The European Antitrust Review 2014 • Section 3: Country chapters
Norwegian antitrust law has been marked by several important events in the past year. In May 2013, a revision of the Norwegian Competition Act (the Act), resulting in a closer harmonisation with the EU rules, particularly as regards the merger control regime, was adopted in the Norwegian parliament. Furthermore, the Norwegian Competition Authority (NCA) imposed its largest fine ever on a participant in an asphalt cartel. The case demonstrates that the Norwegian leniency regime is starting to work, as one of the cartel participants was granted full immunity on the basis of a leniency application. In 2013, the NCA was, for the first time, granted an interim decision provisionally suspending a cooperation agreement between two of the largest grocery chains in Norway.
The Act applies to anti-competitive behaviour having an effect or liable to have an effect in Norway. Section 10 of the Act prohibits all ‘agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition’.
Section 10 of the Act has been modelled on article 53 EEA, which corresponds to article 101 TFEU. Equally, section 11 of the Act, relating to abuse of dominance, has been modelled on article 54 EEA, which corresponds to article 102 TFEU. Articles 53 and 54 of the EEA Agreement form part of national Norwegian law and may be enforced in Norwegian courts. However, in order for the prohibitions in articles 53 and 54 to apply, trade between the contracting parties to the EEA Agreement must be affected.
The NCA has been given the power to enforce the Act. However, as in several other countries, cartels in Norway may also be investigated and sanctioned by the prosecuting authorities under criminal rules. As for the EEA Agreement, the EFTA Surveillance Authority (ESA) supervises and enforces the competition rule of the EEA agreement. However, the NCA is given the authority to enforce article 53 and 54 of the EEA agreement when applying the antitrust rules under the Act.
Following the enaction of the Act in 2004, the NCA have made few significant decisions under section 10 of the Act. The decisions have generally concerned smaller companies and the fines have been of a limited size. However, the NCA recently issued a decision imposing a fine of 140 million kroner on Sweden-based construction company NCC for its alleged participation in an asphalt cartel. The Norwegian construction company Veidekke, which had applied for leniency, was granted full immunity and thus escaped a fine of 220 million kroner.
According to the decision of the NCA, the cooperation between Veidekke and NCC concerned bids for asphalt paving contracts in the counties of North and South Trøndelag in central Norway, and took place between 2005 and 2008. During that period, the two companies allegedly shared contracts advertised by Statens Vegvesen (Norway’s public road administration) and by the city of Trondheim.
In assessing the amount of the fine, the NCA considered several factors, including the value of the contracts affected by the alleged cartel and the gravity and duration of the infringement. The fine is the highest fine ever imposed by the NCA. However, participation in a cartel may lead to fines of up to 10 per cent of the global turnover of the companies involved, and the fine is significantly below this level.
In April 2013, the NCA granted its first interim decision suspending a cooperation agreement on joint distribution and purchase between two grocery chains. As a result of the agreement, one party would rely on the other for approximately 60 per cent of its purchases and also discontinue its wholesale unit in the large parts of Norway.
The Norwegian grocery market consists of four large chains with vertically integrated wholesale and retail activity. The NCA was concerned that the cooperation agreement would weaken competition between the grocery chains and increase the risk of the exercise of market power, either through coordination between the chains or as a result of unilateral action by a single entity. The NCA was also concerned about the long-term harm to supplier markets. The NCA argued that competition could be permanently and irreparably harmed if the cooperation proceeded while the NCA investigated the case. The NCA concluded that there were reasonable grounds to believe that the agreement was contrary to section 10 of the Act and decided to suspend the cooperation until 30 September this year. The decision has, however, been appealed to the Ministry of Government administration, reform and church affairs (the Ministry) by the parties.
A 2011 NCA decision imposing a fine on two taxi companies allegedly cooperating in a competitive tendering relating to the transport of patients for the Oslo University Hospital was overturned by Follo district court in February 2013. Two taxi cooperatives, Follo Taxisentral and Ski Taxi, collaborated through a jointly owned company, Ski Follo Taxidrift AS, on submitting bids during two competitive tendering rounds during the autumn of 2010. In its decision, the NCA concluded that the joint bids of the two taxi cooperatives had as its object the restriction of competition and imposed fines.
The court found that the common tendering did not infringesection 10 of the Act. In relation to the first tender, the Court found that as one of the cooperatives was not in a position to carry out the tender itself, the common tendering did not fall within the scope of section 10. This approach is clearly more in line with general European practice than the NCA’s initial decision.
