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Trends and climate

Trends

Have there been any recent changes to the cartel regime? If so, have they had a significant impact on enforcement activity?

Apart from the implementation of the EU directive concerning actions for damages under national law for infringements of competition law, there have been no notable changes to the cartel regime in the past few years.

Are there any proposals to reform or amend the existing cartel regime?

In March 2017 a working group set up by the Ministry of Economic Affairs and Employment concluded that the Competition Act should be amended with regard to various factors such as inspections, penalties and information exchange between the authorities. The proposed changes would increase authorities’ powers and introduce new ways of dealing with problematic conduct (including heftier fines on trade associations found guilty of competition restrictions, direct penalties for failure to cooperate with the authorities and structural remedies in situations where other remedies are insufficient).

However, at the time of writing, no official government proposal has been published, and it remains unclear how recent EU-level proposals will affect Finnish proposals.

Have there been any recent key cases?

Yes. Major recent cases include:

  • a 2016 Market Court ruling concerning the conduct of the Finnish Bakery Federation (the key issue was what constituted a price recommendation by a trade association); and
  • a 2016 Market Court ruling concerning an alleged cartel between power line construction companies (the key issue was what constituted a single and continuous infringement).

Both rulings have been appealed.

In addition, at the time of writing, the Market Court is considering a case involving an alleged bus cartel and questions about the distinction between acceptable political advocacy and prohibited cooperation.

Legal framework

Legislation

Which legislation applies to cartels and what are the relevant substantive provisions?

The Competition Act (12.8.2011/948) prescribes that:

All agreements between business undertakings, decisions by associations of business undertakings and concerted practices by business undertakings which have as their object the significant prevention, restriction or distortion of competition or which result in the prevention, restriction or distortion of competition shall be prohibited.

In particular, agreements, decisions or practices which:

1. directly or indirectly fix purchase or selling prices or any other trading conditions;

2. limit or control production, markets, technical development, or investment;

3. share markets or sources of supply;

4. apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or

5. make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject matter of such contracts, shall be prohibited.

Institutions

Which bodies are the relevant regulatory and prosecutory authorities and what are their specific roles?

The Finnish Competition and Consumer Authority (FCCA) is the relevant authority. The duties of the FCCA are mostly investigative. It has the power to order an undertaking to terminate its conduct, but it cannot impose fines on undertakings. The Market Court has the power to impose penalties based on an FCCA proposal, but not of its own volition. The FCCA’s proposals are not binding on the Market Court.

Regional state administrative agencies investigate competition restraints as authorities under the FCCA. They have no independent power to make decisions in competition matters.

Are there any sectoral regulators with concurrent powers?

There are no sectoral regulators in relation to cartel enforcement other than the FCCA. 

Application

Does the legislation apply to both formal agreements and informal practices?

Yes. The legislation prohibiting cartels covers agreements and concerted practices between undertakings, as well as decisions by associations of undertakings. 

Does the legislation apply to individuals, companies or both?

The legislation applies to undertakings, which may be companies or individuals that engage in economic activities by themselves. Finnish competition law contains no provisions imposing penalties on individuals (eg, employees or company executives engaging in cartel conduct). However, certain provisions apply to individuals as representatives of companies, such as a requirement to appear before the FCCA if summoned. 

Does the legislation subject companies to civil liability, criminal liability or both?

The Competition Act contains no criminal penalties. There has been theoretical discussion that certain kinds of competition restriction (eg, purchase cartels) could be considered fraud and, as a result, would be subject to criminalisation under the Penal Code (39/1889). However, to date there have been no cases where a cartel would have resulted in fraud charges.

Does the legislation subject individuals to civil liability, criminal liability or both?

Not applicable (see above).

Where cartel conduct is punishable by both civil and criminal penalties, can the enforcement authority pursue both types of penalty? How does the authority decide which penalties to seek?

Not applicable (see above).

Are there any sector-specific offences or exemptions?

