A penalty payment shall be imposed on an undertaking or association of undertakings that infringe the provisions of Articles 5 or 7, or Article 101 or 102 of the Treaty on the Functioning of the European Union, unless the conduct shall be deemed to be minor or the imposition of the penalty payment otherwise unjustified in respect to safeguarding competition. (Finnish Competition Act, Section 12, para 1)
Separate companies belonging to the same group of companies form a single financial unit. The penalty payment may be imposed on the parent company of the company committing the infringement, for example if the de facto decision-making power in the company is wielded by the parent company. If the parent company of the infringing party is considered to be liable for the infringement, the penalty is primarily proposed and imposed on both the parent and the subsidiary so that they are jointly liable (Government Proposal to the Parliament 88/2010, p. 57).
The fact that a penalty is imposed jointly on an association of undertakings does not preclude a penalty from also being imposed on individual undertakings that have been involved in establishing or maintaining the infringement (Government Proposal to the Parliament 88/2010, p. 57).
“The penalty payment may also be imposed on an undertaking or an association of undertakings to whom the business activity involved in the infringement has been transferred as a result of a concentration or other corporate transaction.” (Competition Act, Section 12, para 2) Undertakings and associations of undertakings that have taken part in an infringement cannot free themselves from liability by changing their corporate form or name. Nor is the liability removed if ownership of the infringing party is transferred through a business acquisition or merger. The party liable for the infringement is determined on a case-by-case basis (Government Proposal to the Parliament 88/2010, p. 58).
“The penalty payment shall be imposed by the Market Court upon the proposal of the Finnish Competition Authority. The payment shall be ordered to be paid to the State.” (Finnish Competition Act, Section 12, para 3)
The main principle behind the penalty payment is that it must have a sufficient deterrent effect, both specific and general. “The amount of the penalty payment shall be based on an overall assessment, and in determining it, attention shall be paid to the nature and extent, the degree of gravity, and the duration of the infringement.” (Finnish Competition Act, Section 13) “The penalty payment shall not exceed 10 per cent of the turnover of an undertaking or association of undertakings concerned during the year in which the undertaking or association of undertakings were last involved in the infringement.” (Finnish Competition Act, Section 13)
The factors taken into account by the FCCA in setting the amount of the penalty payment are described in guidelines on penalty payments published by the FCCA in 2011.
Reductions of penalty payments in non-cartel cases
The penalty payment imposed on undertakings may be reduced if an undertaking significantly assists the Competition and Consumer Authority in investigating the infringement in question. In other words, infringing parties can help to reduce the fine for which they are liable by cooperating with the FCCA.
According to Section 18 of the Finnish Competition Act, “the Finnish Competition Authority may propose that a lower penalty payment be imposed on an undertaking or association of undertakings than would otherwise be the case, or refrain from making a penalty payment proposal, if the undertaking or association of undertakings has significantly assisted the Finnish Competition Authority in the investigation of a restraint on competition.” In such cases, “the Market Court may impose a lower penalty payment than would otherwise be the case, or not impose a penalty payment.”
Section 18 of the Competition Act applies to cases other than cartels. Immunity from and reductions to penalty payments applicable to cartel cases are discussed separately, below.
Immunity and penalty reductions in cartel cases
The Finnish Competition Act allows for undertakings participating in secret cartels to obtain immunity from or reductions of penalty payments imposed due to anti-competitive conduct. For this to happen, the undertaking must leave the cartel and fulfil the other criteria set for immunity or reductions in the Act.
