Review of mergers

Thresholds and triggers

What are the relevant thresholds for the review of mergers in the pharmaceutical sector?

A merger must be notified to the Finnish Competition and Consumer Authority (FCCA) if the combined worldwide turnover of the parties to the merger exceeds €350 million and the turnover of at least two of the parties resulting from Finland exceeds €20 million for both.

There are no sector-specific thresholds for the review of mergers. Thus, mergers in the pharmaceutical sector are subject to review by the FCCA when the above-mentioned thresholds are met.

Is the acquisition of one or more patents or licences subject to merger notification? If so, when would that be the case?

The FCCA has neither considered an acquisition comprising solely a patent or a patent licence under merger control rules to date nor provided detailed guidance on this issue in its merger control guidelines. However, reference can be made to the European Commission’s consolidated jurisdictional notice, which considers that an acquisition confined solely to patents can be considered a notifiable transaction if the assets transferred constitute a business with a market turnover. The transfer of a patent licence without additional assets, however, can only fulfil this criterion if the licence is exclusive at least in a certain territory and the transfer of the licence will transfer the turnover-generating activity.

Market definition

How are the product and geographic markets typically defined in the pharmaceutical sector?

In the cases notified to the FCCA, the product and geographic markets were defined by the notifying party on the basis of the definitions that follow the European Commission’s practice. In the Idec Pharmaceuticals Corporation/Biogen Inc decision, the notifying party referred to the Commission’s decisions where it applied the anatomical therapeutic chemical (ATC) classification as a basis for product market definition. The ATC classification consists of four different levels, and in this case, the analysis was conducted on the third level, which allows medicines to be grouped according to their therapeutic indications. As regards the geographic dimension of the market, the notifying party submitted that it was national because of the differences in the legislation between the countries at the time of notification (ie, 2003).

In the Kesko Oyj/Oriola Oyj/JV decision of June 2017, some of the relevant product markets concerned the pharmaceutical sector, namely the retail sale of medicines, the wholesale of medicines and the procurement of medicines for wholesale. The notifying parties submitted that the geographic dimension of the markets was national (or even local as regards the retail sale of medicines).

In the Orifarm Generics Holding A/S/Takeda Pharmaceuticals International AG decision of October 2020, the notifying party submitted that the relevant market should be assessed under the ATC classification and the geographic dimension of the separate product markets was suggested to be national. However, the market definition was left open because the acquisition was not considered to substantially impede competition in the Finnish market.

Sector-specific considerations

Are the sector-specific features of the pharmaceutical industry taken into account when mergers between two pharmaceutical companies are being reviewed?

In recent years, no pharmaceutical industry mergers or acquisitions have been notified to the FCCA. Since the introduction of merger control in Finland in 1998, the following cases concerning the pharmaceutical industry have been notified to the FCCA:

  • Orifarm Generics Holding A/S/Takeda Pharmaceuticals International AG, Decision No. KKV/1101/14.00.10/2020, 21 October 2020;
  • Kesko Oyj/Oriola Oyj/JV, Decision No. KKV/491/14.00.10/2017, 26 June 2017;
  • Idec Pharmaceuticals Corporation/Biogen Inc, Decision No. 555/81/2003, 4 August 2003;
  • Nycomed Pharma AS/Oy Leiras Finland Ab, Decision No. 1106/81/2002, 23 December 2002;
  • Orion-yhtymä Oyj/Kronans Droghandel Ab, Decision No. 7/81/2002, 22 May 2002;
  • Leiras Oy – Produits Chimiques Auxiliaires de Synthèse SA/Leiras Fine Chemicals Oy, Decision No. 650/81/2001, 1 August 2001; and
  • Nordic Capital III Limited/Nycomed Amersham Norge AS, Decision No. 472/81/99, 24 June 1999.


The merger control decisions adopted by the FCCA in these cases are rather straightforward and do not provide extensive discussion on the FCCA’s analyses in the matters. It is, however, noteworthy that the FCCA has drawn attention to certain sector-specific issues, such as the potential impact of the Finnish pharmaceutical single-channel wholesale distribution system in the competitive assessment of a merger.

Addressing competition concerns

Can merging parties put forward arguments based on the strengthening of the local or regional research and development activities or efficiency-based arguments to address antitrust concerns?

Merging parties may put forward efficiency-based arguments in the notification to the FCCA. The merging parties must provide all the relevant information necessary to substantiate their efficiency benefits and to demonstrate that they cannot be achieved without the merger.

In general, the FCCA will take into account efficiencies resulting from the merger, provided that these efficiencies materialise on the Finnish market and are passed on to Finnish consumers and customers. The weight given to efficiency claims depends on how substantial the efficiencies are, how likely they are to be achieved, and whether they promote competition for the benefit of customers and consumers. Efficiencies generated by a merger may be production-related efficiencies, such as savings in production, supply or distribution costs or dynamic efficiencies, such as improved products.

In the assessment of the efficiency-based arguments, the strengthening of local or regional R&D activities does not play any particular role. The promotion of technical or economic progress is taken into account irrespective of the territory where it is generated (ie, the strengthening of local or regional R&D does not have any particular preference over a similar increase in R&D efforts on a national basis or outside Finland).

Horizontal mergers

Under which circumstances will a horizontal merger of companies currently active in the same product and geographical markets be considered problematic?

The FCCA may propose to the Market Court the prohibition of a transaction that may significantly impede effective competition in Finland or a substantial part of it, in particular if the transaction creates or reinforces a dominant position. The FCCA, therefore, assesses notified mergers and acquisitions under a similar framework as the European Commission. If the parties are currently active in the same product and geographical market, the FCCA will investigate whether the transaction may lead to the combined entity (or one or more competitors) having the ability and incentive to raise prices (eg, directly or by foreclosing competitors from the market).

In past years, the FCCA has proposed to the Market Court that two transactions be prohibited. In February 2020, the Market Court prohibited a merger for the first time and blocked a merger between two competing companies that are broadline distributors offering a wide variety of products to food service customers (Kesko Oyj/Heinon Tukku Oy). Later in 2020, the FCCA submitted a merger prohibition proposal regarding the merger between two healthcare service providers (Mehiläinen Yhtiöt Oy and Pihlajalinna Oyj) that provide healthcare services acquired by individuals, insurance companies and employers. However, in December 2020, the Market Court gave a decision to discontinue the court proceedings as the parties announced that Mehiläinen Yhtiöt Oy will not execute the tender offer made for Pihlajalinna Oyj’s shares. 

Product overlap

When is an overlap with respect to products that are being developed likely to be problematic? How is potential competition assessed?

A merger of pharmaceutical companies that both have similar products under a late stage of development could potentially lead to competition concerns if the companies could successfully bring the products to market if the transaction does not take place. The FCCA could argue that absent the transaction, the two companies would launch products in competition with each other, whereas the combined entity would not create such competition on the market. For example, in Idec Pharmaceuticals Corporation/Biogen Inc, the FCCA drew attention to the fact that the products under development (in Phases II and III) by the target would not be competing products to those supplied by the acquirer.


Which remedies will typically be required to resolve any issues that have been identified?

The FCCA (and ultimately the courts) may accept, as condition for clearance to a notified merger or acquisition, both structural and behavioural remedies. Generally, divestiture remedies may be more effective in resolving competition concerns. Remedies could also include assigning or licensing acquired patents to third parties.

Law stated date

Correct on

Give the date on which the above content is accurate.

8 May 2020.