FCCA closes investigation of abuse of dominant market position on the insulation board market

In a decision issued on 29 September 2015, the Finnish Competition and Consumer Authority (FCCA) closed an investigation concerning a potential case of abuse of a dominant market position by Finnfoam Oy on the Finnish insulation board market. The investigation conducted by FCCA did not produce evidence of abuse of market dominance.

The investigation was launched as a result of two complaints, involving suspicions that Finnfoam had been guilty of prohibited predatory pricing practices on the insulation board market. Predatory pricing practices prohibited under the Competition Act refer to practices whereby an undertaking in a dominant position prices its products below production costs in an effort to eliminate effective competition from the market. The investigation conducted by the FCCA did not provide support for the claims that predatory pricing practices had been employed.

The investigation did, however, reveal that Finnfoam’s annual contract documents had included clauses on exclusive purchase obligations applicable to construction companies acting as customers. An exclusive purchase obligation obliges the customer to purchase all of its required commodities from the same retailer. Exclusive purchase obligations applied by undertakings in a dominant position can prevent effective competition if alternative suppliers are hindered from competing in a way that meets the full range of demand from the customer. In such a case, customers and, ultimately, consumers do not benefit from price and quality competition.

However, the FCCA’s investigation revealed that construction companies had also purchased insulation boards from other providers regardless of the exclusive purchase obligations. In addition, Finnfoam removed the terms and conditions in question from its contracts during the investigation of the case. For this reason, the FCCA did not consider it necessary to continue the investigation in this respect. The investigation produced no other evidence indicating that Finnfoam’s actions involved abuse of a dominant market position prohibited by the Competition Act. The investigation was closed on these grounds.