The FCCA Proposes Expanding the Obligation to Notify Mergers
12 July 2021
In a recently published report, the Finnish Competition and Consumer Authority (the FCCA) proposes that the current merger control turnover thresholds be lowered and that the authority be granted the right to require notification even when the thresholds are not met. In Finland, the responsibility for drafting national competition legislation is entrusted with the Ministry of Economic Affairs and Employment, while the FCCA is responsible for the practical implementation of the legislation. Earlier this year, the Ministry stated that it will assess the need and possibilities to change the current merger control rules.
Merger Control Thresholds Would Be Lowered
Currently, the FCCA reviews concentrations, and notification is required where
- the combined global turnover of the parties exceeds EUR 350 million, and
- the turnover of at least two of the parties resulting from Finland exceeds EUR 20 million.
According to the FCCA’s proposal, in the future, the authority would review the concentrations where
- the combined turnover of the parties resulting from Finland exceeds EUR 100 million, and
- the turnover of at least two of the parties resulting from Finland exceeds EUR 20 million.
Thus, should the proposal be adopted as such, the combined turnover threshold would no longer be based on the parties’ global turnover, but instead on the turnover resulting solely from Finland. Further, the turnover threshold would be lowered from EUR 350 to EUR 100 million. The second threshold of EUR 20 million would remain unchanged.
FCCA Proposes the Right to Require Notification if Turnover Thresholds Are Not Met
Besides lowering the turnover thresholds, the FCCA proposes in its report that the authority be granted the right to require notification in a situation where the turnover thresholds are not met. According to the proposal, such a right would be limited to mergers where the parties’ combined turnover resulting from Finland exceeds EUR 50 million. The FCCA notes that, in addition to some other European countries, the competition authorities in Sweden and Norway have already been granted such a right.
According to the report, should the proposed right not be granted to the authority, the turnover thresholds should be lowered even more from the proposed one. In addition, filing thresholds based on transaction value should be considered.
The FCCA’s right to require notification when the main thresholds are not met would create significant uncertainty for businesses contemplating transactions. On this note, the FCCA has referred to the EU Commission’s recently adopted guidance regarding Article 22 of the EU Merger Regulation. The FCCA states that Article 22 alone creates such uncertainty. The new guidance allows for one or more Member States to request the Commission to examine any concentration that does not have an EU dimension but affects the trade between the Member States and threatens to significantly affect competition within the territory of the Member State or States making the request, irrespective of whether any national thresholds have been met or not.
So far, it is not known when the changes proposed by the FCCA would possibly proceed to the drafting stage. If the competition law is amended as proposed, the costs of companies carrying out mergers and acquisitions would be increased. The competitive effects of even those mergers which would not meet the filing thresholds would have to be estimated in order to eliminate the possibility for the transaction to be prohibited, for instance, after closing.
Similarly, a significantly larger number of smaller acquisitions would have to be notified to the authority, slowing down the implementation of such acquisitions. Thus, should the proposal be taken for debate in the Finnish Parliament, the legislator must carefully consider whether it is reasonable to make almost every transaction subject to merger control and, furthermore, whether it is reasonable to lower the national filing thresholds at the same time.