Study by the Finnish Competition and Consumer Authority shows that the current national turnover thresholds allow harmful merges to escape the scrutiny of the authority. The study shows that the obligation to notify mergers should be modified by lowering the current turnover thresholds and by granting the authority the right to require a notification when thresholds are not met. Expanding the merger filing obligation would create benefit to consumers worth tens of millions of euros each year.
Market concentration may lead to increases in consumer prices and decreases in product or service quality. Merger control is the most effective way to prevent the negative effects of market concentration. Merger notification thresholds should ideally be set at a level where all mergers of importance to the national economy are captured by the regulation, while omitting minor concentrations.
The obligation to notify a merger to the FCCA currently depends solely on the turnover of the merging parties. The FCCA only reviews concentrations 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.
The study indicates that the current turnover thresholds are too high for the Finnish economy, as many industries fall entirely out of the scope of merger control.
An example of such industry is long-haul bus transportation, where the acquisition of a maverick company by an incumbent operator in 2018 fell below the turnover thresholds. The study also shows that under the current legislation the authority is unable to prevent concentration in local markets. The health care sector for example has seen an exceptional wave of mergers in the past decade leading to rapid concentration and a market dominated by three large players as described in the authority’s recent decision to block the merger between two major players in the market.
An international comparison also shows that the Finnish turnover thresholds are considerably higher than in other Nordic countries and in EU member states of a similar size.
The benefits from revising the filing obligation greatly exceed potential expenses
The FCCA proposes amending the legislation in a way that would subject to review all mergers 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.
In addition, the study suggests granting the authority the right to require a notification when thresholds are not met. As per the proposal, the power to order a notification would be limited to cases where the combined turnover of the parties resulting from Finland exceeds EUR 50 million. The right to require a notification is in the toolbox of many European competition authorities, including Sweden and Norway.
The proposed amendment would increase the number of mergers reviewed by the FCCA by approximately one third. This will increase administrative costs for undertakings and for the FCCA. The study however shows that the benefits from expanding the obligation to notify concentrations would clearly offset the costs. Expanding the merger filing obligation would create benefit to consumers worth tens of millions of euros each year.
The study has been conducted at the request of the Ministry of Economic Affairs and Employment of Finland.
More information:
Director Sanna Syrjälä p. 029 505 3385
firstname.lastname@kkv.fi
Senior Economist Riku Buri, p. 029 505 3725
firstname.lastname@kkv.fi