Real estate management cartel fined following a judgment of the Finnish Market Court

In a judgment delivered on December 15, 2022, the Finnish Market Court imposed an aggregate fine of closer to 5 million euros on the Finnish Real Estate Management Federation (“Suomen Isännöintiliitto ry”, hereinafter the Federation) and six companies active in the provision of real estate management services that held board memberships in the Federation during the infringement period. According to the Market Court, the Federation and the companies involved engaged in prohibited horizontal cooperation, including price-fixing. More specifically, the participants had colluded to increase prices and to unify their pricing policies through the Federation’s press releases and price recommendations, which were preceded by communications amongst the participants, inter alia, at the Federation board meetings. The companies also otherwise engaged in the bi- and multilateral exchange of commercially sensitive information. As regards the Federation, in addition to having facilitated the coordination of conduct between the competing service providers, the Federation was found to have had an independent and active role in the infringement insofar as it had published press releases on pricing also on its own initiative and actively raised pricing issues amongst the participating companies. Interestingly, the infringement was appraised solely on the basis of Section 5 of the Finnish Competition Act (the national equivalent of Article 101 of the Treaty on the Functioning of the European Union) as the conduct did not affect intra-EU trade given the local nature of the services provided.

The infringement lasted from 2014 to 2017 when the Finnish Competition and Consumer Authority (“FCCA”) initiated its investigation into the suspected infringement. As part of its investigation, the FCCA conducted searches at the companies’ premises and issued in February 2021 its findings on the infringement, together with a proposal for an aggregate fine of 22 million euros.

The Market Court reduced significantly the fines proposed by the FCCA

The Market Court confirmed in its judgment delivered in December 2022 to a large extent the findings issued by the FCCA in 2021. The Market Court concurred with the FCCA that the practices amounted to a serious infringement by object, which were aimed at affecting the pricing development for real estate management services nation-wide and they were therefore of significant economic value. At the same time, the Market Court considered that anti-competitive conduct could not be established with respect to some meetings, and overall considered that in light of the evidence presented the conduct lacked the intensity and scale that the FCCA had presented.

In light of these findings, the Market Court significantly reduced the aggregate fine from the FCCA’s proposal: from the aggregate proposed 22 million euros to a total aggregate fine of 5 million euros for all participants. While the FCCA’s proposals were premised on the 10 per cent legal maximum for all participants, including the Federation, the Market Court’s decision set the fines at significantly lower levels. The single biggest fine was reduced from the proposed 13.9 million euros to 3 million euros, while none of the remaining sanctions exceeded one million euros. In many instances liability was joint and several and various acquisitions had taken place in the industry since the infringing practices took place, which raised issues of successor liability.

It is somewhat difficult to reconcile the fine level with the Market Court’s findings of a serious infringement that had lasted for three years. The level of fines is also difficult to reconcile with other recent cases, for instance sanctions imposed on the expanded polystyrene (EPS) insulation materials suppliers in July 2022 by the Finnish Supreme Administrative Court. In that case, the fines confirmed by the Supreme Administrative Court amounted to around 8 per cent of the participants’ respective turnover, while in the case of real estate management services, the single largest fine imposed by the Market Court represents some 2 per cent of the company group’s total turnover. It remains to be seen whether the Market Court’s judgment is indicative of fine levels in the future, despite the fact that the FCCA has expressed a firm intention to increase the level of fines for serious competition law infringements, to which testifies also the FCCA’s proposal in the real estate management services case. It bears observing that the ECN+ Directive, in particular as regards the legal maximum level of fine for associations of undertakings, were not applicable at the time of the FCCA’s proposal.

Based on publicly available information, the FCCA and most of the companies involved have appealed against the Market Court’s judgment. It is understood that the FCCA will defend its initial proposal for a total fine of 22 million euros for the companies involved.

Other competition law infringements involving trade associations

In recent years, there have been several instances of infringements by industry associations in Finland. Other industries where trade associations have been found to have engaged in anti-competitive practices include driving schools, bakery products and hairdressers. The FCCA’s growing interest in practices conducted under the auspices of industry associations, which interest may be further bolstered since the implementation of the ECN+ Directive and the more significant fining powers, may evidence continued uncertainty among a number of industry associations as to the requirements of competition rules.

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