. They share with the FCA the competence to investigate suspected restrictions on competition, in particular to conduct on-site inspections. The municipal governments lack, however, independent decision-making powers, and a decision finding infringement of articles 81 and 82 EC can only be made by the FCA. In addition to the FCA and the Market Court, the Finnish Communications Regulatory Authority and the Energy Market Authority are responsible for ensuring that effective competition is maintained in the telecommunications and energy markets, respectively. Getting the Deal Through vertical agreements

3 6 What is the relevant test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? The Competition Act applies to restrictions of competition which affect the Finnish market. Restrictive practices having effects outside the territory of Finland or affecting exports from Finland may come under the scrutiny of the FCA only if they have an effect on Finnish customers. Accordingly, provided that the anti-competitive behaviour has effects in Finland or is directed against Finnish customers, it is of no significance whether the offending undertaking is Finnish or foreign, or whether the relevant agreement has been entered into in Finland or elsewhere (FCA decision in A Ahlström/Kværner, No. 5/359/93). Further, in accordance with article 2(4) of the Competition Act, the State Council may prescribe that the provisions of the Competition Act are applied to competition restrictions effectuated outside of Finland, where enforcement is required by an agreement entered into between Finland and another state, or it is in the interests of Finland s foreign trade. 7 To what extent does antitrust law apply to vertical restraints in agreements concluded by public or state-owned entities? The Competition Act makes no exceptions for agreements concluded by public or state-owned entities. Thus, the same rules of national and EC competition law apply to them as to any other company. However, the provisions apply only to the extent that the public entity is deemed to perform economic activities. Official acts of a non-commercial nature will not be open to scrutiny under the Competition Act. 8 Are there any general exceptions from antitrust law for certain types of vertical restraints? If so, please describe. Neither the Competition Act nor the Guidelines specifically exempt any types of vertical restraints. However, as in EC law, there is a general de minimis exception in Finnish competition law, which applies to vertical agreements as well. The FCA s guidelines concerning agreements of minor importance (De Minimis Guidelines) and the principles laid down in Government Bill 11/2004 form the grounds for the assessment of the minor importance of an agreement having effects on the Finnish market. The provisions of the FCA s De Minimis Guidelines closely follow those of the Commission s Guidelines and the Block Exemption Regulation respectively. Hence, a vertical agreement between companies the combined market share of which does not exceed 15 per cent (de minimis threshold) on the relevant market is generally considered not to have appreciable anti-competitive effects, provided the agreement does not contain hard-core restrictions. Moreover, if the FCA concludes that despite a particular restriction, competition on the market as a whole functions well, it can decide not to pursue the case. 9 When assessing vertical restraints under antitrust law (or when considering the application of exceptions from antitrust law) does the relevant agency take into account that some agreements may form part of a larger, interrelated, network of agreements or is each agreement assessed in isolation? Yes, the FCA will in their assessment of individual agreements take it into account that some may form part of a network of agreements. When assessing the applicability of articles 4 and 5 of the Competition Act to national restrictions on competition, the FCA considers the structure of the market on a case-by-case basis. Moreover, according to the De Minimis Guidelines, where the market is foreclosed by the application of parallel networks of similar vertical agreements by several companies, the de minimis threshold is lowered to 5 per cent. 10 In what circumstances does antitrust law apply to agency agreements in which an undertaking agrees to perform certain services on a supplier s behalf in consideration of a commission payment? Genuine agency agreements between a principal and a commercial agent do not fall under the scope of application of article 4 of the Competition Act, provided that the agent bears none or very little financial risk for the contracts negotiated on behalf and in the name of the principal. 11 Is antitrust law applied differently when the agreement containing the vertical restraint also contains provisions granting intellectual property rights (IPRs)? Finnish legislation does not exempt any aspects or usages of intellectual property rights from the application of competition law. The Competition Act does not contain any specific mention of intellectual property rights. Nevertheless, the preparatory materials of the previous Competition Act imply that the competition law may be applied to intellectual property rights, and the practice of the Finnish authorities as well as the case law of the courts clearly show this to be the case. The Competition Act closely follows the equivalent EC competition law and the principles set out therein. Therefore, existing EC legislation and the case law of the Community Courts are of particular significance when examining interface issues of competition and intellectual property rights in Finland. Consequently, the current Technology Transfer Block Exemption Regulation 772/2004/EC and the accompanying Commission guidelines constitute the relevant legislative sources when assessing the interconnection between intellectual property rights and competition issues in Finland. 