19 December 2007
Stock Exchange Bulletin at 3:00 p.m.
LEMMINKÄINEN APPEALS TO THE SUPREME ADMINISTRATIVE COURT TO REVERSE THE MARKET
COURT'S DECISION ON COMPETITION INFRINGEMENT
Investigations by the Finnish Competition Authority (FCA) were launched in the
spring of 2002 when the agency carried out unannounced audits at companies
involved in the asphalt business, and the Finnish Asphalt Association. In March
2004 the FCA proposed to the Market Court that it impose a competition
infringement fine concerning alleged violations of the Act on Competition
Restrictions in the asphalt industry during 1994-2002. The FCA proposed a total
competition infringement fine of EUR 97 million for the industry, of which
amount Lemminkäinen was to pay EUR 68 million.
By its decision issued today, the Market Court has ordered Lemminkäinen to pay a
competition infringement fine of EUR 14 million for circumventing the Act on
The Market Court's decision relates to Lemminkäinen's road-paving operations in
Finland, which accounted for approx. 10% of the Group's total turnover in 2001.
The decision of the Market Court shows that the claims made by the Finnish
Competition Authority were largely rejected. The Court finds that only some
instances of restriction of competition alleged by the FCA were corroborated by
evidence with regard to the geographic area and period of time concerned. For
example, the Market Court holds that the FCA failed to show that allocation of
markets and co-operation in tendering in respect of paving contracts awarded by
municipalities and private customers would have been nationwide. Nor did the
Market Court accept the FCA's allegation that asphalt industry companies would
have been able to use a cartel to maintain a price level that was, on average,
ten per cent higher as compared to a situation with genuine competition.
Lemminkäinen acknowledges that the proceedings at the Market Court have, as
such, shown that the conduct of business by Lemminkäinen in the Finnish
road-surfacing market has, to some extent, included aspects that are in
contravention of competition legislation. Lemminkäinen will not, under any
circumstances, approve of the use of illegal procedures in its operations. Over
the years, special efforts have been made within the Group to intensify training
in issues concerning competition law and to provide related instructions.
Lemminkäinen will appeal the decision to the Supreme Administrative Court. While
the grounds for appeal will be determined in more detail during the 30-day
appeals period, the main arguments will include at least the following:
1. Lemminkäinen's reprehensible activities have been even more limited than
suggested by the Market Court both in terms of the geographical area and the
period of time concerned.
2. The Market Court has failed to give due consideration to the extensive
evidence provided by Lemminkäinen showing that there is genuine competition in
the road-surfacing sector.
3. The amount of the competition infringement fine imposed on Lemminkäinen is
excessive both in the light of the evidence produced and the accepted legal
The decision shows that the members of the Market Court dissented on both the
amount of the fine and the criteria for evaluation of evidence. Two of the
judges, who were in minority, would have decreed a considerably lower
Irrespective of further proceedings, the competition infringement fine imposed
on Lemminkäinen by the Market Court will be recognised as expenditure in the
fourth quarter of the current year. Even so, Lemminkäinen's profit for 2007 will
exceed its earnings in 2006.
Managing Director Juhani Sormaala
Tel. +358(0)2071 53302
Helsinki Stock Exchange
Lemminkäinen Group operates in all areas of the construction sector. Its main
business areas are building construction, infrastructure construction, technical
building services and building products. Net sales in 2006 were EUR 1,795.9
million, of which international operations accounted for about a third. The
Group employs some 9,000 people. Lemminkäinen's main market area is the Baltic
rim region, where the Group has established a presence by setting up local
subsidiaries, but it also serves customers all over the world in specialised
areas of construction. Lemminkäinen´s share is listed on Helsinki Stock