The Finnish Competition and Consumer Authority (FCCA) approved the merger in which Valio Oy will purchase Heinon Tukku Oy on 30 June 2021. A precondition for approving the merger is that Valio undertakes to protect the confidential information received about its competitors as a result of the acquisition so that it is not passed on to the organisation in a manner that is harmful to competition.
FCCA has investigated the competition impacts of the merger between Valio and Heinon Tukku. The acquisition will merge a manufacturer and a wholesale operator, and the FCCA’s preliminary review paid particular attention to the possibility of companies operating at different levels of distribution to acquire confidential information from competitors and the possibility of excluding competitors from the market as a result of the merger.
Valio and Heinon Tukku also have overlapping business operations in public sector foodservice procurements and in the dairy, industrial produce and frozen food supply markets. However, on the basis of the reviews, the merger does not cause adverse effects on competition in these markets.
Condition to approving the acquisition is the protection of pricing information from competing manufacturers
Based on FCCA reports, the acquisition does not lead to the exclusion of the competitors of Valio or Heinon Tukku from the market. On the other hand, according to the Agency's assessment, Valio is at risk of receiving information on the wholesale pricing of competing manufacturers and other terms and conditions of contractual relationships through Heinon Tukku.
‘If Valio received information about the pricing of its competitors, it could influence Valio's incentives in pricing and significantly restrict competition between manufacturers in the sale of products to foodservice customers, such as hotels, cafés and restaurants,’ says Sanna Syrjälä, the Head of Merger Control.
Competition problems caused by corporate acquisitions can often be eliminated by placing conditions on the acquisition. Valio undertook to protect the confidential information it receives of its competitors so that it will not be passed on to the organisation in a way that is harmful to competition. The commitment to protect the information is valid for 10 years from the approval of the acquisition. According to the Agency's assessment, the commitment is sufficient to eliminate the competition problems arising from the acquisition and the merger could be approved conditionally.
The FCCA's decision contains confidential business secrets of the parties. The decision cannot therefore be made public until after the business secrets have been removed.
Further information on the subject:
FCCA opens an in-depth investigation into the competition impacts of Valio’s proposed acquisition of Heinon Tukku, FCCA’s press release 31 May 2021.
Senior Specialist Laura Kauppila, tel. +358 29 505 3335
According to the Competition Act, a merger must be reported to the FCCA if the combined turnover of the parties to the concentration exceeds 350 million euros and the turnover of at least two of the parties resulting from Finland exceeds 20 million euros for both. The FCCA approves the merger provided that it will not result in any of the negative impacts mentioned in the Competition Act. The FCCA will intervene in the merger if its investigation indicates that the merger would significantly impede effective competition on the Finnish market or a substantial part thereof, in particular as a result of the creation or strengthening of a dominant position. If required, the processing of the merger notification is carried out in two phases. The first stage lasts a maximum of 23 workdays. If the processing of the first stage reveals that the merger may have adverse effects on competition, the Authority will make a decision on transferring the matter for further processing, during which the merger and its competitive effects will be thoroughly investigated. The second stage lasts a maximum of 69 workdays. The Market Court may extend the deadline for the second phase by a maximum of 46 working days. After the second stage has been completed, the FCCA may approve the merger as such if it will not cause harmful competitive effects. The FCCA will intervene in the merger if it deems that it would have a significant anticompetitive effect on the Finnish market. The primary method for preventing any anticompetitive effects is to impose conditions, such as the obligation to sell some part of the business. If the imposition of conditions does not result in a satisfactory result, the Market Court may, on the basis of a proposal submitted by the FCCA, prohibit the merger in its entirety.