Sound and effective economic competition
Sound and effective economic competition entails that companies are free to enter the market and to freely decide about their practices and means of competition. The customers shall also have the choice of best possible alternative
Effective competition encourages the market parties to constant rationalization of activities and development of new products and services. To gain better financial awards, both buyers and sellers seek, in competitive circumstances, to offer better alternatives than their competitors to other market parties.
The competition mechanism is generally considered to steer the financial resources of the society to the most efficient use as regards all known production methods (static efficiency). But an essential part of competition is also the creation of entirely new, previously unknown production methods (dynamic efficiency).
Competition restraints decreasing economic efficiency
Competition legislation obliges the authorities, i.e. the FCCA and the Regional State Administrative Agencies, to intervene with such procedures by business undertakings which decrease economic efficiency or prevent or harm the practising of trade by other business undertakings. The Competition Act (948/2011) seeks to prevent harmful conduct by business undertakings, and to secure the competitive structure of the market via merger control. In the application of the Act, special attention is paid to the protection of the operational conditions of the markets and the freedom of business undertakings to operate so as to allow customers and consumers to benefit from competition (Section 1).
The Competition Act prohibits competition restraints which are generally considered to have harmful effects for sound and effective economic competition (prohibition principle). Such prohibited restraints include abuse of dominant position and mutual agreements and practices between competing undertakings to limit competition (cartels). Upon the FCCA's proposal, the Market Court can impose a penalty payment on those who have violated the provisions of the Competition Act (Section 12).
In addition to the competition restraints referred to in the Competition Act, the functioning of the market may also be harmed by various Acts, Decrees, administrative orders and practices by the authorities. The Competition Act cannot be applied to such governmental competition restraints. However, the FCA has the opportunity to e.g. make initiatives to dismantle any harmful competition restraints which remain outside the field of application of the Competition Act and hence the FCCA's direct powers.
- Abuse of dominant position
- Cartels and other horizontal competition restraints
- Competition restraints related to supply and distribution agreements i.e. vertical competition restraints
Investigation of competition restraints
It is the task of the FCCA to investigate competition restraints both on its own initiative and on the basis of complaints. The intention is to intervene with major competition restraints as regards the performance of the national economy, harmful to sound and effective economic competition.
Particularly those planning to make a complaint should know that the FCCA prioritises its cases and may also declare a case inadmissible on certain grounds (Section 32). It should also be observed that Section 5 of the Competition Act only prohibits agreements which significantly prevent, restrict or distort competition. So-called competition restraints of minor importance are considered to violate the Competition Act.
EU competition rules
Next to the Competition Act, EU competition rules are also in force in Finland. In addition to workable competition, their key function is to ensure that any practices by business undertakings do not prevent the free movement of goods, services or capital from one EU state to another.
The EU competition rules are always applied to a competition restraint felt within the EU if the restraint may significantly affect trade between the Member States. More on the topic in section EU competition rules.
last modified 12/28/2012