12 In what circumstances does antitrust law apply to agreements between a parent and a related company? The Competition Act applies to agreements between undertakings. The concept of an undertaking is interpreted to cover all companies belonging to one and the same group (ie, related companies). Thus, the Competition Act does not apply to intracompany agreements. 13 Can the legality under antitrust law of a given vertical restraint change over time? The FCA assesses the legality of an agreement or an arrangement on a basis of case-by-case analysis. In the assessment process it observes the rules and principles set out both in the national and EC competition law respectively (see also questions 8, 9 and 15). Thus, changes in the market position of a party/parties over the time may bring about changes in the assessment of the agreement in question. From the point of view of the possible legal consequences of a certain vertical agreement or an arrangement, it is of particular importance to pay proper attention to the efficiency gains aimed to obtain by the agreement or arrangement already at an early stage of the preparations. This is of relevance pursuant to article 5 of the Competition Act (which corresponds to article 81(3) of 76 Getting the Deal Through vertical agreements 2008

4 the EC Treaty) since it stipulates that a competition restraint is not prohibited in the event it creates sufficient benefits to outweigh the anti-competitive effects. 14 Briefly explain the analytical framework that applies when assessing vertical restraints under antitrust law. In its assessment of vertical restraints the FCA follows the Commission s decision practice and the relevant EC law rules (the Commission s Regulation on the application of article 81(3) of the Treaty to categories of vertical agreements and concerted practices (the Block Exemption Regulation), the Commission s Guidelines as well as the case-law of the Community Courts) very closely. As stated above, article 4 of the Competition Act prohibits vertical restraints which have as the object or effect the restriction of competition. Certain vertical restraints can however be exempted from the application of article 4 if they fulfil the criteria of article 5 of the Competition Act. Articles 4 and 5 of the Competition Act are in practice identical to articles 81(1) and 81(3) of the EC Treaty, respectively. The analytical framework for the assessment of whether a particular vertical restraint falls under article 4 and 5 of the Competition Act is further elaborated upon in the Guidelines, which are based to a large extent on the Commission s Guidelines. The Guidelines consider vertical agreements to be agreements regarding the sale or purchase of products between companies operating at different levels of trade. Such agreements may be considered restrictive of competition if they contain restrictions directed towards the supplier or purchaser, such as noncompetition clauses or exclusivity obligations. Moreover, the Guidelines quote article 4 of the Commission s Guidelines verbatim. In doing so, the same so-called hard-core restrictions as listed in article 4 of the Commission s Guidelines as the most restrictive are qualified as such also under Finnish law. These are resale price maintenance, restrictions concerning the territory into which or the customers to whom the buyer may sell, selective distribution, and certain agreements concerning the purchase of spare parts. Exemption under article 5 of the Competition Act of vertical agreements containing such hard-core restrictions is highly unlikely. Further in line with the respective EC competition law, the analytical framework for the assessment of vertical agreements starts with the four-step analysis laid down in paragraph 120 of the Commission s Guidelines followed by the relevant factors to be considered in the assessment under paragraph 121 thereof. 15 Is there a block exemption or safe harbour that provides certainty to companies as to the legality of vertical restraints in certain conditions? If so, please explain how this block exemption or safe harbour functions. Yes, according to the Guidelines, the FCA applies the 30 per cent market share safe harbour as established in the Block Exemption Regulation. Accordingly, a vertical agreement which does not contain hard-core restrictions (as described in question 14) is considered exempt from the application of article 4 of the Competition Act provided that the supplier s (or in the case of exclusive purchasing agreements the purchaser s) market share does not exceed 30 per cent on the relevant market. Moreover, if an agreement fulfils the requirements of the De Minimis Guidelines it will be considered exempt from the application of article 4 of the Competition Act (see further information in question 8). Finally, even if it does not fall under the 30 per cent safe harbour or the de minimis exception, an individual vertical agreement may benefit from an exemption under article 5 of the Competition Act where the conditions contained therein can be satisfied. The conditions are similar to those listed in article 81(3) of the EC Treaty. 16 What are the consequences of an infringement of antitrust law for the validity, or enforceability by one of the parties, of a contract containing prohibited vertical restraints? Restrictive contractual conditions or conditions based on other restrictive arrangements, which violate either the prohibitions contained in the Competition Act or an order or injunction issued by the FCA or the Market Court, are invalid and unenforceable as such. Such agreements and practices cannot be legally enforced in courts of law or in arbitration tribunals. 