The Finnish Competition and Consumer Authority (FCCA) has initiated further proceedings concerning the merger of Scandic Hotels Oy and Restel Hotellit Oy.
The parties of the merger are engaged in hotel accommodation business in Finland. The Scandic Group is a Nordic hotel chain with 230 hotels in seven countries. In Finland, the group has a total of 24 Scandic hotels in 17 cities, with one ongoing hotel construction project. Scandic also operates three Hilton hotels in Finland under a franchising contract.
Restel Hotellit Oy is fully owned by Restel Oy, a subsidiary fully owned by Tradeka-Yhtiöt Oy. Restel operates a total of 43 hotels: in addition to the company’s own hotel chain, Cumulus City & Resort, the company operates the Holiday Inn hotels in Finland as well as Helsinki’s Crowne Plaza, Indigo Helsinki Boulevard and Hotelli Seurahuone hotels.
On the basis of the FCCA's preliminary investigations, the acquisition may have adverse impacts on competition in the accommodation service market. There are 12 cities in Finland in which both Scandic and Restel are involved in hotel operations. In many of these cities, the cluster formed by the parties of the merger would have a remarkably large market share. The Finnish hotel market is highly concentrated as is, because in addition to the parties of the contract, there is only one other hotel chain, the S Group, that operates nationwide. Following the merger, Scandic and S Group would own majority of the hotel capacity in many Finnish cities.
In its further proceedings, the FCCA will investigate whether the planned acquisition significantly impedes effective competition in the Finnish market or its important part. The FCCA may approve the acquisition as such, attach conditions to the approval or request that the Finnish Market Court prohibit the acquisition. According to the Competition Act, the further proceedings may not take longer than three months.
The FCCA’s decision includes business secrets of the parties involved. The decision cannot be published until the business secrets have been removed, i.e. in around two weeks’ time.
Maarit Taurula, Head of Research, tel +358 29 505 3381
According to the Competition Act, the FCCA must be notified of the transaction if the combined turnover of the parties to the corporate transaction exceeds 350 million euros and the turnover of at least two of the parties resulting from Finland exceeds 20 million euros for both. FCCA approves a corporate transaction if it has no harmful impacts referred to in the Competition Act. FCCA will intervene in corporate transactions if its investigations suggest that the acquisition substantially impedes effective competition on Finnish markets or a substantial part of the markets, particularly through the creation or reinforcement of a dominant market position. When necessary, the notification process has two phases. The so-called first phase shall take one month at most. If the acquisition clearly does not have restrictive effects for competition or if the restrictive effects can be prevented by conditions proposed by the parties, the acquisition shall be cleared. Otherwise the FCCA shall take a decision to initiate further proceedings during which the transaction and its competitive effects shall be thoroughly investigated.
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