KILPAILUVIRASTO
KONKURRENSVERKET
(Competition Authority)
S T A T E M E N T
20.12.2001 Dnro 1152/72/01
Ministry of Transport and CommunicationsPL 235
00131 Helsinki
Your statement request 30.11.2001 (LVM036:00/2001)
REPORT BY THE WORKING GROUP CONSIDERING THE SEPARATION INTO A COMPANY OF THE COMMERCIAL ACTIVITIES OF THE FINNISH METEOROLOGICAL INSTITUTE
The Ministry of Transport and Communications has asked the Competition Authority for a statement on the report by the working group studying the separation of the commercial activities of the Finnish Meteorological Institute (FMI) into a company. Since the beginning of March 2000 the commercial activities of FMI have been separated into their own result area. In addition to the sales and marketing, the commercial product development and the operational weather service have been transferred to this unit. In total 37 persons work within this result area that also provides work for staff within the basic services of the institute. The most important customer groups for the commercial activities are at present the transport sector, TV and radio, agriculture and the general public. The strongest development is expected for services to the general public, surface transportation, development cooperation and TV and radio.
The working group proposes that the commercial activities associated with FMI's weather services are organized as a limited company. The commercial activities of the company to be established would be based on the current commercial services of FMI. The functions of the company would include the production of daily weather services, expert services, commercial product development, management of acquisition services and sales and marketing. The company would acquire the weather data and products from the producers in the same fashion as private weather companies. According to the estimates by the working group, the company to be established would have the capability to operate profitably. FMI would continue under the Ministry of Transport and Communications as a public agency based on a net budget, and would perform the tasks assigned to it by regulations. These tasks include general forecasts presented collectively to the public and associated warnings, management and development of the basic infrastructure of the weather service, specified scientific research functions, preparedness for exceptional circumstances and weather services associated with civil protection and other services falling within governmental activities.
The working group proposes that the production of weather services for civil air traffic should not fall within the scope of the company. According to the working group the aviation weather services managed as a public task is part of the FMI externally funded basic services. In addition the report states that the production of the aviation weather services defined by ICAO is not viable in Finland without extensive support by the FMI infrastructure. The required background functions include synoptic observations, sounding activities, radars, satellites, forecast models and telecommunications. The costs for the background functions required for the operations of the aviation weather services are called background costs. According to the pricing guidance for aviation weather services given by ICAO and WMO in 1997 and 1999, aviation should pay for its own share of the background costs associated with the operation of the aviation weather services.
The position of the Competition Authority
According to the report by the working group considering the separation into a company of the FMI commercial activities, the promotion of competition in the meteorological sector supports that the commercial services activities of FMI are separated and established as a limited company. These arrangements would furthermore increase the transparency of the weather service market and release capital from the public sector for as wide-ranging and efficient use as possible. Also elsewhere in Europe the national meteorological services are nowadays given enhanced possibilities for commercial activities. A fast implementation of the change in Finland would give service providers on the basis of Finnish know-how and technology a chance to profit from the developments provided by the development of this sector, and to respond to the competitive challenges which will emerge later due to the development of the weather market. The Competition Authority agrees with the above arguments presented by the working group and considers that the separation of the FMI commercial activities into a company as well justified. In addition the Competition Authority considers that to ensure that the objectives set for the establishment of a company are achieved, the limited company should in line with the model solution in The Netherlands also be physically separated from the Finnish Meteorological Institute.
The report of the working group on the separation of the FMI commercial activities into a limited company states that the aviation weather services produced for the Civil Aviation Administration (CAA) are public services. In addition it is noted that the production of aviation weather services require extensive support by the FMI infrastructure, and that the aviation sector in accordance with the pricing guidance issued by WMO and ICAO in 1997 and 1999 should pay part of the background costs associated with the use of the FMI infrastructure. However, CAA owns the 25 METAR-stations located at the airports that produce the aviation weather observations forming the foundation for the aviation weather service. In addition the price guidance on aviation weather services provided by ICAO and WMO are only recommendations and not binding on national aviation authorities or meteorological offices. To keep the aviation weather services outside the commercial weather services has not been justified sufficiently well in the report. In other countries, for instance the United States, the experience does not support that aviation weather services could not be part of the commercial weather services. Furthermore the information given by the Civil Aviation Authority to the Competition Authority has not referred to the possibility that aviation weather services should unconditionally be produced as public services.
| Director-in-Chief | Matti Purasjoki |
| Special Researcher | Jussi Pääkkönen |
| For information: | 1 Ministry of Trade and Industry 2 Finnish Meteorological Institute |
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