17 How is the restricting of the buyer s ability to determine its resale price assessed under antitrust law? Article 4(2)(1) of the Competition Act prohibits directly or indirectly the fixing of resale prices. A business undertaking is not allowed to require that a certain minimum price or basis of pricesetting not be exceeded or undercut in the next level of the supply or distribution chain. This applies not only to resale but also, for example, to the leasing of products. The imposition of maximum and recommended resale prices are not prohibited by the Competition Act, provided that they do not lead to a de facto fixing of the price. Indicating that the price attached to a product is only a recommendation does not, however, render the arrangement compatible with the prohibition on resale price maintenance, if compliance with the recommendation is, in any event, controlled by the supplier. The FCA has consistently held resale price maintenance to be a very serious restriction of competition to which no de minimis defence may be applied. The prohibition on resale price maintenance has been interpreted broadly by the FCA to cover all kinds of restrictions imposed by the seller on its reseller s freedom to prices. On 18 December 1995, in Oy Kolmeks Ab, the FCA held that a prohibition included in the agreements between a manufacturer of pumps and electric motors and its wholesalers, preventing the latter from passing the discounts granted by the manufacturer on to the resellers, violated the prohibition on resale price maintenance. On 17 March 2005, the FCA had proposed a fine of E120,000 on Oy Tecalemit Ab (Tecalemit) for resale price maintenance. Tecalemit had included a non-competition provision in its after-sales service agreement according to which its contracting party was not to compete with Tecalemit on price for all the products and services. The provision was held to violate the prohibition against resale price maintenance which is commonly held as one of the most serious competition restrictions, since retailers must be allowed to compete freely on price. The case is still pending before the Market Court. On 2 December 2005, the FCA has proposed a fine of E20,000 on Greendoor Oy (Greendoor) for resale price maintenance. Greendoor had demanded that Varuste.net, an undertaking selling camping equipment on the internet, observe the recommended retail prices of the products supplied to it by Greendoor. Although the financial interests at stake in this case were rather minor, the proposition to impose a fine was still jus- Getting the Deal Through vertical agreements

5 tifiable because the objective of the actions taken were to hinder a new service provider from entering into the market and thus limiting the number of alternatives offered to customers. The case is still pending before the Market Court. On 27 August 2007, the FCA proposed to the Market Court (the case is still pending) that it impose a fine of E33,000 on Suomen Hiusyrittäjät ry (SHY, the Finnish trade organisation representing Finnish hairdressers) for a violation of the prohibition on price cooperation. The FCA opened investigations on its own initiative. According to the FCA, SHY had given price recommendations to its members with the effect of aligning the amount and the timing of the increase in service fees, hence, in violation of the Competition Act. On the same day the FCA ordered Kjaerulff 1 Oy (Kjaerulff) to cease with immediate effect the practice of fixing resale prices for the Topfield branded digital adaptors. According to the FCA, Kjaerulff had refused to pay an advertising grant to importers who had failed to follow the recommended retail prices set for the adaptors supplied by it. The FCA s investigation was initiated following various complaints. In this case the FCA chose not to propose that a fine be imposed on Kjaerulff as it had ended the practice while the FCA s investigation was running. 18 Have there been any developments in your jurisdiction in light of the landmark 2007 judgment by the US Supreme Court in Leegin Creative Leather Products Inc v PSKS Inc? If not, is any response or development anticipated? No, as of yet the above-mentioned judgment of the US Supreme Court has not had any effects on Finnish legislation or the practice of the competition authorities. No such effects are anticipated in the near future. 19 How is the restriction of the territory into which a buyer may resell contract products assessed under antitrust law? In what circumstances (if any) may a supplier require a buyer of its products not to resell the products in certain territories? Territorial and customer restrictions are subject to article 4 of the Competition Act and are assessed in accordance with the same principles as other types of vertical restrictions. If not capable of being justified under article 5 of the Competition Act, territorial and customer restrictions are prohibited. In November 2006, the FCA proposed to the Market Court the imposition of a E100,000 fine on Lastentarvike Oy (Lastentarvike) for operating a selective distribution system in violation of the article 81 of the EC Treaty and the Competition Act in the retail market for baby prams and pushchairs. Lastentarvike is the market leader and representative of strong brands in the field. For several years, Lastentarvike had included conditions in its distribution agreements prohibiting its retailers from actively selling baby prams and pushchairs purchased from Lastentarvike to consumers outside their designated territories. Moreover, Lastentarvike had included terms in its distribution agreements prohibiting authorized distributors from selling and marketing the products on the internet and in national specialist magazines thus preventing the passive sales of the products to consumers outside the retailers designated territories. According to the FCA, the restrictions decreased competition between the retailers and hence served to maintain higher prices than would have been the case in a competitive situation. 