Pre-Merger Notification Survey FINLAND Roschier, Attorneys Ltd. CONTACT INFORMATION Christian Wik Roschier, Attorneys Ltd. Finland Telephone: 358.20.506.6000 Email: christian.wik@roschier.com 1. Is there a regulatory regime applicable to mergers and similar transactions? Yes, merger review procedure in Finland is covered by Chapter 3a of the Act on Competition Restrictions (480/1992) (hereinafter the Competition Act). 2. Identify Applicable National Regulatory Agency/Agencies. The relevant authority responsible for merger review procedure is the Finnish Competition Authority (hereinafter the FCA). 3. Is there a supranational regulatory agency (e. g., the European Commission) that has, or may have exclusive competence? If so, indicate. Yes, the European Commission. 4. Are there pre-merger filing requirements; if so, where are they published? Yes, concentrations falling within the scope of the Competition Act have to be notified to the FCA. As a basic rule, the notification has to be made using the basic notification form, adopted in a Decree given by the Ministry of Trade and Industry, or the so-called short form notification form. The notification forms as well as other information relevant to the merger review procedure are published, inter alia, on the website of the FCA (www.kilpailuvirasto.fi). - 1 -
5. What kinds of transactions are "caught" by the national rules? (Identify any notable exceptions) The Competition Act applies to the following types of concentrations: an acquisition of sole or joint control of another undertaking; an acquisition of the whole or part of the business of another undertaking; a merger; and the creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity (a full-function joint venture). 6. Is there a "size of transaction" threshold? No. 7. Is there a "size or turnover of the parties" test; if so, what is it and how are size and turnover to be calculated? A concentration falls to be notified to the FCA where: the combined aggregate turnover of the parties exceeds EUR 350 million; and the aggregate turnover in Finland (including e.g. imports to Finland) of each of at least two of the parties exceeds EUR 20 million. In the calculation of the relevant turnovers, the turnover of the whole buyer group will be taken into account, whereas of the seller s turnover only the amount relating to the target of the acquisition is relevant. In case the target company is acquired in stages, all the acquisitions from the same seller over a period of two years are taken into account in the turnover calculation. The turnovers refer to the gross sales revenues generated from the ordinary activities of the relevant entity, based on the most recent financial statement, of which the sales rebates granted as well as value-added taxes and other taxes directly related to the turnover have been deducted. The rules concerning the parties whose turnover will be taken into account as well as the manner of calculating the turnover correspond for the most part to the rules of the EC Merger Regulation. The location of the customer is decisive in determining the amount of the relevant Finnish turnover. As a general rule, the turnover will be allocated to the country in which the customer was situated at the time of the sale in question, not e.g. on the basis of the place where the good or service was used. 8. Is geographic scope/national market effect of transaction an issue with respect to filing or approval requirements? If so, specify. The concentration may be opposed by the FCA if it creates or strengthens a dominant position as a result of which competition would be significantly impeded in the Finnish market or a substantial part thereof. Under the Competition Act, an undertaking is considered dominant if it can significantly influence the price level, delivery conditions or other competition conditions at a certain production or distribution level. Certain specific supplementary rules apply to concentrations in the electricity markets. - 2 -
9. Is the filing voluntary or mandatory? What are the penalties for noncompliance? The filing of the notification to the FCA is mandatory if the jurisdictional thresholds described above are met. The sanctions for non-compliance are addressed in detail under heading Describe the sanctions for not filing or filing an incorrect/incomplete notification below. 10. Time in which a filing must be made. The notification to the FCA has to be made within one week from: the signing of the relevant binding acquisition agreement (acquisition of control of an undertaking or the acquisition of a business); the publication of the relevant public bid; the decision to merge by the undertakings involved (merger); or the holding of the constitutive meeting of the joint venture (creation of a joint venture). In practice, postponing the one-week deadline may be negotiated with the FCA. 11. Form and Content of Initial Filing. The basic notification form is broadly similar to the Form CO of the EC Merger Regulation. Various types of information must be given depending on the details of each case on the parties, transaction structure, relevant markets, competitors, customers, suppliers, market conditions etc. The notification form must be completed in Finnish or Swedish, appendices to notifications are also accepted in English. In certain circumstances, the notification may be filed to the FCA using the socalled short form notification. Basically the short form notification is approved by the FCA where the joint venture to be created or the undertaking in which a joint control is acquired has no connections to the Finnish markets. Such a situation may be deemed to exist where the joint venture - or the jointly controlled undertaking, as the case may be - has no business activities in Finland and generates no turnover from Finland (the turnovers of the jointly controlling companies triggering the obligation to notify). In individual cases the FCA may, where deemed appropriate with regard to the assessment of the transaction in question or where the concentration to be investigated could be considered to affect competition only to an insignificant extent, grant waivers in respect of the information to be given in the notification. 12. Are filing fees required? No. 13. Is There An Automatic Waiting Period? If so, specify. - 3 -