Regarding the other tender, covering a smaller geographical area, the Court concluded that the common tendering was carried out openly and thus could only have an anti-competitive effect on the market. However, as the common tender did not have an appreciable anti-competitive effect on the market, section 10 of the Act was not violated. The judgment has been appealed by the NCA.
Standard of proof
The Norwegian Supreme Court gave its ruling in October 2012 in a case involving collusive tendering. The Competition Authority decided in July 2009 to impose fines on the two companies, Grunnarbeid AS and Gran & Ekran AS, of 5 million kroner and 2 million kroner respectively for having cooperated illegally in connection with a tender organised by the municipality of Steinkjer. The NCA’s decision was fully upheld in the district court. The appeal to the Supreme Court primarily dealt with the level of the fine. The Supreme Court stated that for the imposition of administrative fines in relation to infringements of the Act, the appropriate standard of proof is set at a higher threshold than the balance of probabilities, but not as strict as the standard of proof in criminal law. This outcome was made after, among others, an interpretation of article 6 in the European Convention of Human Rights. Prior to this judgment, there was uncertainty relating to the relevant standard of proof when imposing fines as a result of a violation of the Act. With the ruling of the Supreme Court, a long-disputed question is thus finally determined.
As a breach of section 10 of the Act can be criminally sanctioned irrespective of an application for leniency for civil fines imposed by the NCA, the Norwegian leniency programme has had a slow start. It was therefore no surprise that the leniency rules introduced in Norway in 2004 were not successful until assurances were given in 2008 that a company applying for leniency was in practice very unlikely to be criminally prosecuted. The NCA reportedly received 14 applications between 2008 and 2012.
However, Norway’s current leniency rules provide no absolute protection against criminal prosecution for the company or its management. Employees and board members of a company involved in a cartel may risk criminal prosecution and those individuals may also be involved in the company’s decision as to whether a leniency application should be filed or not. A risk of imprisonment might function as a disincentive to approach the authorities.
The initial report from the committee appointed to review the Act proposed to extend the leniency rules to cover all types of criminal sanctions. However, in the white paper, it was decided not to provide a general protection against criminal prosecution for the management in a company. The rationale was that such a protection would conflict with fundamental principles of Norwegian criminal law. Nevertheless, a provision where public prosecution of violation of the competition rules is conditioned upon the NCA’s petition has been adopted. In reality, this merely constitutes a formalisation of the procedure already applied today.
In addition, it was decided to abolish criminal sanctions for companies in their entirety. In the White Paper, criminal sanctions for infringing section 10 of the Act were considered redundant next to administrative fines. In addition, criminal sanctions have not been enforced since the adoption of the Act in 2004, and the level of the administrative fines imposed have also been significantly higher than for criminal penalties. The Ministry therefore considers the objective of deterrence sufficiently served by the administrative fining system.
In addition to proposing significant amendments in the leniency regime, the Act will now formalise procedures relating to the NCA’s ability to enter into settlement decisions. The opportunity to adopt settlement decisions allows the NCA to use less time on procedures relating to drafting a decision, possible complaints from the involved companies and so on. Under the current Act, there is no formalised procedure for the NCA to enter into binding settlement agreements with parties involved in an alleged infringement of the Act. The NCA has, however, closed a couple of cases on the basis that the parties have altered their agreements or practice. Such informal decisions not to institute legal proceedings raise a number of legal questions, particularly relating to the legal effect of the settlement. The Act will now include a provision corresponding to article 9 of regulation 1/2003, giving the NCA authority to negotiate a formal settlement with the parties. This implies that the NCA can close the case provided that the parties commit to comply with certain conditions preventing or mitigating the anti-competitive concerns.
Abuse of a dominant position
The Act also applies to abusive behaviour by dominant undertakings. Section 11 of the Act states that ‘any abuse by one or more undertakings of a dominant position is prohibited’. As mentioned at the outset, section 11 of the Act corresponds in essence to articles 54 EEA and 102 TFEU.
In December 2012 the NCA and the ESA carried out two unannounced inspections at the premises of Norwegian telecoms operator Telenor. The inspections were carried out in relation to two independent cases. The investigations carried out by the NCA and ESA were in relation to a potential abuse of Telenor’s dominant position in the Norwegian mobile phone market.
