Lower turnover thresholds for Finnish merger control applicable as 1.1.2023
The government proposal (HE 172/2022 vp) concerning amendments to the Competition Act has been approved and ratified. Following the amendments, the threshold for notifying a transaction to the Finnish Competition and Consumer Authority (“FCCA”) will be lowered.
Also the change in the European Commission’s referral policy, which was confirmed by the General Court this summer, must also be taken into consideration in merger control assessments. According to the Commission’s new approach, the Commission can also examine transactions that do not exceed the turnover thresholds of the referring Member State.
Lower turnover thresholds for merger control
Following the legislation amendment, from the beginning of 2023 all transactions must be notified to the FCCA where:
- the combined turnover of the parties to the concentration resulting from Finland exceeds EUR 100 million, and
- the turnover of at least two of the parties resulting from Finland exceeds EUR 10 million for both.
Pursuant to current section 22 of the Competition Act (948/2011), the FCCA must be notified of transactions where the worldwide combined turnover of the parties to the concentration exceeds EUR 350 million and the turnover of at least two of the parties resulting from Finland exceeds EUR 20 million for both.
Following the amendment, the turnover threshold for the combined turnover will be determined solely on the basis of turnover resulting from Finland, and the worldwide turnover will no longer be relevant for the assessment. The second turnover threshold, which concerns the turnover of at least two of the parties resulting from Finland, will be lowered from the current EUR 20 million to EUR 10 million.
According to the government proposal, the current turnover thresholds for merger control are too high considering the size of the Finnish national economy. The current turnover thresholds have also been found to result in the exclusion of certain industries from merger control review.
The new turnover thresholds will apply to transactions where the agreement has been made, control has been acquired or a public tender offer has been published on 1 January 2023 or after that.
As a result of the amendment, Finnish merger control will extend to more transactions and smaller companies than before. Following the change in the turnover thresholds, it has been estimated that an additional 30–40 transactions will fall under the scope of the obligation to notify each year hereby doubling the current number of notifications.
Contrary to the FCCA’s initial proposal, the amended Competition Act will not grant the FCCA the possibility to require a notification where the turnover thresholds are not exceeded.
Also, the notification form has been updated following an amendment to the Government Decree on the scope of obligation to notify (1012/2011). The aim of the update is to reduce the amount of information required in transactions where the parties do not have any or have only limited horizontal overlaps or vertical links.
The European Commission can also examine transactions that do not exceed the turnover thresholds
Under Article 22 of the EU Merger Regulation, a Member State can request the Commission to examine a concentration that otherwise would not fall under the jurisdiction of the Commission or the national competition authority. Previously, the Commission has only examined mergers in situations where the threshold for notification has been exceeded in the Member State requesting referral.
In the spring of 2021, the Commission published guidance on the use of Article 22, in which the Commission, deviating from its earlier practice, encourages Member States to use the referral mechanism of Article 22 also in certain cases where the national notification threshold is not exceeded. The reason behind the change is the Commission’s goal to be able to better intervene in arrangements intended at buying a new competitor out of the market.
In summer 2022, the General Court confirmed in its ruling on case Illumina/GRAIL that the Commission can, at the request of a national competition authority, also examine mergers that do not exceed the national notification thresholds.
As a result of the Commission’s guidance and the General Court judgment, the referral mechanism made possible by Article 22 will also have to be taken into considering in mergers not triggering a national merger control notification. This is particularly the case in mergers concerning the digital and pharmaceutical markets.