News, 5 August 2011
The FCA today made a proposal to the Market Court to prohibit the envisaged merger between NCC Roads Oy and Destia. The proposal concerns the arrangement notified to the FCA on 5 April 2011, in which in-depth investigations began on 5 May 2011 and in which NCC Roads Oy was to purchase from Destia Oy and Destia Kalusto Oy their asphalt paving business.
The merger would have led to a joint dominant position between NCC Roads and Lemminkäinen Infra Oy which would have significantly impeded competition in the asphalt mix market in the capital city area.
Other contractors dependent on asphalt mix manufacturers
In addition to NCC Roads and Lemminkäinen, Destia is the only actor in the capital city region with a fixed asphalt station. The other contractors depend on bought asphalt mix and therefore on the sellers of the mix.
Following the deal, asphalt mix would only have been sold by NCC Roads and Lemminkäinen in the capital city area, which both compete with their asphalt mix customers for the paving contracts of the municipalities and private actors. As a result of the deal, the sellers of asphalt mix could have either refused to sell the mix at all, or to have retained the prices above the competed level and thus to have harmed the activities of their competitors in the asphalt paving market. This would in turn have led to increased contract prices and hence been detrimental to the interest of the municipalities, housing organizations and other private actors contracting asphalt paving work.
The competition problems resulting from a merger may often be eliminated through the imposition of remedies. Making a prohibition proposal remained the only option in this case, as the remedies submitted by the parties to the FCA could not be seen to effectively address the competition concerns resulting from the merger.
The FCA also investigated the competitive impacts of the merger on the asphalt paving markets for the state, municipal and private contracts as well as the asphalt mix market elsewhere in Finland. In these markets, the threshold for intervention defined in the Competition Act was not exceeded.
First prohibition proposal in 11 years
Merger control was introduced to Finland in 1998. The present prohibition proposal is only the second one ever made in Finland. The first proposal made in 2000s to ban a deal concerned the acquisition of joint control by Sonera Oyj in Digita Oy, the subsidiary of the Finnish Broadcasting Corporation Yleisradio Oy.
Under the Competition Act, the Market Court shall issue its decision based on the prohibition proposal in three month's time from the making of the proposal. The merger may either be prohibited as proposed by the FCA, approved as such or conditions may be attached to its implementation. The decision by the Market Court may be appealed to the Supreme Administrative Court.
The Market Court proposal issued by the FCA today contains several business secrets by the parties, and may only be published after these have been removed.
Assistant Director Timo Mattila
Research Officer Keijo Ranta