On 26 January 2018, the Finnish Competition and Consumer Authority (FCCA) approved a transaction based on which Lemminkäinen Oyj will merge with YIT Oyj. The FCCA’s investigations suggest that the acquisition will not significantly impede effective competition on the construction market.
YIT is a construction company that develops, builds and repairs homes, offices, infrastructure and entire areas. Lemminkäinen is a construction company engaged in building and infrastructure engineering and the sale of stone products.
The FCCA postponed further proceedings on the merger between YIT and Lemminkäinen to 28 September 2017, because the FCCA’s preliminary investigations indicated that the acquisition might have had adverse impacts on competition in the building and infrastructure engineering markets. In December 2017, the Market Court extended the deadline for proceedings on the merger until 26 January 2018.
The FCCA has examined the competitive effects of the acquisition on the building and infrastructure engineering markets and the related national road maintenance and residential construction markets. To enable an assessment of the impact on competitiveness, the Authority has gathered extensive information on construction projects carried out in Finland during 2012–2017 and the related tenders.
On the basis of the collected material, the FCCA has examined the market shares of YIT and Lemminkäinen and their competitors. In addition, on the basis of the offers made by the companies, the Authority has investigated how closely the parties compete in various construction projects. Regarding the maintenance of national roads, the Authority had access to material that enabled an analysis of the merger’s effect on prices.
The FCCA’s investigations indicate that the building and infrastructure engineering markets will remain sufficiently competitive for all types and size categories of construction after the acquisition. In addition, the reduction in the number of tenderers for road maintenance will not affect the competitiveness of the market and the acquisition will not significantly impede effective competition in the Finnish construction market.
Today’s decision by the FCCA includes business secrets of the parties involved. A public version of the decision will be available within around two weeks.
- Further information: Sanna Syrjälä, Head of Research, tel. +358 29 505 3385 and Martina Castrén, Senior Research Officer, tel. +358 29 505 3325
- Further information about the economic analysis: Olli Kauppi, Chief Economist, tel. +358 29 505 3394
Read more:
- FCCA to accept acquisition of Lemminkäinen Oyj by YIT Oyj (FCCA press release, 16 January 2018)
- Deadline for the consideration of the merger of Lemminkäinen and YIT has been extended to 26 January 2018, (FCCA press release on 13 December 2018)
- The FCCA is requesting that the deadline for proceedings in the YIT and Lemminkäinen acquisition be extended to 26 January 2018. FCCA press release, 11 December 2017:
- FCCA to further investigate competition effects of merger of YIT and Lemminkäinen. (FCCA press release, 28 September 2017)
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 from Finland of at least two of the parties exceeds a combined total of 20 million euros. The FCCA will approve a corporate transaction if it has none of the harmful impacts referred to in the Competition Act. The 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. Where necessary, notifications of acquisitions are considered in two stages. The so-called first stage takes a month at most. If the acquisition is clearly not harmful to competition, or if the harmful effects can be prevented by means proposed by the parties to the acquisition, the acquisition is approved during the first stage. If not, the FCCA decides to conduct a further investigation of the matter, during which the acquisition and its competition effects are investigated in further detail.