Furthermore, in May 2013, the NCA and the ESA carried out unannounced inspections at the premises of Norwegian state-owned oil company Statoil. The inspections were carried out on behalf of the European Commission, which is currently investigating whether several oil companies, including BP and Shell, may have colluded in reporting distorted prices to the price reporting agency Platts to manipulate the published prices for a number of oil and biofuel products. The prices assessed and published by Platts serve as benchmarks for trade in the physical and financial derivative markets for a number of commodity products in Europe and globally. It is suspected that the potential collusion might have been ongoing since 2002.
In December 2011, the ESA fined the Norwegian ferry operator Color Line €18.8 million for an infringement of article 53 and 54 of the EEA Agreement. The ESA found in its decision that an agreement concluded in 1991 between Color Line and the public harbour of Strömstad in Sweden was in breach of article 54 of the EEA Agreement. Through the agreement, Color Line secured long-term exclusive access to harbour facilities in Strömstad harbour, which amounted to abuse of Color Line’s dominant market position. Two of the companies that had attempted to establish a competing ferry service between Sandefjord and Strømstad are now taking legal proceedings against Color Line claiming damages for their loss. These are among the first private litigations following a breach of competition rules in Norway.
A merger or acquisition, as well as other transactions deemed to constitute a ‘concentration’, require notification to the NCA. However, the Norwegian merger control regime as of today is only partially harmonised with the merger control rules in the EU.
Section 17 of the Act, stating what types of transactions that are considered as concentrations, fully corresponds to the EU Merger Regulation. However, aections 16 and 18 of the Act, stating the criteria for intervening against the concentration and the procedural rules for notifying the concentration respectively, have not been harmonised with the EU.
Norway currently stands out as one of the European countries with the lowest turnover thresholds for notifications of mergers and acquisitions. This imposes a regulatory burden not only on Norwegian companies, but also on foreign companies with only limited sales to Norway. All concentrations must be notified to the NCA if each of at least two parties to the transaction has a group turnover in Norway exceeding 20 million kroner, provided that the combined group turnover such parties derive in Norway exceeds 50 million kroner. Sales to customers in Norway by foreign companies are normally treated as turnover in Norway.
However, the revised Competition Act significantly increases the current filing thresholds. In the case of an acquisition of a company, the new thresholds mean that notification in Norway will be required if each of at least two parties to the transaction has a group turnover in Norway exceeding 100 million kroner, provided that the combined group turnover such parties derive in Norway exceeds 1 billion kroner. In addition, certain amendments have been made concerning the entities to be included in the calculation of the group turnover of the parties. These amendments are intended to harmonise the principles for turnover calculation with those that apply under the EU Merger Regulation.
The proposed thresholds are comparable to the current thresholds in Sweden and Denmark. Based on an analysis of notifications received in recent years, it is expected that the proposed thresholds will reduce the number of notifications in Norway by 70 per cent.
Today, a concentration that requires notification to the NCA must be submitted to the NCA by means of a ‘standardised notification’. A standardised notification is normally fairly short, providing essential information about the parties and the concentration. If the NCA decides to examine the case in further detail, the NCA must, within 15 working days of receipt of the standardised notification, order the undertakings to submit a complete notification. In such cases, the undertakings to which this order applies must provide additional and more detailed information about the transaction.
The revised Act will, however, contain procedural rules that are more similar to the regime in the EU, abolishing the system of two separate notifications. This will mean that only one notification will be submitted, leaving the NCA with a 25 working day deadline before they must decide whether to proceed to Phase II. As only one notification will be handed in, the content requirements are more comprehensive than for the standardised notification, requiring more detailed information about the market and the undertaking concerned. However, for certain uncomplicated transactions, there will be the possibility of submitting a simplified notification similar to the ‘Short Form CO’ in the EU.
The NCA also retains the power to impose a duty to notify them of transactions where the parties’ turnover is below the thresholds. Such an imposition will primarily take place in transactions where the NCA fears competition will be limited after the completion of the transaction. The threshold for imposing such a duty to notify is significantly lower than for the NCA to intervene against a transaction, but the NCA will most likely use this sanction in transactions where there are other reasons to intervene. In transactions where the filing thresholds are not fulfilled, the parties must make a separate assessment on whether to file voluntarily to the NCA.
The revisions of the Act were adopted on 28 May 2013, and are expected to enter into force by 1 January 2014.
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