There are no sector-specific offences. However, agreements or arrangements which concern the labour market and certain arrangements relating to agriculture are exempt from Finnish competition rules.

To what extent, if any, does the legislation apply to extraterritorial conduct?

If a competition restriction is agreed outside Finland, the Finnish rules can still be applied if the restriction targets Finnish clientele or has other effects on the Finnish market.

Investigations

Initiating an investigation

Who can initiate an investigation of potential cartel conduct?

Restrictions of competition are investigated both on the initiative of the Finnish Competition and Consumer Authority (FCCA) and following a complaint. A competitor or other party which has grounds to suspect that competition law has been breached can file a complaint with the FCCA. In addition, any company or individual can anonymously tip off the FCCA as to a suspicious feature of the market. The FCCA will initiate formal proceedings if this is necessary to safeguard effective competition in the market. The FCCA has the right to prioritise its tasks but, as its focus is on the most harmful market behaviour, cartel investigations take priority.

If an investigation is initiated by complainants or third parties, what rights (if any) do they have?

Complainants may generally express their views on the draft decision on how to resolve the matter. They may also have a right to appeal a decision if the matter affects them in a sufficiently direct way.

What obligations does a company have on learning that an investigation has commenced?

If the FCCA so requests, an undertaking or association of undertakings subject to investigation is obliged to provide the authority with all of the information and documents needed for the investigation of a suspected cartel. The FCCA may request the information it deems necessary from the parties. The obligation to provide information applies to all companies that are party to an investigation in any capacity.

A company subject to an investigation also has a general obligation to cooperate with the FCCA, and must provide the necessary information truthfully and precisely.

What obligations does a company have if it believes that an investigation is likely?

There are no particular obligations in such situations. 

What are the potential consequences of failing to act or delaying action?

There are no formal penalties for such behaviour under competition law.

However, the FCCA may impose a periodic penalty payment to enforce an order or obligation under the act. The periodic penalty payment cannot be imposed on an individual to fulfil the obligation to attend the FCCA’s hearing during the investigation.

In addition, providing an authority with false evidence may lead to a fine or to imprisonment for at most six months. This penalty applies to individuals.

Formal stages of investigation

What are the formal stages of and approximate timeframe for investigations?

There is no formal timeframe or specific stages to be followed during the investigation, although the FCCA has a stated goal of closing the investigation of certain low-importance matters within six months of initiation of the case. The FCCA must inform the investigated undertaking of its position in the investigation and the suspected offences as soon as possible without jeopardising the investigation. After the investigation phase concludes, the FCCA will provide the parties with a draft decision on how it intends to act (eg, to propose an infringement fine to the Market Court or to close the investigation with no further action to be taken). By the draft decision, the FCCA discloses its views on the conduct being assessed and narrows down, for example, the scope and length of the alleged infringement. The companies subject to the investigation have the right to express their opinions on the FCCA’s views. After this, the FCCA generally finalises the investigation and issues its decision. Investigations typically take a relatively long time, even several years.

Investigative powers

What investigative powers do the authorities have?

In addition to making requests of undertakings, the FCCA has the right to invite a representative of an undertaking or an association of undertakings to appear before it if this is necessary to gather the information needed when investigating a suspected cartel.

The FCCA and the regional state administrative agencies are entitled to conduct dawn raids (see below). 

What is the geographic reach of public enforcement actions?

The FCCA investigates competition restrictions with an effect in Finland. However, the FCCA may request executive assistance from the competition authorities of other EU member states in investigations into undertakings operating in those countries if they are suspected of restrictive practices targeting the Finnish market or Finnish customers.

When is court approval required to invoke these powers?

The FCCA needs authorisation from the Market Court to conduct a dawn raid anywhere other than in a company’s business premises. Examples of such inspection targets include the homes or summer houses of company executives or employees.

Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?

