On 18 November 2019, the Finnish Competition and Consumer Authority ("FCCA") proposed the Market Court to prohibit the merger between Kesko Oyj and Heinon Tukku Oy, two operators in wholesale services in the foodservice industry. According to the FCCA, the merger would significantly impede effective competition in the sale of daily consumer goods to foodservice customers. Foodservice customers include restaurants, hotels, catering businesses, service stations, and kiosks as well as public sector customers such as schools, kindergartens, and healthcare units.
The merging parties are broadline distributors offering a broad range of products and serving foodservice customers nationally. As foodservice customers procure approximately 70–80 per cent of their purchases from broadline distributors, the competitive constraint imposed by the specialist suppliers and manufacturers was considered to be weak by the FCCA. According to the FCCA, the proposed merger would lead to a dominant position with a market share of up to 60–70 per cent. According to the FCCA, the merging parties had already been competing for the same customers in the same region and their merger would therefore lead to a significant impediment of effective competition. According to the FCCA, the remedies submitted by Kesko were not sufficient to address the relevant competition concerns.
The proposal for prohibition at hand is the fourth since the beginning of merger control in Finland in 1998. All of the mergers which were previously proposed for prohibition were ultimately approved by the Market Court, albeit with stricter conditions than had been proposed to the FCCA.
Recently, it has often been the case that in the second phase of merger investigations, the FCCA applied for extension from the Market Court to review the transaction. In this case, the FCCA applied for the extension twice and, despite the fact that the notifier opposed the second extension, the extension was granted both times. In light of this, we recommend that operators envisaging transactions notifiable under the Competition Act take the length and uncertainty of the Finnish proceedings into account in their transactions.The public version of the proposal is not yet available; please find an English version of the FCCA's press release here.