Before concluding a transaction, it is essential to consider whether the transaction needs to be notified to competition authority. According to the Finnish Competition Act (948/2011), transactions that meet specific turnover thresholds must be notified to the Finnish Consumer and Competition Authority (“FCCA”).

In Finland, as in many other countries, merger control aims to strike a balance between encouraging business growth and safeguarding fair competition. The FCCA examines the impact on competition by investigating the market structure and competitive situation in the market. If the transaction notified to the FCCA may distort effective competition in Finland, the FCCA may impose conditions on the transaction to mitigate any harmful effects to market. If such effects cannot be adequately eliminated, the FCCA has the authority to even forbid the transaction.

The Finnish merger control provisions apply to transactions where:
a) The combined turnover of the parties exceeds 100 million euros; and
b) The turnover of at least two of the parties exceeds 10 million euros for both.

The conditions are cumulative, meaning both criteria must be fulfilled. The turnover threshold is calculated from the latest financial statements, and the turnover must be accumulated in Finland.

However, if the combined worldwide turnover of the parties exceeds 2500 million euros, and the EU-wide turnover of at least two of the parties exceeds 250 million euros for both, the EC Merger Regulation (EC) No 139/2004 may apply.

In order for the Finnish merger regulation to apply, the turnover must be accumulated in Finland. Turnover is allocated according to the customer's location at the time of the transaction.

The obligation to notify the transaction to the FCCA does not necessarily arise, even if a Finnish company's turnover exceeds the turnover limits, if the turnover does not accumulate in Finland. In such cases, however, the notification requirements required by international competition authorities must always be examined separately.

In many cases, one of the parties to the transaction is a corporate group. In these circumstances, it is crucial to consider the control relations of companies in the directly ascending and descending generations when examining turnover thresholds.

The turnover of the purchaser includes the turnover of an entity that exercises control over the purchaser or wherein the purchaser exercises control, as well as the turnover of the entities over which the mentioned entities exercise control. Additionally, the turnover of an entity wherein control is exercised by the same natural person as in the entities mentioned before shall be included in the calculation.

The turnover of the object of acquisition includes the turnover of (i) the entity where control is acquired; (ii) the business operation that is object of purchase; and (iii) a merging entity or foundation in an absorption merger.

Another common question is how previous transactions should be taken into account when calculating the turnover thresholds. The turnover can be adjusted as follows:

1. The turnover of any business that was transferred or closed down during the financial period and after the end of the financial year can be subtracted.
2. The turnover of any business that was acquired during the financial period and after the end of the financial year can be added if the impact of these transactions on the turnover cannot be fully reflected in the most recently approved financial statements.

Businesses planning transactions should carefully assess whether the turnover thresholds are met to prepare for potential notification requirements to the FCCA. While the thresholds themselves are straightforward, questions often arise regarding how turnover should be calculated. Seeking legal advice and guidance throughout the process can help navigate the complex landscape of merger control and ensure compliance with Finnish competition regulations.

Julkaistu 26.2.2024