Yes. The authorities can examine various types of document and data both on company premises and in other locations such as private homes. In the latter case, court authorisation is needed. The authorities are also entitled to seal premises or documents and to question the executives and employees of the inspected undertaking.

Inspections are carried out by officials of the FCCA and the regional state administrative agencies. The inspections may also be carried out by the European Commission.

An undertaking has a right to have its external legal adviser present during the investigation, but the commencement of the inspection is not conditional on the presence of an adviser. In general, the inspectors are ready to wait a short time for the adviser to arrive before starting the inspection.

What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?

The company subject to inspection has a general duty to cooperate and may not resist or hinder the inspectors’ work. The duty to cooperate covers, for example, assisting inspectors in locating requested documents and giving honest answers to the inspectors’ questions. However, there is no obligation to provide material without it being requested or to answer questions that would amount to admitting infringement. There are no immediate penalties for failing to cooperate, but it may have an impact on how the matter is processed later. An attempt to actively hinder an inspection could result in criminal charges for the individual concerned.

Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?

Legal professional privilege is applied only to correspondence between an external legal adviser and his or her client. The advice of in-house counsel is not covered by legal privilege. 

Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?

When the FCCA questions an undertaking’s representatives during the inspection or in hearings, the representatives do not have to answer questions that would amount to admitting the undertaking’s participation in a cartel. Legal advisers are entitled to be present when representatives are questioned.

When conducting an inspection in private homes and summer houses, the authorities may not seal the premises, devices or documents, nor may they question individuals on the facts of a suspected infringement.

What is the process for objecting to an authority’s exercise of its claimed powers?

The Competition Act includes no provisions on objections. In practice, an undertaking can present claims regarding authorities’ conduct in the course of the main proceedings in the Market Court. If a case does not go to the Market Court, an undertaking cannot object to authorities’ conduct except through extraordinary appeals.

Publicity and confidentiality

What information about investigations will be made publicly available and at which stage(s) of the process?

The FCCA must inform the investigated undertaking of its position in the investigation and the suspected offences as soon as possible without jeopardising the investigation. In addition, the undertaking under investigation has the right to receive information on the documents concerning the investigation and the phase of the proceedings insofar as it cannot harm investigations in the matter. In practice, the FCCA typically refuses to disclose most case documents at least until the draft decision is sent to the parties on the grounds that disclosure would, by default, jeopardise the investigation.

The FCCA does not usually reveal information as to the identity of a complainant to the parties subject to investigation. It also does not typically disclose the identities of the undertakings under investigation unless they do so first.

Is any information automatically confidential and is confidentiality available on request?

The parties can identify, for example, their business secrets and request that such information not be disclosed to third parties or the other parties in the case. However, the FCCA makes the ultimate choice as to whether to treat this information as confidential. Decisions on confidentiality are most often made when a party requests documents from the FCCA. The FCCA’s decisions may be appealed.

Leniency documents (especially the corporate statement) are always automatically confidential without a separate request.

International cooperation

Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?

Yes. The FCCA acts in close cooperation with the European Commission and the other Nordic competition authorities, and within the European Competition Network.

Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?

The FCCA does not appear to request waivers.

Decisions

How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?

A cartel investigation is resolved through a decision by the FCCA. The FCCA may propose an infringement fine to the Market Court or order particular conduct to cease. It may also terminate the investigation unconditionally or conditionally based on commitments given by the parties under investigation.

Settlements, plea bargains or other negotiated solutions are not possible under existing law or propose legislative changes (with the exception of full and partial leniency).

What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?

Not applicable (see above).

If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?

If, at the end of an investigation, the FCCA finds that a cartel existed, it may propose an infringement fine to the Market Court or order a particular conduct to cease. A draft of such a proposal or decision (essentially corresponding to a statement of objections) is sent in advance for comments to the subject of the proposal or decision. The Market Court and, on appeal, the Supreme Administrative Court will make the final decision on imposing infringement fines.

Which party must prove its case? What is the relevant standard of proof?

