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LEMMINKÄINEN APPEALS TO THE SUPREME ADMINISTRATIVE COURT TO REVERSE THE MARKET COURT'S DECISION ON COMPETITION INFRINGEMENT
Lemminkäinen Corporation 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 sp
Lemminkäinen Corporation 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 Competition Restrictions. 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 practice. 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 infringement fine. 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. Lemminkäinen Corporation Juhani Sormaala Managing Director Additional information: Managing Director Juhani Sormaala Tel. +358(0)2071 53302 DISTRIBUTION: Helsinki Stock Exchange Key media 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 Exchange.