14/05/2020

Finnish Competition and Consumer Authority’s Powers Expanded – National Implementation of ECN+ Directive Moves Forward

The new European ECN+ directive entered into force at the beginning of last year. The goal of the directive is to strengthen and unify the powers of national competition authorities.

In Finland, some of the requirements of the ECN+ directive were already incorporated into the new Competition Act, which entered into force on 17 June 2019. The Ministry of Economic Affairs and Employment set a committee to complete the implementation of the directive.

At the end of April, the committee published its report in which the committee proposes amendments to several of the Competition Act’s provisions as well as the addition of new provisions. The most significant amendments proposed relate to fines, structural remedies and closer cooperation among national competition authorities.

Amendments to Imposition of Fines

The committee proposed that the Competition Act be amended so that the FCCA could in future also propose fines and periodic penalty payments for procedural violations, such as, breaking a seal during an authority inspection.

According to the proposal, a procedural violation could lead to a maximum fine of one per cent of the global turnover of the company that committed the violation.

The ECN+ directive does not obligate Member States to review their fining policy with respect to fines imposed due to competition restrictions. In Finland, however, the committee was given the opportunity to also assess the predictability of the level of fines. The committee proposed adding more detailed provisions to the Competition Act concerning the assessment of the level of fines.

According to the proposal, the standard that the FCCA would use to assess the level of a fine for a competition restriction would, for the most part, correspond to the Commission’s fining guidelines. The standard would not, however be binding on the courts, which would maintain discretion in determining the amount of a fine.

Trade associations and their members need to take particular note that the ECN+ directive has significantly increased the severity of the consequences they face, as fines will in future be determined on the basis of the aggregate turnover of their member companies, and their members will ultimately be liable to pay the fines. Read more about the impact of the ECN+ directive on trade associations.

New Structural Remedies to Intervene in Competition Restrictions

In addition to amendments to fines, the committee report also includes a proposal for using structural remedies to end a competition restriction. Structural remedies mean, for example, imposing an obligation to divest an ownership stake in a competitor or dispose of a business unit.

The purpose of structural remedies is to maintain or reinstate competitive circumstances on a market. The report recognises that structural remedies are heavy and often irreversible, and as a result proposes that they could only be put into effect after a decision has become final.

Closer Cooperation between Competition Authorities

The committee report also proposes provisions that would enable closer cooperation between national competition authorities in the EU. The report proposes, for example, that an entirely new chapter be added to the Competition Act to ensure the notification of documents and the enforcement of sanctions on behalf of other national competition authorities across Members State borders.

Minority Opinions on Fines, Inspections and Interim Measures

Two minority opinions were published concerning the report. The Finnish Bar Association’s minority opinion criticises the provisions concerning fines for procedural violations as well as the standard for determining fines for competition restrictions. It also highlighted insufficient court oversight of FCCA inspections.

The Confederation of Finnish Industries and Suomen Yrittäjät submitted a joint minority opinion, which criticises, among other things, the fines imposed on associations of undertakings and the regulation of interim measures and also highlighted the need for effective advance competition advice.

Progress of Drafting

The national implementation of the directive must be completed by 4 February 2021. The goal of the Ministry of Economic Affairs and Employment is to publish the government bill concerning the amendments during mid-September. Stakeholder groups will have the opportunity to give statements on the bill before then.

 

Sari Hiltunen, Hanna Perikangas and Joona Havunen