On 19 April 2021, the Finnish Competition and Consumer Authority (FCCA) approved the merger between Altia Oyj and Arcus ASA. The approval and implementation of the merger is conditional upon the sale of Altia’s Skåne Akvavit brand to a suitable buyer and the termination of Arcus’ distribution agreement for Metsmaasikas strawberry liqueur. The merger has also been approved conditionally in Sweden. In addition, the parties have proposed commitments to address the competition concerns identified by the Norwegian Competition Authority.
The FCCA has investigated the competition effects of the merger between the Finnish beverage company Altia and its Norwegian counterpart Arcus. The parties to the transaction manufacture, import and distribute alcoholic beverages, mainly spirits and wines. The parties have overlapping activities in several alcoholic beverage categories. However, in many of the categories Arcus has only limited activity in Finland.
According to the FCCA’s investigation, the merger would significantly reduce the level of competition in Finland in the sales of both aquavit and berry liqueurs to the national retail monopoly Alko and in the sale of aquavit to hotel, restaurant and catering customers. As a result of the merger, the parties would gain a near-monopoly position in Alko’s aquavit category. The merger would also cause the market for berry liqueurs, in which the FCCA’s investigations indicate that the parties are each other’s closest competitors, to become highly concentrated.
The FCCA did not identify competition concerns in any other markets. In many beverage categories, the merger would result in only a limited increase in market shares, and several competitors would remain in the market.
Divestment of a brand and termination of a distribution agreement as conditions for the approval
Competition problems caused by a merger can often be eliminated by imposing conditions on the merger. The FCCA considers that the commitments proposed by the parties are sufficient to resolve the competition concerns raised by the merger and to ensure that the market structure remains competitive.
To address the competition concerns in the aquavit market, Altia commits to sell the Skåne Akvavit brand in Finland. The effectiveness of the commitment is enhanced by the fact that the merger cannot be implemented until a binding contract has been made with a buyer and the FCCA has approved the buyer.
“An up-front buyer provision may be used to increase the incentives of the parties to close the divestiture. This is the first time in Finland that the approval of a merger is bound by such a condition. In many earlier cases, finding a suitable buyer on the Finnish market has proved to be a challenge,” says Sanna Syrjälä, Director of Merger Control at the FCCA.
On the berry liqueur market, the competition concerns will be addressed by the commitment of Arcus to terminate the distribution agreement for Metsmaasikas strawberry liqueur.
The merger has also been investigated in other Nordic countries
The merger has also been notified to the Swedish and Norwegian competition authorities. The transaction was approved subject to conditions by the Swedish Competition Authority on 15 April 2021. In Norway, the investigation is still on-going.
The FCCA’s decision contains confidential business secrets of the parties. The decision cannot therefore be made public until after the business secrets have been removed.
- FCCA opens in-depth investigation into proposed merger between Altia and Arcus, FCCA press release dated 8 January 2021
- The merger of Altia and Arcus is cleared after commitments, Swedish Competition Authority press release dated 15 April 2021
- Objection against the merger between Altia and Arcus, Norwegian Competition Authority press release dated 11 March 2021
Senior Specialist Lauri Kirkkola, tel. +358 29 505 3073
Head of Research Mikko Heinonen, tel. + 358 29 505 3162
According to the Finnish Competition Act (No 948/2011), a merger must be notified to the FCCA if the combined turnover of the merging firms exceeds 350 million euros and the turnover for each of at least two of the firms exceeds 20 million euros in Finland. The FCCA approves the merger provided that it will not result in the negative effects specified in the Competition Act. The FCCA will intervene in the merger if its investigation concludes that the merger would significantly impede effective competition on the Finnish markets or a substantial part thereof, in particular as a result of the creation or strengthening of a dominant position. If required, the merger investigation is carried out in two phases. The first phase lasts a maximum of 23 working days. If in the first phase it is concluded that the merger may have negative effects on competition, the FCCA makes the decision to investigate the matter further in the second phase of the proceedings during which the merger and its competition effects are comprehensively examined. The second phase lasts a maximum of 69 working days. The Market Court may extend the deadline further by at most 46 working days. At the end of the second phase, the FCCA may approve the merger as such, if it concludes that the merger would not be harmful to competition. The FCCA intervenes in the merger, if it concludes that merger would significantly impede competition in Finland. According to the Competition Act, the main way to intervene in the merger is through commitments offered by the parties involved, such as a commitment to divest a specific business. If the proposed commitments are not sufficient to eliminate the identified competition concerns, the Market Court may, on the basis of a proposal submitted by the FCCA, prohibit the merger in its entirety.