What is Competition Law?
In the strict sense, competition law means the rules governing competition restrictions. In a broader sense, competition law can also include the public procurement and state aid regulation.
First of all it is worth mentioning that the more significant the position a company has on the market, the more the competition rules and regulations govern its business actions. Competition law allows greater freedom for small and medium-sized companies to use different types of competition means in their business.
Competition law is very special in its nature. It is a field of law in which the law and economy are mixed, and economics is generally used to help decision making. In addition, case law has greater significance than with other fields of law.
Competition law governs restrictive business practices. Restrictions set to a next level of distribution by a manufacturer or a distributor are considered vertical restraints, restrictive actions between business undertakings on the same production or distribution level are considered horizontal restraints, and hindrance of competitors’ actions or exploitation of customers by a company that has a dominant position on the market is considered as abuse of a dominant position.
All restrictions of competition are not prohibited. The objective of competition regulations is to preserve sound and effective economic competition between companies. In addition, the main objective of the EU regulations is to ensure that actions between companies do not prevent the free movement of goods, services and capital between EU member states. From the point of view of companies, the objective is that their actions in Finland or in the area of the EU are not restricted or prevented by any other companies without justification. Through preserving efficient competition, it is possible to further affordable and good quality goods and sufficient range of products available for consumers in the market.
Any agreements, decisions or harmonized courses of action that might distort competition in the market, are prohibited by law and violations are sanctioned. The consequences of competition infringing actions are a competition infringement fine, compensation for damages, and invalidity of an agreement to the extent that the agreement includes unlawful restrictions of competition.
Competition law regulates also merger control. A transaction may be prohibited, if it significantly impedes competition in the Finnish markets or in an essential part thereof due to a dominant position resulting from or being strengthened by the transaction (the SIEC test).