According to the Competition Act, the concentration may not be implemented prior to the clearance from the FCA or the Market Court, as the case may be. However, when the Market Court is investigating a concentration upon a request made by the FCA, the prohibition to implement the transaction will cease to be in effect after a one-month period from the institution of the court proceedings, unless the Market Court orders the prohibition to be extended. 14. Are There Time Limits Within Which The Regulatory Agency Must Act? Can they be shortened by the parties or be extended by the regulatory agency? At the first phase, the concentration will be examined by the FCA. The FCA has a period of one month from the date of receipt of the complete notification during which it has to clear the concentration, conclude that the transaction will not be caught by the Competition Act or decide to initiate the second phase investigation. If the FCA does not bring in any decision within this period, the concentration is considered cleared (in practice, however, the FCA always issues a decision). Should the FCA decide to initiate the second phase investigation, it must - within three months (or within five months with the permission of the Market Court) of such a decision - clear the concentration with or without conditions on its implementation, or request the Market Court to prohibit the concentration. Having received the FCA s request, the Market Court has to make its decision to clear or to prohibit the concentration within three months. The time limits mentioned above may not be shortened by the parties. In practice, the investigation of the FCA may be expedited with pre-notification discussions, to which the parties are encouraged by the FCA. 15. What is the substantive test for clearance? The concentration may be prohibited if it creates or strengthens a dominant position as a result of which competition would be significantly impeded in the Finnish market or a substantial part thereof. Under the Competition Act, an undertaking is considered dominant if it can significantly influence the price level, delivery conditions or other competition conditions at a certain production or distribution level. Certain specific supplementary rules apply to concentrations in the electricity markets. 16. What are the common Post-Filing Procedures: Requests for further information, etc? As a general rule, the FCA will - having received the notification - send a market inquiry to the competitors, customers and suppliers of the parties to the concentration. The aim of the procedure is to establish the relevant market structure and the competition conditions therein, and to afford the relevant market players the possibility to be heard on the proposed concentration. In case it is evident that the proposed concentration will not give rise to any competition concerns and will be cleared without any material investigations, market inquiries may not be made. - 4 -
Should the FCA decide to initiate second phase investigation, it may send more detailed questions to the relevant market players. The statements as well as other issues pertinent to the case will be discussed with the parties and, where necessary, formal hearings will be held. 17. Describe the sanctions for not filing or filing and incorrect/incomplete notification. Failure to comply with the filing obligation may lead to the imposition of fines amounting up to 10 percent of the turnover of the relevant undertaking. The fine is imposed by the Market Court on the basis of a proposal by the FCA. The amount of the fine will be determined in view of the nature, extent and duration of the infringement. The fine will be imposed, unless the infringement is considered minor or the imposition of the fine otherwise unnecessary in view of safeguarding competition. In addition, the FCA may impose a conditional fine on the party which has failed to comply with the obligation to notify. The conditional fine will be adjudged payable by the Market Court. 18. Describe the procedures if the agency wants to challenge the transaction? Having examined the concentration, the FCA may clear it - with or without conditions - or to request the Market Court to prohibit it. As indicated above, the concentration may be opposed by the FCA if it creates or strengthens a dominant position as a result of which competition would be significantly impeded in the Finnish market or a substantial part thereof. If the impediment of competition resulting from the concentration could be avoided by attaching conditions on the implementation of the concentration, the FCA should primarily impose such conditions. If conditions acceptable to the parties are deemed insufficient to ensure the avoidance of the impediment of competition, the FCA requests the Market Court to prohibit the concentration. The time limits within which the relevant authorities are obliged to act are addressed in detail under heading Are there time limits within which the regulatory agency must act? above. 19. Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger? As a main rule, no steps may be taken to implement the transaction prior to the clearance of the concentration by the FCA. Should the transaction be implemented prior to the clearance or against a prohibition decision, a fine amounting up to 10 percent of the total turnover of the relevant undertaking may be imposed. It is possible to apply for an exemption to implement the transaction before clearance. In addition, the Market Court may - at the request of the FCA - order the concentration to be dissolved/annulled, e.g. by requiring the undertakings concerned or the assets brought together to be separated in order to restore the conditions of effective competition. It is required, however, that the request of the FCA - 5 -
demanding the dissolution/annulment has to be notified to the parties within one year from the closing of the transaction. 20. Describe, briefly, your assessment of the regulatory agency's current attitudes/activities. In respect of merger control, the FCA is a well-functioning authority and has high level of know-how both in procedural and substantive terms. In general, the FCA is willing to discuss with the parties and to provide advice in problematic issues. The FCA is also reliable with regard to the confidentiality issues pertinent to merger control procedures. 21. Other Important Information: The Competition Act is currently under review. A working group report on the revision of the Competition Act was submitted to the Ministry of Employment and the Economy in December 2008. As regards merger control, the most significant amendment proposed by the working group is to replace the dominance test described above by the so called SIEC-test (significant impediment of effective competition), which is applied by the European Commission. In addition, the working group proposes certain procedural changes, such as abolishing the deadline for notifying a concentration and giving the FCA the possibility to stop the clock in certain circumstances. The new Competition Act is expected to enter into force in 2010. - 6 -
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