20 Explain how restricting the customers to whom a buyer may resell contract products is assessed under antitrust law. In what circumstances (if any) may a supplier require a buyer of its products not to resell the products to certain customers? Please see question How is the restricting of the uses to which a buyer (or a subsequent buyer) puts the contract products assessed under antitrust law? restrictions on the buyer s use of the contract products. However, as following the latest amendments to the Competition Act, the treatment of vertical restrictions has been brought in line with article 81 of the EC Treaty, the assessment and permissibility of different types of vertical agreements and the terms thereof can be expected to be in accordance with the rules applied by and the decision practice of the Commission. Moreover, as stated above, the Guidelines strongly rely on the Commission s Guidelines. Consequently, the FCA s assessment of vertical agreements will most likely be in full conformity with the corresponding practice of the Commission. 22 Briefly explain how agreements establishing selective distribution systems are assessed under antitrust law. selective distribution systems. However, as following the latest amendments to the Competition Act, the treatment of vertical restrictions has been brought in line with article 81 of the EC Treaty, the assessment and permissibility of different types of vertical agreements and the terms thereof can be expected to be in accordance with the rules applied by and the decision practice of the Commission. Moreover, as stated above, the Guidelines strongly rely on the Commission s Guidelines. Consequently, the FCA s assessment of vertical agreements will most likely be in full conformity with the corresponding practice of the Commission. Moreover, it can be noted that in Lastentarvike the FCA stated obiter that even though a supplier may in a selective distribution system restrict its distributors from selling the products to distributors which are not part of the selective distribution system, it may never restrict its distributors from selling to end consumers or other distributors which are members of the same selective distribution network. 23 How is the restriction of the buyer s ability to obtain the supplier s products from alternative sources assessed under antitrust law? restrictions of the buyer s ability to obtain the supplier s products from competing sources. However, as following the latest amendments to the Competition Act, the treatment of vertical restrictions has been brought in line with article 81 of the EC Treaty, the assessment and permissibility of different types of vertical agreements and the terms thereof can be expected to be in accordance with the rules applied by and the decision practice of the Commission. Moreover, as stated above, the Guidelines strongly rely on the Commission s Guidelines. Consequently, the FCA s assessment of vertical agreements will most likely be in full conformity with the corresponding practice of the Commission. 78 Getting the Deal Through vertical agreements 2008

6 24 Explain how restricting the buyer s ability to stock products competing with those supplied by the supplier under the agreement is assessed under antitrust law. restrictions of the buyer s ability to stock products competing with those supplied by the supplier. However, as following the latest amendments to the Competition Act, the treatment of vertical restrictions has been brought in line with article 81 of the EC Treaty, the assessment and permissibility of different types of vertical agreements and the terms thereof can be expected to be in accordance with the rules applied by and the decision practice of the Commission. Moreover, as stated above, the Guidelines strongly rely on the Commission s Guidelines. Consequently, the FCA s assessment of vertical agreements will most likely be in full conformity with the corresponding practice of the Commission. 25 How is the requiring of the buyer to purchase from the supplier a certain amount, or minimum percentage, of its requirements, of the contract products assessed under antitrust law? Exclusive purchase obligations have been addressed in Interflora Suomi ry, which concerned the Finnish flower dispatch chains. There, the Competition Council (the predecessor of the Market Court) departed from the position taken by the FCA and prohibited the use of an exclusivity clause in agreements between the chains and their member florists. The clause prohibited a florist that had an agreement with one chain from using the dispatch services of another chain. The Competition Council held that competition between the chains would be restricted, among other things, by not allowing florists to use the least expensive alternatives for dispatching flowers and thus hindered the conduct of business of the florists in contravention of the Competition Act. 26 Explain how restricting the supplier s ability to supply to other buyers, or sell directly to consumers, is assessed under antitrust law. restrictions of the supplier s ability to supply to other buyers or sell directly to consumers. However, as following the latest amendments to the Competition Act, the treatment of vertical restrictions has been brought in line with article 81 of the EC Treaty, the assessment and permissibility of different types of vertical agreements and the terms thereof can be expected to be in accordance with the rules applied by and the decision practice of the Commission. Moreover, as stated above, the Guidelines strongly rely on the Commission s Guidelines. Consequently, the FCA s assessment of vertical agreements will most likely be in full conformity with the corresponding practice of the Commission. 