Finnish merger control thresholds under the microscope – key takeaways
The Finnish Government has submitted a parliamentary proposal (HE 172/2022) containing significantly lower merger control notification thresholds in Finland. The new thresholds are expected to be implemented into the Competition Act and enter into force in the beginning of 2023.
New merger control notification thresholds
On 19 September 2022, the Finnish Government submitted its proposal to Parliament containing significantly lower merger control notification thresholds. The core amendments in the proposal concern section 22 of the Finnish Competition Act (948/2011), which sets out the notification thresholds in Finland.
According to the new thresholds, transactions would be notifiable in Finland if:
- the parties’ combined Finnish turnover exceeds EUR 100 million; and
- the aggregate turnover in Finland of each of at least two of the parties exceeds EUR 10 million.
These new thresholds deviate considerably from the presently applicable thresholds. Currently, transactions are notifiable in Finland if the combined worldwide turnover of the parties exceeds EUR 350 million and the turnover in Finland of each of at least two of the parties exceeds EUR 20 million. Under the newly-proposed thresholds, the assessment of whether the transaction must be notified would be based on the combined turnover of the parties accrued in Finland (as opposed to on a global level) and a significantly lower combined turnover would trigger the first threshold. Accordingly, the notification obligation would require the parties to the transaction to have a stronger footprint in the Finnish markets.
If approved by the Parliament, the new notification thresholds would likely enter into force as early as at the beginning of 2023. According to the proposal, the new thresholds would apply to transactions in which an acquisition agreement has been signed or a takeover bid has been announced after the entry into force of the revised Competition Act.
During the legislative process, the Finnish Consumer and Competition Authority (FCCA) had proposed that the Competition Act also be amended to grant the FCCA the right to investigate certain transactions even when the (revised) notifiability thresholds are not met (Fin: otto-oikeus). This initiative was, however, rejected and did not make it into the current proposal. In the government proposal, it has been stated that merger control rules should be clear, precise, and predictable.
Other developments in merger control
The Finnish merger notification form is also expected to be updated from the beginning of 2023 following a proposal for reform submitted by the FCCA in June 2022. The current form has been in use for a decade and the aim of the amendments is to achieve better alignment with the FCCA’s information needs.
The FCCA has published an explanatory memorandum to further describe the background to the suggested changes. According to the memorandum, the FCCA’s investigation methods and information needs have evolved over the years. This has led to the FCCA submitting an increasing number of requests for information (RFIs) to the notifying parties in connection with prenotification discussions as the current notification form has not addressed the FCCA’s information needs sufficiently. By changing the notification form, the FCCA is aiming to incorporate a number of its standard RFI questions.
The proposed notification form would require, for example, information on the parties’ profitability and a breakdown of costs relating to e.g. materials, personnel and R&D activities. Moreover, the proposed notification form would require the parties to describe the significance of different procurement methods used by customers, including a description of typical tender processes. The abovementioned information requirements would become standard in transactions which result in horizontally or vertically affected markets.
The revised notification form would also be more aligned with the European Commission’s Form CO, particularly as regards the inclusion of questions concerning potential conglomerate effects.
The revision of the notification form is intended to be issued as a Governmental Decree in 2022, coming into force at the beginning of 2023. The FCCA has indicated that it will be publishing detailed guidelines on the substantive review of the information requested in the revised notification form.