FCCA approves the joint venture of Kesko and Oriola in the health, beauty and wellbeing segment

On 26 June 2017, the Finnish Competition and Consumer Authority (FCCA) approved a corporate transaction based on which Kesko Corporation and Oriola Corporation will set up a joint venture. According to the FCCA, this joint venture may generate efficiency gains that benefit consumers, such as a wider product selection. The FCCA has concluded that the acquisition will not impede, as referred to in the Competition Act, effective competition in the Finnish market. The joint venture will face pressure from its competitors in the health, beauty and wellbeing products segment.

Kesko is a retail operator specialising in the grocery trade, the building and technical trade and the car trade. Oriola is a distributor, a provider of distribution and warehousing services and a wholesale company serving the pharmaceuticals industry in Finland. In the wholesale market, Oriola sells products and services to hospitals and pharmacies. Kesko is not engaged in the pharmaceuticals industry in any way.

The parties to the acquisition have overlapping business operations in the retail, wholesale and retail procurement markets for beauty, health and wellbeing products, such as cosmetics, hygiene products and dietary supplements.

The joint venture’s planned product selection would include cosmetics, body care products, personal hygiene products, dietary supplements, snacks, functional foods, sweets, soft drinks and nicotine products.

The corporate transaction between Kesko and Oriola falls within the scope of the EC regulation on the control of concentrations between undertakings. The European Commission referred the case to the Finnish Competition and Consumer Authority in May 2017. In its investigation, the FCCA applied the Finnish legal provisions regarding merger control.

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 of at least two of the parties resulting from Finland exceeds 20 million euros for both. FCCA approves a corporate transaction if it has no harmful impacts referred to in the Competition Act. 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.