The FCCA must prove that a restriction of competition has occurred. There are no specific provisions on the standard of proof.

Is there a hearing? If so, what is the process for submitting evidence and testimony?

In cartel matters the Market Court typically arranges an oral hearing with opening and closing statements. Written evidence can be introduced and witnesses can be named up to and during the hearing. Parties (including the FCCA) will present the evidence and hear the witnesses in the hearing. Naming evidence and witnesses is typically done by submitting a written document to the court.

What are the accused’s procedural rights?

The accused party has various procedural rights, including:

  • the right to receive information on its position in the investigation and what it is suspected of as soon as possible;
  • the right to receive, on request, information on the documents concerning the investigation and the phase of the proceedings insofar as this cannot harm the investigation and is not prohibited by rules concerning general access to documents;
  • the right to legal professional privilege and to withhold an admission of having breached competition law; and
  • the right to be heard within a reasonable time limit on a proposed infringement fine or a decision establishing a violation of competition law.

Appeal process

What is the appeal process?

A Market Court ruling resolving an infringement fine proposal (ie, a ruling imposing a fine or declining to do so) can be appealed to the Supreme Administrative Court by a party subject to the proposed fine, the FCCA or a third party if the decision is considered to affect it in a sufficiently direct and obvious manner.

In addition, an FCCA decision ordering that particular conduct stop can be appealed to the Market Court by a party subject to the decision. This decision, as well as a decision terminating an investigation, can also be appealed to the Market Court by a third party if the decision is considered to affect it in a sufficiently direct and obvious manner. The parties and the FCCA may appeal a Market Court’s ruling to the Supreme Administrative Court.

To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?

The Market Court may fully review all aspects of the FCCA’s assessments and conclusions in all cases. Similarly, the Supreme Administrative Court may fully review all aspects of the Market Court and the FCCA’s assessments and conclusions.

Penalties

Penalties for companies

What are the potential penalties for companies involved in a cartel?

The only direct penalty available is an infringement fine, which is imposed by the Market Court based on a Finnish Competition and Consumer Authority (FCCA) proposal. Failure to comply with an FCCA decision or order may result in a periodic penalty payment.

Are there guidelines in place for penalties? If not, how are penalties normally calculated?

An infringement fine may not exceed 10% of the turnover of an undertaking or an association of undertakings concerned during the year in which the undertaking or the association of undertakings was last involved in the infringement. The amount of the fine is based on an overall assessment which takes into account factors including the nature and extent, the degree of gravity and the duration of the infringement. The FCCA has a set of guidelines setting out how it approaches each factor.

Do the authorities take into account any penalties imposed in other jurisdictions?

In principle, this option is available within the context described above, but has not been used to date.

How can a company mitigate its exposure to fines?

Apart from applying for leniency, there are no obvious ways to mitigate exposure through, for example, corporate restructurings. Refusing to participate in cartel conduct and carefully documenting compliant behaviour for the avoidance of erroneous convictions remain the best ways to mitigate exposure.

Penalties for individuals

What are the potential penalties for individuals involved in a cartel?

There are no specific penalties for individuals.

Do the authorities take into account any penalties imposed in other jurisdictions?

Not applicable (see above).

Is a company permitted to pay a penalty imposed on its employee?

Not applicable (see above).

Is a company permitted to continue to employ an employee involved in cartel conduct?

Yes. 

Private actions

Private damages actions

Can private actions for damages be brought in your jurisdiction? If so, who may assert such actions?

Private actions for damages can be brought. Such actions are available to any individual or legal person which has suffered damage due to a competition restriction.

What relief may be awarded to successful claimants (eg, damages, costs, injunctive relief or attorneys’ fees)?

Full compensation for the damage, along with reasonable attorneys’ fees and other costs incurred in the proceedings, may be awarded. Injunctive relief is also available, but has not been sought in recent cases. 

How are the amounts of any damages, costs or attorneys’ fees calculated?

