- Africa and the Middle East
- Asia Pacific
- Latin America
- North America
- GCR 100
- Rating Enforcement
Norway: Competition Authority
General director of the Norwegian Competition Authority
Over the past few years, the Norwegian Competition Authority (NCA) has worked hard to put competition higher on the agenda of businesses, politicians and public agencies. To raise awareness among businesses, the NCA has stepped up its enforcement activities in combination with a deliberate strategy to make the authority’s decisions known to the public at large. The authority has also taken a strong stance in the public debate advocating for competition as a force for increased innovation and productivity.
High activity in the food sector
The food industry has been high on the Authority’s agenda for a number of years. This is reflected in a wide spectrum of activities including mergers, anti-competitive agreements, new proposed amendments and market surveillance. In Norway, this market is highly concentrated, with four vertically integrated chains with wholesale and retail operations. One particularly interesting case is the planned joint purchasing and distribution agreement between the largest and fourth-largest food retail chains in Norway, Norgesgruppen and ICA. Norgesgruppen and ICA together have a high market share nationally, and a particularly strong position in local markets in parts of the country. As a reaction to the proposed agreement, the two remaining retail chains announced their plans of a joint purchasing agreement of their own – if the agreement between their competitions was cleared. To avoid irreparable damage to competition, the Authority immediately issued a temporary ban, followed by a statement of objections to the agreement between Norgesgruppen and ICA. The competition agency fears that agreement between the two chains will make it possible to exploit market power, thus harming consumers.
The Authority also fined Norway’s largest food retail chain, Norgesgruppen, €3.1 million for implementing an acquisition of a part of ICA’s rental agreements for stores before receiving approval from the authorities. This is an important case because Norgesgruppen challenged the merger control regime by splitting up the transaction and by arguing that the merger control did not include contractual agreements.
In Norway, as well as in other countries, food suppliers have been advocating for the introduction of a code of conduct regulating the negotiations between suppliers and retailers in the food industry. A new law regulating the code of conduct was proposed by a law commission appointed by the Norwegian government. The Authority has questioned the need for a law regulating code of conduct, and is in particular critical to the proposed use of fines for breaching quite vague and subjective sections of the proposed law. The law has temporarily been put on hold by the new government.
Mergers and acquisitions and abuse cases
Over the past few years, the Authority has had to allocate a substantial share of its scarce resources to mergers and acquisitions. The activity level in this area was expected to drop somewhat after the major revision to the competition law where the merger thresholds were raised substantially from a combined turnover of 50 million to 1 billion kroner and from turnover of the smallest firm from 20 to 100 million kroner. It is important to note that the Authority’s powers to investigate potentially anti-competitive mergers are not affected by the increased thresholds.
Even though the number of merger cases filed to the Authority has dropped by approximately 80 per cent, the number of mergers, which has to be examined more closely, has not declined. The authority has also chosen to impose information obligations on mergers and acquisitions for some of the major Norwegian firms. Moreover, the new thresholds implies a redistribution of resources towards more market surveillance to capture mergers and acquisitions affecting competition adversely in, for example, local markets.
To speed up the investigation of potential abuse of dominance cases, the Authority established a task force whose aim was to identify potential abuse cases in the Norwegian market. An investigation based on this work was initiated this year. Using a task force to identify potential abuse of dominance cases ex officio has proven very useful. The Authority intends to build on this experience in the future to achieve a better balance between complaints and self-initiated cases.
Soft law approach
In the past few years, the Authority has chosen to use a soft law approach in same cases. The Authority has actively and sometimes publicly warned parties in risk of breaching the competition law, for example, as a follow up to market investigations. One interesting case in this respect was anti-competitive car warranties. In a review, the Authority found a number of vague and misleading warranty conditions that could create uncertainty among customers and lock them in to the car manufacturer or importer. The authority had two aims in conducting this market investigation: to inform the consumers of their rights to a free choice of repair shop; and to warn car manufacturers or importers about warranties that are potentially in conflict with the competition law. As result of this review – and the soft law approach – the majority of the car manufacturers and importers have changed their warranty conditions to be in accordance with the competition law.
Another area where the authority has chosen a soft law approach was the banks’ anti-competitive signaling of interest rates. In Norway, as in Europe as a whole, the government has imposed stricter capital requirement on the banking sector. As a response to these requirements, a number of banks publicly signalled that they would have to raise interest rates. Some even stated how much the rates would be raised. The Authority considered this signalling behaviour to be a potential violation of the competition law. However, instead of starting a full-fledged investigation, the Authority met the major players and their federation and warned them about this potentially illegal practice. As a result, the banks are now much less open about their plans to raise interest rates.
The step towards more use of a soft law approach will be facilitated by the new measures given in the revised competition law. From January 2014, the Authority can accept commitments from the parties in anti-competitive agreements and in cases of abuse of dominance. Hard core cartels are exempted from this new measure.
Focus on visibility and efficiency
To make the most of our limited resources, and to successfully deter anti-competitive behaviour and fight anti-competitive measures, the NCA has visibility as one of its three strategic goals (the other two are professionalism at a high international level and respect for the parties involved in cases).
In a recent questionnaire addressed to lawyers and business managers, negative publicity was ranked as the second deterrent factor after fines, but before imprisonment and private litigations. 86 per cent of the lawyers assessed this as a ‘very important or important’ factor to deter competition crime.
Publicising the Authority’s decisions is a powerful tool to deter competition crime and raise awareness. Business managers are made aware of the need to comply with the competition act. In addition, more potential cases are reported to the authority.
Visibility also plays an important role in the NCA’s advocacy work towards other authorities. The Authority has expressed concerns for the wave of regulation in a number of sectors as well as exemptions from the competition law. We have called for a review of anti-competitive regulations and a stronger prioritisation of competition as a key tool to raise productivity in the Norwegian economy. Moreover, the NCA regularly publicly pinpoints areas where there are anti-competitive regulations harmful to competition. Examples of areas where the Authority has been particularly active are in relation to the effect of the high import barriers protecting the agricultural sector, the continued exemption from the competition act for the book industry and anti-competitive regulations for waste management.
In the past year, the Authority has worked hard to streamline and speed up its case work by focusing on project management. This includes training project managers, improving project processes through, for example, digital workflows, and adopting new IT tools to aid casework and make the authority less vulnerable to turnover. This will continue to be a priority in the coming year.
In 2013, Norway got a new government. In its inaugural address to the Norwegian parliament, the role of competition was strongly emphasised. The government has signalled that it will establish a new appeals commission for merger decisions to increase the independence from the ministry, and that tasks in the area of media ownership will be transferred from the Media authority to the Competition authority. Moreover, the government has appointed a productivity commission where the director general of the Authority is one of the members. It is also likely that there will be substantial changes in the public procurement regime based on suggestions from a public commission, which will present its report in June.
The political signals are good news for competition; for the Authority, a lot of hard work lies ahead.
General director of the Norwegian Competition Authority
Next Chapter: Norway: Overview