27 To what extent are franchise agreements incorporating licences of intellectual property rights, relating to trademarks or signs and know-how for the use and distribution of products, assessed differently from simple distribution agreements under antitrust law? Finnish legislation does not explicitly exempt any aspects or uses of intellectual property rights from the application of competition law. Since the latest amendments to the Competition Act in 2004 resulted in the full harmonisation of the substantive provisions of the Competition Act with EC competition law, also franchise agreements incorporating licences of intellectual property rights are assessed in line with the respective EC competition law rules in this field. Consequently, the safe harbours provided, for instance, by the Technology Transfer Block Exemption Regulation, are of significant relevance in Finland. 28 Explain how a supplier s warranting to the buyer that it will supply the contract products on the terms applied to the supplier s most favoured customer or warranting to the buyer that it will not supply the contract products on more favourable terms to other buyers is assessed under antitrust law. supply warrantees guaranteeing the application of a most favoured customer clause. However, as following the latest amendments to the Competition Act, the treatment of vertical restrictions has been brought in line with article 81 of the EC Treaty, the assessment and permissibility of different types of vertical agreements and the terms thereof can be expected to be in accordance with the rules applied by and the decision practice of the Commission. Moreover, as stated above, the Guidelines strongly rely on the Commission s Guidelines. Consequently, the FCA s assessment of vertical agreements will most likely be in full conformity with the corresponding practice of the Commission. 29 Is there a formal procedure for notifying agreements containing vertical restraints to the agency? Is it necessary or advisable to notify it of any particular categories of agreement? Since Regulation 1/2003/EC and the corresponding national amendments to the Competition Act (entered into force on 1 May 2004), which harmonised the national competition rules with EC competition law, the possibility to notify agreements and to receive an exemption decision from the FCA have been abolished as of 10 May If there is a formal notification procedure, how does it work? What type of ruling (if any) does the agency deliver at the end of the procedure? And how long does this take? Is a reasoned decision published at the end of the procedure? As stated above, the notification procedure for individual agreements has been abolished. 31 If there is no formal procedure for notification, is it possible to obtain guidance from the agency as to the antitrust assessment of a particular agreement in certain circumstances? There are no rules or guidelines requiring the FCA to provide informal assistance to undertakings. In practice, however, the FCA has generally shown willingness to assist parties which have approached it on an informal basis. The FCA s attitude towards these types of informal queries has depended on the significance of the particular case. In important cases the FCA has been prepared to give guidance on an informal basis, mainly orally. However, all discussions are carried out on an informal basis and even if the FCA officers give some indications of their preliminary views, they would not be bound to these indications should later investigations reveal information supporting another view. 32 Is there a procedure whereby private parties can complain to the agency about alleged vertical restraints? Yes, the procedure for making a complaint to the FCA is informal but a complainant should, according to the FCA s own guidelines, provide at least the following information: the complainant s contact details; Getting the Deal Through vertical agreements

7 an indication of the market(s) affected by the suspected restriction on competition; an indication of the manner in which competition is restricted and by whom; an indication of the parties which are affected by the suspected restriction and the damage caused by the alleged restriction; an indication of the market position of the suspected infringing undertaking and other undertakings operating in the market (expressed, for instance, by market shares); and copies of any relevant documents or other material which the complainant considers as evidence of the existence of the suspected restriction on competition. The FCA enjoys discretion under article 12(1) of the Competition Act to decide whether to proceed with an investigation. Thus, the FCA is not obliged to initiate investigations in response to every complaint. Further, the FCA is not subject to any time limits in the conduct of its investigations. 33 How frequently is antitrust law applied to vertical restraints by the agency? Between 2004 and 2007 the FCA has issued six prohibition decisions concerning vertical restraints, of which one has been a cease-and-desist order and five have contained proposals for a fine to be imposed. The latter cases are still pending before the Market Court. In addition to these decisions the FCA regularly gives informal guidance on various questions regarding vertical agreements. 