The Finnish Market Court fined Valio EUR 70 million for abuse of dominant position and the Finnish Supreme Administrative Court prohibited the enforcement of the fine 

On 26 June 2014, the Finnish Market Court handed down its ruling (MAO:467-468/14) dismissing an appeal brought by Valio Oy (“Valio”) against the Finnish Competition and Consumer Authority’s (“FCCA”) decision of December 2012 and imposed a EUR 70 million fine on Valio for having abused its dominant position by engaging in predatory pricing in the market for production and wholesale of fresh milk. In its decision of December 2012, the FCCA found that Valio had as of March 2010 reduced its wholesale price of fresh milk below average variable production costs. The below cost pricing still continued when the FCCA handed down its decision in December 2012. The FCCA also found that Valio’s below cost pricing aimed to foreclose its competitors from the Finnish fresh milk market. Therefore, the FCCA found Valio’s conduct to amount to predatory pricing and ordered Valio to cease the abusive conduct and proposed that the Market Court should impose a fine of EUR 70 million on Valio. In its ruling, the Market Court upheld the FCCA’s finding that Valio’s fresh milk prices were below Valio’s average variable production costs for the entire period investigated by the FCCA. Further, the Market Court held that Valio’s price reductions were part of a detailed plan which aimed to force Arla out of the market by the end of 2011 or to significantly weaken Arla’s position in the market. Valio also aimed to increase its market share in the Finnish fresh milk market to 80 %. The Market Court also held that Valio’s plan was to raise prices back to their previous level once it had reached its goal. According to the Market Court, Valio’s behavior constituted a serious breach of the Finnish Competition Act and, therefore, the Market Court imposed the EUR 70 million fine on Valio, as proposed by the FCCA. This is the highest fine for an individual company in the Finnish competition law history. Valio has appealed the Market Court decision to the Supreme Administrative Court, which is the final appellate instance.

On 19 August 2014, the Finnish Supreme Administrative Court prohibited the enforcement (2442/2014) of the EUR 70 million fine imposed on Valio Oy (“Valio”). On 26 June 2014, the Finnish Market Court imposed the fine on Valio for having abused its dominant position by engaging in predatory pricing in the market for production and wholesale of fresh milk. According to the Supreme Administrative Court, the prohibition is in force until the Supreme Administrative Court has handed down its judgment on Valio’s appeal against the Market Court’s decision or until the Supreme Administrative Court orders otherwise.

Previously reported on Roschier EU & Competition Law Reviews on 6 August 2014 and on 20 August 2014.

New EU law on food information to consumers 

The new EU Regulation No 1169/2011 (“Regulation”) known as the food information regulation, taking effect on 13 December 2014, consists of new rules on the provision of food information to consumers, including labeling. The Regulation is basically a merger of two EU directives, namely the directives on labeling and nutritional labeling.

The main changes concern the requirements for clearer information on the most common substances that can cause allergies. Therefore, according to the new Regulation names of allergens must be emphasized so that they are clearly distinguished from the rest of the list of ingredients, inter alia by means of font, style or background color. Information on allergens shall be provided even for non-prepacked foods including those which are sold in restaurants.

The Finnish National Food Agency considers that the new requirements for the labeling of prepacked food are relatively equal to the current national provisions on labeling. Thus, the new Regulation will not cause any significant changes in the labeling of prepacked food in Finland.

The Regulation also includes contact detail requirements, which have so far been interpreted as a requirement to publish the producer’s full address on the product. However, this will not apply to food sold in Sweden, as the Swedish National Food Agency has concluded that the current labeling works well for Swedish consumers, since most people communicate via phone or internet, not by writing letters.

The Regulation also includes provisions on nutrition labeling, which will be in force as of 13 December 2016.

Moreover, the Ministry of Agriculture and Forestry of Finland issued a new decree on the provision of food information to consumers regarding non-prepacked food (834/2014). Due to the new decree, consumers will get more information, e.g. on substances causing allergies or intolerance, storage conditions as well as instructions of use. Information on non-prepacked food must be given to consumers to the same extent as the information on prepacked food. The decree will come into effect in April 2015. 

EU-Russia Sanctions Review

Russia is Finland’s main export partner in the food industry. The Council of the European Union (EU) has as of March 2014, adopted restrictive measures in relation to Russia’s actions destabilizing the situation in Ukraine. In response, Russia has imposed a one-year ban on EU imports of certain food and farm products, affecting also food imports from Finland to Russia.

Most recently, Russia has notified of temporary restrictions on imports of meat cuttings and certain processed products thereof. According to Federal Service for Veterinary and Phytosanitary Surveillance Rosselkhoznadzor, the ban, which has been in force since 21 October 2014, concerns specified meat products from the EU countries. On the other hand, Russia has already relaxed some of its food import restrictions, including Atlantic salmon (salmo salar), lactose free milk and lactose free dairy products. Yet these imports need to meet the requirements for lactose free dairy products set by the Russian laws and regulations.

