The Finnish Competition and Consumer Authority (FCCA) has today submitted a proposal to the Market Court for a EUR 55,000 penalty to the Finnish Bakery Federation. The proposal is based on the unlawful price recommendations the Federation gave its members in 2007–2010.
Price recommendations given by trade associations represent a severe restriction on competition because they are conducive to standardising pricing among businesses in the sector and encouraging companies to raise prices regardless of whether their costs increase. The FCCA has previously addressed similar recommendations issued by the Finnish Hairdressers’ Association, and the Supreme Administrative Court’s ruling confirmed that such recommendations are unlawful.
“The purpose of price recommendations was to restrict competition between companies”
The FCCA began to investigate the matter regarding the Finnish Bakery Federation after the Federation issued a press release in August 2010 about the industry’s weak profitability and the pressure to raise bakery product prices. Investigation revealed that similar recommendations had been made over the years in other bulletins issued by the Federation, letters to members, speeches and editorials in the “Leipuri” bakery trade magazine. A rise in the general level of prices, illustrated with percentage figures, was presented as grounds for price increases. According to the penalty proposal, the objective of the price recommendations was to raise prices, achieve consistency in the level and timing of price increases, and thereby to restrict competition between companies in the bakery sector.
According to law, the maximum penalty is 10 per cent of the turnover of an undertaking or an association of undertakings. Where an association is concerned, turnover also includes income from the actual operations and membership fees.
For comparison’s sake, it should be noted that the EU competition authorities apply a practice whereby the 10 per cent is calculated from the combined turnover of the association and member businesses operating in the markets subject to violation.