See Be the first one to leave the cartel and receive immunity from fines
Examples of penalties imposed
A nationwide asphalt cartel was found by the Supreme Administrative Court to have operated in Finland between 1994 and 2002, involving all the major operators in the sector. The companies in question were found guilty of serious, long-term market-sharing and collusive tendering practices that were against antitrust legislation. The Supreme Administrative Court ordered Lemminkäinen Oyj, VLT Trading Oy (formerly Valtatie Oy), NCC Roads Oy, Skanska Asfaltti Oy, SA-Capital Oy, Rudus Asfaltti Oy and Super Asfaltti Oy to pay a total of EUR 82.55 million in fines. The court evaluated the nature, scope and duration of the infringement individually for each company. In determining the sum of the fine to be paid, the court paid attention to the following factors, among others:
1) Whether the company joined the cartel voluntarily
2) How active the company was within the cartel
3) Whether the company pressured others to join the cartel and tried to prevent new companies from entering the market
4) Whether the company had a dominating position in the market and, therefore, a realistic opportunity of influencing the functionality of the asphalt market and the positions of other companies in the sector
5) The revenue obtained by the company from its asphalt business
6)The geographical extent and temporal duration of the company’s participation in the cartel
The court also took into account evidence presented on the damages caused by the cartel, although stating that investigating the extent of the damages caused and, on the other hand, the benefit obtained from the cartel by the participants was not a prerequisite for imposing the fine. These factors could affect the amount of the penalty, however.
The Supreme Administrative Court also stated that:
1) because this was the most serious antitrust case handled in Finland to date (in terms of nature, scope and duration), prior penalty payment decisions could not be used as a justifiable precedent for the penalty to be set in the case at hand.
2) the companies in question could not obtain a release from their liability through various voluntary acquisition and merger actions.
The Market Court found the Metsäliitto Cooperative, Stora Enso Oyj and UPM-Kymmene Plc guilty of nationwide unlawful price cooperation and information-sharing related to raw wood acquisition between 1997 and 2004. The case constituted price-fixing on the buyer’s side. In line with a penalty proposal from the FCCA, the Market Court ordered Stora Enso Oyj to pay a fine of EUR 30 million and Metsäliitto to pay EUR 21 million. UPM-Kymmene Plc was the first to report the cartel to the authority and was, therefore, exempted from the penalty, having fulfilled all the criteria for immunity. The Metsäliitto Cooperative assisted the FCCA in its investigation and thereby obtained a 30 per cent reduction in its fine.
In setting the amount of the penalty payment, the Market court paid attention to the following factors, among others:
1) The companies’ representatives were aware of the antitrust regulations applicable to business operations between 1997 and 2004
2)There were no such ambiguities in the interpretation of antitrust legislation that the representatives of the company could be exempted from knowing that their actions were against the law
3) The companies were fined for similar activities in 2001, but continued operating unlawfully
4) The infringement lasted for over seven years and had a nationwide scope
5)The companies in question were global operators with large turnovers and a dominant position on the Finnish raw wood purchasing market
In its ruling concerning the abuse of market dominance by Elisa Communications Oyj and its decision on penalty payments, the Finnish Competition Board considered as a mitigating factor the fact that the subscriber line market had not in practice existed until the requirement to rent them to competitors was set by law, so no prior pricing examples existed. On the other hand, the principles of fair and cost-correlated pricing were recorded in Finnish law in 1992, and Elisa’s conduct indicated a wilful attempt to exclude competitors. An aggravating factor was that Elisa had given itself discounts for the same commodity that it had overpriced for competitors, thus preventing new competitors from entering the market. Another aggravating factor was the fact that the competition restraint applied to the network opening obligation that formed the very cornerstone of telecommunication regulations as a whole. Additionally, Elisa had continued its unlawful conduct even after written notifications from the Competition Board. In its decision, the Competition Board stated that an assessment of the benefit obtained from the restraint of competition was a crucial aspect of the consideration of penalty payments. Elisa’s conduct had significantly contributed to preventing local competition from appearing, thereby helping the company to maintain its large market share in its area of operation. Elisa was considered to have obtained a significant financial benefit from this conduct. With the company’s annual turnover reaching several billion Finnish marks, the principle of forming a sufficiently specific and general deterrent required that the penalty payment exceed the general regulation. The Competition Board imposed a fine of FIM 25 million on Elisa.
Finnish Competition Board decision, 18/5/2001, (150/690/1999)