EU issues sanctions against third countries, individuals or entities in order to achieve its policy objectives set in the Common Foreign and Security Policy (CFSP). Article 215 of the Treaty on the Functioning of the European Union (TFEU) provides a legal basis for the interruption or reduction, in part or completely, of the Union’s economic and financial relations with one or more third countries, where such restrictive measures are necessary.

Current EU sanctions against Russia concern capital market access, defense equipment, dual-use goods and sensitive technology. Also, EU has imposed targeted sanctions including travel bans and asset freezes on a list of individuals and entities.

According to Ministry for Foreign Affairs of Finland, the direct effect of EU’s restrictive measures on Finnish economy remains small, and the restrictions do not have significant impact on exports from Finland to Russia. However, the exports to Russia may be affected by the general decline in Russian economy and the indirect effect of capital markets.

Evira guides how to use voluntary “gmo free” labeling on food products

Finnish Food Safety Authority Evira has released guidelines for the use of voluntary “gmo free” marketing claims to better meet the information needs and expectations of consumers regarding genetically modified (GM) food and feed. The guidelines for voluntary “gmo free” marketing claims are to supplement the mandatory GM labeling requirements of the European Union (EU).

The principle is to ensure that consumers are able to make an informed choice. Pursuant to Regulation (EC) No 1829/2003 only GM ingredients authorized in the EU may be used in the manufacture of food or feed, and the usage of GM shall be indicated in the labeling of the product. As a result, the consumer can be certain that if there is no GM indication in the labeling, the food product is not genetically modified. 

Currently, EU has not specified common criteria for voluntary "gmo free" or equivalent marketing claims. However, in order to instruct Finnish operators, Evira offers guidelines for the use of voluntary "gmo free" marketing claim on food and feed. The guidelines differ depending on the production mode of the GM foods. Accordingly, Evira divides GM foods into three categories: 1) food and feed products containing GM ingredients authorized in the EU; 2) food and feed products containing ingredients that currently have no authorized GM species in the EU; and 3) foodstuffs of animal origin.

Regarding the first category products (e.g. soy, maze or rapeseed), the level of the GM ingredient is zero per cent, or if adventitious or technically unavoidable, no more than 0.9% of GM ingredients. The guidelines for the second category of foods (e.g. rice, oats, papaya, carrot or blueberry) prohibit the use of the “gmo free” marketing claims. Lastly, the voluntary “gmo free" marketing claims may only be used on foodstuffs of animal origin, when the animal has been fed with regular feed throughout its life cycle. Such feed may contain no more than 0.9% of GM ingredients.

In Brief

The Finnish Market Court on Slavish Imitation and Misappropriation of Goodwill 

The Market Court has on 11 June 2014 decided a trademark case (MAO 398/14) on alleged slavish imitation, i.e. misappropriation of goodwill. In the case Valio Oyj brought before the market court a claim that Osuuskunta Satamaito would have slavishly imitated their trademark Valio PLUS, meant to distinguish special kinds of refined milk products, by using their own similar expressions PLUSSA or PLUSSA MAITO.

Taking into account inter alia the market researches and follow-up reports, the Market Court found that simply the word PLUS could not be considered as having gained such goodwill and association with Valio that it would require protection in this respect. Also based on the fact that Satamaito included its own business name in its products, the Market Court found that there was no such association between the products that it could be considered slavish imitation. Valio has appealed the decision.

Tax on Confectionery Not to Be Increased in 2015; Sugar Tax Not to be Implemented Before 2017 

The government decided on 30 September 2014, that the planned increase on excise tax on confectionery, ice cream and soft drinks is cancelled. The commission is currently investigating the extent and exceptions to the current tax from the viewpoint of EU state subsidy regulations. The current tax is applied only to selected products, which could be causing market disturbances.

Additionally, the Sugar Tax Working Party announced that there is no possibility to implement the so called sugar tax, i.e. tax on the sugar contents of a product, before the obligation to report the sugar contents of a product is implemented in 2017.

A Grocery Ombudsman has been introduced by the Swedish National Food Agency 

The Swedish National Food Agency is launching a new service called the Grocery Ombudsman in order to combat crime, such as fraud within the food industry. The Grocery Ombudsman has a whistleblower function and employees in the food industry may turn to the Grocery Ombudsman if they know or suspect that something is not done correctly within the food industry. A notification can be filed through the National Food Agency's website, email or phone and the notifier may choose to remain anonymous. The service is introduced in order to eliminate those who deceive consumers and with such action cause lawful entrepreneurs to go bankrupt.