34 May the agency impose penalties or must it petition the courts or another administrative or government agency? What sanctions and remedies can the agency or the courts impose when enforcing the prohibition of vertical restraints? As stated in the answer to question 5 above, the FCA conducts an investigation and the substantive assessment of suspected restrictions on competition, but the competence to impose fines and periodic penalty payments falls into the exclusive competence of the Market Court (only upon the FCA s recommendation, however). The FCA may also order interim measures where this is necessary to prevent forthwith a restriction on competition. The FCA may either prohibit undertakings from engaging in anticompetitive practice by issuing an interlocutory injunction or oblige an undertaking to supply products to another undertaking on non-discriminatory terms. The Competition Act contains no criteria which must be satisfied before the FCA can order interim measures. However, the undertaking to which a decision ordering interim measures is addressed has the right to be heard, unless by reason of urgency of the case or for some other reason no hearing can be arranged. Furthermore, the FCA must make a decision in the main case or a recommendation for the imposition of a fine to the Market Court within 60 days from the day on which it ordered interim measures, failing which the interim order will lapse. 35 What investigative powers does the agency have when enforcing the prohibition of vertical restraints? In principle, the FCA s investigative powers are aligned with those of the European Commission. Thus, the FCA is under the Competition Act competent to: Update and trends The most recent amendments to the Competition Act were introduced in April 2004 and entered into force on 1 May The minister of trade and industry on 19 June 2007 set up a working group to investigate the need to reform the Competition Act and to make its proposal for necessary amendments. The working group s deadline is at the end of The working group shall, for instance, assess the present decision-making procedure and amnesty system as targets of possible revision. The amendments are expected to enter into force in demand the production of specific documents (article 10); conduct on-site inspections at undertakings premises, including the power to enter premises, to examine books and business records and to take copies and extracts, as well as to request on-the-spot oral explanations (article 20); seal off premises, books and business records for the duration of the inspection and to the extent that this is necessary (article 20). The FCA also has the power to conduct searches of private residences of company executives, board members and other employees, but only in so far as the investigation is conducted at the request of the Commission on the basis of Regulation 1/2003/EC. As regards penalties for procedural non-compliance, the FCA can impose periodic penalty payments on undertakings that refuse to comply with the FCA s information request or that seek to obstruct on-site inspections by the FCA s officials (article 25). The order for the payment of a periodic penalty payment is made by the Market Court. 36 What notable sanctions or remedies have been imposed? Can any trends be identified in this regard? As described in more detailed in questions 17 to 28, there have not been that many FCA prohibition decisions regarding vertical restraints. Moreover, the fines imposed in these decisions have been rather low. 37 Can sanctions or remedies be imposed on companies having no branch or office in your jurisdiction? Yes, in as far as their conduct is determined to have restricted competition having an effect on the Finnish market or a part thereof. 38 To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take? Can the successful party recover its legal costs? Private enforcement is possible even though not yet very common in Finland. When the provisions of the Competition Act have been breached, either negligently or intentionally, another undertaking which has suffered damage as a result can claim compensation for the damage suffered. Civil, private law-based claims for nullity of competition restrictive practices and actions for damages 80 Getting the Deal Through vertical agreements 2008

8 caused by violations of article 81 of the EC Treaty or article 4 of the Competition Act are heard by the general courts of law, there being one general court system in civil matters in Finland. Accordingly, a claim for damages can be raised before the district courts, from which an appeal lies to the Courts of Appeal, and in exceptional circumstances, where a leave of appeal is granted, further to the Supreme Court. The right to obtain damages covers expenses, price differences, loss of profits and other direct or indirect economic losses caused by an unlawful restriction on competition. The amount of compensation may be adjusted if it is considered unreasonably onerous in the particular circumstance of the case. The right to compensation is limited to five years from the time of knowledge (or presumed knowledge) of the damage. The right to claim damages is strictly confined to undertakings and accordingly consumers have no standing as claimants under the Competition Act. Punitive or exemplary damages may not be claimed under the Finnish law. Moreover, it should be noted that the Class Action Act has come into force in Finland on 1 October However, damages for breaches of competition law have been excluded from the scope of this new Act. 39 Is there any unique point relating to the assessment of vertical restraints in your jurisdiction that is not covered above? No, apart from the above said there are no unique assessment points regarding vertical restraints in Finland. Christian Wik Sonya Walkila christian.wik@roschier.com sonya.walkila@roschier.com Keskuskatu 7 A Tel: Helsinki Fax: Finland Getting the Deal Through vertical agreements