There are no specific provisions on how to calculate the amount of damages. Typically, claims and awards have been calculated as a percentage of the prices paid during the cartel. Attorney fees are generally calculated based on itemised hourly billing. Reasonable litigation-related expenses are reimbursed to the extent they are demonstrated to have been paid.

Have there been any notable recent cases in which a private action was the subject of adjudication?

There have been several prominent cases in the past few years, with varying degrees of success. The most prominent have involved a cartel in the sale of asphalt and paving works, and a cartel in the purchasing of raw timber. At the time of writing, the rulings in these cases are not legally final.

Class actions

Can class actions be brought in your jurisdiction? If so, what is the procedure for such cases?

Class actions can be brought, but they are strictly regulated. The only party that may bring a class action is the consumer ombudsman, whose jurisdiction covers only matters related to consumer protection. The ombudsman may initiate a class action at its discretion in certain general courts whenever a class is defined precisely enough with similar claims against the same defendant. Class members may then sign up for the action.

The class action regime, which was introduced in 2007, has not been used to date and it remains uncertain whether the regime could be applied to damage caused by competition restrictions.

Immunity and leniency

Immunity and leniency programmes

Is an immunity and leniency programme available for companies? If so, how does it operate?

Yes. Through a leniency programme, the applicant can receive full immunity from fines or a reduction of fines. The use of leniency programmes is limited to cartel cases.

To qualify for leniency, an undertaking must immediately:

  • cease participation in the competition restriction once it has delivered the application;
  • cooperate with the Finnish Competition and Consumer Authority (FCCA) during the entire investigation;
  • not destroy evidence; and
  • keep confidential the content of the application and the fact of making or considering making the application.

Whether these conditions have been fulfilled can be decided only at the end of proceedings. Until that point, leniency is granted as conditional.

Under the Competition Act, an infringement fine shall not be imposed on an undertaking if the undertaking:

  • submits a leniency statement and information or evidence based on which the FCCA may conduct an inspection; or
  • following an inspection, submits a leniency statement and information or evidence based on which the FCCA can establish that a violation of competition law has occurred.

Can the enforcement authority decline or withdraw leniency? If so, on what basis?

The FCCA can refuse leniency if it has already obtained the material from another source. An undertaking may not obtain immunity if it has taken steps to coerce another undertaking to participate in a cartel (however, a reduction in fines is available). The applicant’s use of the leniency application as evidence in damages proceedings without permission from the FCCA may result in losing leniency. In addition, leniency may not be granted to more than one member of a cartel. This effectively means that if leniency has been granted following the submission of information or evidence on the grounds of which the FCCA may conduct an inspection, leniency cannot be granted in the same case to a party that supplies information or evidence based on which the FCCA can establish that a violation has occurred.

Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?

A member of a cartel which cannot obtain immunity may be granted a reduction in the infringement fine. The fine can also be reduced if the undertaking submits a leniency statement, information and evidence to the FCCA that is significant for establishing a competition restriction, and before the FCCA receives the information from some other source. The fine may be reduced as follows:

  • a reduction of 30% to 50% if the undertaking is the first to submit the information;
  • a reduction of 20% to 30% if the undertaking is the second to submit the information; and
  • a reduction of up to 20% in other situations.

An undertaking cannot obtain a reduction in the fine if the information is not significant for establishing a restraint on competition, or if the FCCA has already received the information before the application.

What benefits (if any) are available for employees and former employees of a company that seeks leniency?

No specific benefits are available to employees or former employees in such situation.

Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?

Immunity is not available for individuals under Finnish competition law.

Have there been any notable recent cases in which a leniency application was the subject of adjudication?

At least one leniency application was evaluated in the 2010s, and at least two in the 2000s, and in these cases the FCCA granted full leniency to the requesting parties. Also in the 2000s the Market Court approved an FCCA proposal to reduce a fine by 30%. 

Criminal liability

Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?

Not applicable (see above).

