News, 20 December 2012
The FCA proposes that the Market Court impose on Valio Oy a €70m penalty payment for abuse of dominant position in the production and wholesale market of fresh milk. The FCA has also ordered Valio to cease its antitrust violation which has continued for almost three years.
The FCA’s investigations and evidence show that Valio’s top management made a strategic decision in February 2010 aiming to foreclose competition on the Finnish fresh milk market. To achieve this goal, Valio dropped the wholesale prices of its fresh milk considerably below costs as of 1 March 2010. The purpose of the underpricing was to achieve a position close to a monopoly in the market and thereafter to raise the prices back to the level that existed before Arla Ingman had entered the market.
Aim of conduct harming of consumers
Valio has committed a serious antitrust violation, with the aim of harming consumers. Valio’s strategy has been to prevent Arla Ingman from competing on the Finnish fresh milk market. The conduct has also significantly impeded the possibilities of small dairies to operate on the market.
In determining the size of the penalty payment, the FCA considered the gravity and duration of the conduct, the size of the fresh milk market, Valio’s considerable turnover and the fact that Valio has once before been found guilty of abuse of dominance (SAC:1998:65).
Conduct whereby a dominant company prices its products below costs so as to foreclose effective competition from the market is considered abuse of dominance prohibited by the Competition Act. Such pricing below costs aiming at preventing effective competition is called predatory pricing.
A public version of the FCA’s decision and the Market Court proposal shall be published in January 2013 (in Finnish) at kkv.fi.
Director General Timo Mattila
Head of Research Sanna Syrjälä