Introduction
Prioritisation of cases under existing competition law
Rules on prioritisation of cases to be expanded
Effects on related damages claims
Comment
Introduction
The Finnish Competition Authority (FCA) and the administrative courts have delivered no landmark decisions during the past six months. One reason for this appears to be that the FCA's resources are tied up in handling a large number of relatively small cases which, in the final analysis, will not warrant further action from the FCA. The government bill for a new Competition Act, which is expected to enter into force in the next few months, aims to increase the prioritisation of cases investigated by the FCA. As a result, it would appear that private litigation is likely to play a bigger role in competition law disputes in the future, although it is uncertain whether the district courts are ready to handle complicated competition cases without the active involvement of the FCA.
Prioritisation of cases under existing competition law
The FCA has a general administrative duty to initiate necessary proceedings if it becomes aware of a competition restriction affecting the Finnish market. According to the Act on Competition Restrictions, the FCA may decide not to take action if, regardless of the competition restriction, competition in the relevant market can be deemed to be effective as a whole.
It is no secret that the FCA considers that the existing rules do not give it sufficient room to decide not to conduct a full investigation following a complaint. When the FCA decides not to investigate a complaint, these decisions tend to be appealed, and preparing sufficiently reasoned decisions and defending them in appeal procedures is as time consuming as conducting a full investigation. The following example reflects this situation.
On October 25 2010 the FCA discontinued its long-running investigation of nearly 50 local telecommunications companies and Suomen Numeropalvelu Ltd (SNOY), a national provider of wholesale telephone directory information. The original complaint was made in January 2000. In June 2003 the FCA made a decision to discontinue its investigation, which the complainant appealed to the Market Court. In January 2006 the Market Court sent the case back to the FCA based on shortcomings in the investigation. The FCA appealed to the Supreme Administrative Court, which declined to handle the case in August 2007. The 2010 decision to discontinue the investigation is thus the second decision to be made regarding the same complaint.
In the re-opened investigation, the FCA concluded that competition on the market concerned was effective as a whole, and that the product offered by the complainant had only minor significance on the market. The investigation was therefore closed. The complainant had claimed, for instance, that SNOY's pricing models prevented market entry. These allegations were weakened by the fact that another company entered the same market by purchasing telephone directory information from SNOY. Some of the alleged infringements also fell under the statute of limitations due to the unusually long duration of the proceedings. However, the 2010 decision has also been appealed and is currently pending in the Market Court.
Rules on prioritisation of cases to be expanded
The government bill recommends that a new section on prioritisation be added to the new Competition Act. Provided that the bill is passed, in the future the FCA will be required to prioritise its investigations and will not initiate a full investigation of a complaint if:
- it is unlikely that the conduct infringes the Competition Act or Articles 101 or 102 of the Treaty on the Functioning of the European Union;
- competition on the relevant market is effective as a whole, despite the alleged infringement; or
- the complaint is manifestly ungrounded.
Decisions to discontinue an investigation may be appealed. The FCA will also be able to reopen investigations if new evidence is presented.
Although the FCA is not bound by any time limits, it is important for the parties to know their position in respect to an investigation within a reasonable timeframe. The government bill therefore stresses that the FCA must make a decision not to investigate without delay. This will typically happen fairly soon after a complaint has been made. An investigation may also be abandoned at a later stage due to a change in circumstances which renders it unnecessary to take further action.
Effects on related damages claims
The 2010 FCA decision on the telecommunications sector had particular significance for the complainant, since it also has a damages action pending against the respondents in the Helsinki District Court based on the same grounds as its complaint to the FCA. Due to the second round of appeal, the Helsinki District Court is likely to continue to wait for a legally valid competition law decision.
In its decision to discontinue the investigation, in line with the government bill and Market Court practice, the FCA expressly mentioned that the reasoning presented by the FCA in a decision not to take action is not binding in other proceedings – that is, the reasoning does not constitute a binding precedent; nor does it have binding evidentiary value. The FCA further noted, somewhat ironically in this particular case, that a district court can always request the FCA to provide a statement on the competition law aspects of a damages case.
Comment
The increased prioritisation of cases should lead to shorter and more efficient investigations. This serves the interests of all parties concerned, including those considering subsequent private litigation.
However, standalone actions for competition law-related damages have historically not fared well in the Finnish district courts. There has been only one Finnish damages case in which the claimant has managed to show an infringement of competition law without a previous infringement decision by the FCA. An FCA decision not to continue an investigation may thus, in practice, carry considerable weight in damages actions.
If the number of cases in which the FCA decides not to open full investigation increases due to new rules on prioritisation,further debate is likely to ensue regarding the roles of public and private enforcement in dealing with competition law claims and the level of involvement of the competition authorities in standalone damages actions.
For further information on this topic please contact Hanna Laurila or Toni Kalliokoski at Dittmar & Indrenius by telephone (+358 9 68 1700), fax (+358 9 65 2406) or email ([email protected] or [email protected]).