The Market Court of Finland (Markkinaoikeus) has imposed a fine on Valio, a company in Finland, for violating the terms of a merger set by the Finnish Competition and Consumer Authority (Kilpailu- ja kuluttajavirasto) (KKV).
The case, Finnish Competition and Consumer Agency v Valio case (number 607/2024) has resulted in a fine of €600,000 being levied on the undertaking.
Proceedings
The parties to the proceedings were the Finnish Competition and Consumer Authority (Kilpailu- ja kuluttajavirasto) (KKV) and Valio.
The case centred on a fine imposed on Valio for violating conditions set by the KKV during the acquisition by Valio of Heinon Tukku. The KKV had required Valio to protect sensitive pricing information of its competitors, which Valio failed to do.
Arguments of the parties
KKV’s argument, in essence, was that Valio breached the conditions of the merger approval by not adequately safeguarding sensitive pricing information of competitors. This information was accessible to Valio’s sales managers and directors, which could potentially harm competition.
KKV emphasised that the breach was significant, and warranted a substantial fine to ensure compliance and deter future violations. KKV thus sought for the Market Courtto impose a fine of €900,000.
Valio did not oppose the fact that a breach occured. On the other hand, however, the company argued that the fine being sought by KKV was disproportionate, in that it wasexcessive.
Valio contended that the breach was unintentional, resulting from an IT system error, and that they had taken immediate steps to rectify the issue once it was discovered.
Judgment of the Market Court of Finland
The Market Court’s judgment hinged on several key points.
First, it acknowledged that Valio had indeed violated the conditions set by the KKV. The Market Court noted that the breach allowed Valio’s sales personnel access to sensitive pricing information of competitors, which could have been used to Valio’s advantage in the market. This was seen as a serious violation of the merger conditions that had been agreed with KKV.
Second, the Market Court considered the duration and extent of the breach. It was found that the breach lasted between nine-to-twelve months, affecting a significant number of Valio’s sales personnel. The national court thus emphasised that the breach, and was not a minor oversight, but rather, a substantial failure to comply with the merger conditions.
Third, the Market Court evaluated the arguments regarding the proportionality of the fine. While acknowledging Valio’s efforts to correct the breach and their cooperation with KKV, the Market Court maintained that the fine was necessary to uphold the integrity of the merger conditions and to serve as a deterrent against future violations.
Whilst KKV had sought for the Market Court to impose a fine of €900,000, the national court instead fined Valio €600,000, given the mitigating factors presented by the company.
Analysis
Despite the lower fine that was imposed, as compared to what is sought, the national competition authority appears pleased. This is because it claims that this is first time in Finland that a penalty payment is imposed for breaching the conditions of a merger.
The judgment underscores the importance of strict compliance with merger conditions imposed by competition authorities. It further highlights that breaches, even if unintentional, can lead to financial penalties (fines).
Read the judgment
The judgment of the Market Court of Finland (Markkinaoikeus) in the Finnish Competition and Consumer Agency v Valio case, case number 607/2024, delivered on 30 October 2024, can be read here.