Application procedure

What is the procedure for a leniency application?

A party can apply to the FCCA to grant immunity from or a reduction in an infringement fine. The FCCA assesses whether the requirements for (conditional) leniency are fulfilled and informs the applicant of its conclusion. At the end of the procedure, the FCCA rules on whether the applicant is ultimately granted leniency. The FCCA’s decision issued at the end of the procedure cannot be appealed separately. The claims connected to the FCCA’s decision may be presented to the Market Court in relation to the primary matter concerning an infringement fine.

An undertaking may contact the FCCA anonymously before applying for leniency. The FCCA does not set a time limit for the gathering of information on the basis of an anonymous contact. The application for immunity must be made on the FCCA’s premises or delivered following the procedure described in the Competition Act.

If an undertaking applying for leniency has submitted or is about to submit an application for immunity in the same case to the European Commission or the competent authority of another EU member state, conditional leniency may be granted on the basis of a summary application. If the FCCA finds that the requirements for (conditional) leniency are not fulfilled in the summary application, it may request additional information from the applicant within a fixed time.

What is the typical timeframe for consideration of a leniency application?

The case praxis on leniency applications is narrow, but the typical timeframe is a few weeks to a few months.

What information and evidence is required?

The applicant must identify the information which it wishes to submit for consideration in the handling of the case. The following information should be included:

  • the name and address of the applicant;
  • the members of the cartel;
  • a detailed description of the functioning of the cartel;
  • a description of how the restraint on competition was implemented and how it was maintained;
  • possible applications to other competent authorities concerning the same cartel conduct; and
  • whether the applicant intends to apply to other authorities for immunity or a reduction in fines.

What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?

Typically, the information and evidence required to propose an infringement fine are disclosed to the parties when the FCCA sends them the draft decision.

What level of cooperation is required from applicants?

Cooperation with the FCCA during the entire investigation is one condition of obtaining immunity from or a reduction in the infringement fine. Further, the cooperation must be genuine, comprehensive and continuous. The obligation to cooperate begins when the leniency application is filed and ends when the FCCA completes its proceedings. The undertaking must submit all the information and evidence without delay and make its representatives and employees – and, if possible, its former representatives and employees – available to the FCCA. If a substantial part of the undertaking’s employees or the key employees do not cooperate with the FCCA, the undertaking has not fulfilled its obligation to cooperate. The cooperation must take place on the undertaking’s own initiative and be sincere, and the undertaking must provide the FCCA with a correct and undistorted representation of the cartel and related matters. The undertaking may not complicate the investigation through its own activities.

What confidentiality protection is offered to applicants?

A leniency statement and the information and evidence submitted to the FCCA cannot be used for any other purpose than:

  • to order the termination a restraint on competition;
  • to order delivery of a product;
  • for the commitment decision;
  • for the withdrawal of a benefit of a block exemption; or
  • for the review of an infringement fine proposal.

This does not prevent the FCCA from using the information submitted by the applicant to:

  • start an investigation;
  • issue a prohibition decision, commitment decision or an infringement fine proposal; or
  • withdraw a block exemption if the leniency documents contain information about competition restrictions other than that which forms the basis for the application.

In damages proceedings, a court cannot consider as evidence information on the contents of leniency documents, unless invoked by the leniency applicant itself.

Can the company apply for a marker? If so, under which conditions?

The priority ranking between undertakings which have applied for leniency is determined according to the date and time when the undertaking delivered the required information to the FCCA. A leniency applicant can request an extension to the time limit for gathering the relevant information. The FCCA can set a date by which the relevant information must be delivered. The applicant’s priority with respect to other cartel members seeking immunity is secure if the applicant submits the information to the FCCA within the time limit.

The FCCA will not investigate other immunity applications relating to the same cartel before it has decided whether immunity may be granted to the first undertaking which applied for immunity. The FCCA may not impose a time limit for the delivery of information to obtain a reduction of the infringement fine.