Competition Act provision on grocery trade became effective on 1st of January

The prohibition in the Competition Act of abuse of dominant market position can, in accordance with the new paragraph 4a of the Act, be applied on companies whose national market share in the groceries retail markets exceeds 30 percent. In the present market situation, the provision concerns the central firms of the K and S groups.

The Finnish Consumer and Competition Authority (FCCA) has during 2013 had discussions with those involved with grocery trade about questions brought up by them as well as about matters of concern emerged in the Authority’s earlier report. The aim of the negotiations still under way is to identify the risks arising from abuse of dominant market position and avoid conflicts with the law before they occur. However, companies themselves will be responsible for complying with the provision; it is not possible for the competition authority to provide general binding instructions about the matter, because the application of the provision regarding dominant market position always requires case-by-case evaluation.

In addition, FCCA is initiating further investigations about, among other things, customer loyalty schemes and their effects on competition and about the access by goods suppliers to sales data of the trade. The forthcoming surveys of the authority will more closely examine also the practises related to the trade’s private label products.

The primary objective of the Competition Act is to protect competition, not individual companies

The purpose of the Competition Act is to protect efficient competition process as a whole, not individual businesses. The provisions of the act are not intended to be applied to conflict situations between individual companies unless these, at the same time, are related to matters endangering healthy and effective competition.

In accordance with the Competition Act, FCCA can initiate measures to remove restrictions on competition or its harmful effects if it sees a company’s activities as restricting competition the way referred to in the provisions of the Act and if it is necessary to take up measures to secure healthy and effective competition in the markets.

Generally speaking, abuse of a dominant market position refers to such methods that lead to anti-competitive exclusion of other businesses and bodies from the markets or can be seen as unreasonable utilisation of market power. The new provision does not change the statutory definition of abuse of dominant market position.

Read also the following press releases and surveys: