- Africa and the Middle East
- Asia Pacific
- Latin America
- North America
- GCR 100
- Rating Enforcement
The Swedish competition rules are currently contained in the Swedish Competition Act (2008:579) (the Act), which entered into force on 1 November 2008. However, the substantive antitrust provisions have been the same since 1993.1 The Act targets three types of action that may distort efficient competition:
- anti-competitive cooperation;
- unilateral conduct constituting abuse of a dominant position; and
- structural changes (mergers and other types of concentrations).
If a practice also affects trade between EU member states, the Swedish Competition Authority (SCA) will apply articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
In addition to these traditional types of substantive provisions, the Act also contains a specific provision that regulates the conduct of publicly owned entities on competitive markets. This amounts to a prohibition against anti-competitive public sales. There is no prerequisite of dominance, and under this provision the SCA may request the prohibition of sales activities by public entities where such activities are considered to distort or impede effective competition. The threshold for intervention is therefore considered to be lower than under the general provision regulating unilateral conduct.
Currently, enforcement of the substantive competition rules is largely in the hands of the SCA. As well as being responsible for the enforcement of the competition rules, the SCA is the supervisory body for public procurement with a particular focus on illegal direct award of contracts. In addition, it has been assigned monitoring tasks under the EUs financial transparency rules and Sweden’s system of choice reform, which was introduced in 2009 and applies when a contracting entity opens part of its activities up to competition by establishing a system of choice for the services covered by the system such primary health-care service.
In the field of competition, the SCA’s public enforcement is supplemented by private action. The Act expressly enables private parties (ie, legal and natural persons) to initiate claims for damages for competition law infringements. In addition, private parties can bring claims for specific performance or seek declaratory judgments based on aspects of competition law on the basis of the general grounds laid out in the Code of Judicial Procedure.
In addition to these two main avenues, private parties, insofar as they qualify as undertakings, also have a ‘legal secondary right’ to bring claims under section 3:2 of the Act. However, this right is not, strictly speaking, considered a private enforcement claim: it does not cover civil claims or counterclaims; and the legal secondary right is the right of an undertaking that has been affected by an infringement of the prohibition against anti-competitive cooperation or abuse of a dominant position to file a claim before the Market Court (the highest court regarding competition matters in Sweden in cases brought by the SCA) should the SCA decide not to impose an obligation to terminate such an infringement in a particular case. An equivalent secondary right of action exists with respect to the prohibition on anti-competitive public sales. Under section 3:32 of the Act, an undertaking may make a claim or apply for an injunction at the Stockholm City Court if the SCA decides not to do so in a particular case.
Sections 2.1, 2.2 and 2.6 of the Act mirror article 101(1)–(3) of the TFEU. Under section 2.1, agreements between companies, decisions by associations of companies and concerted practices that have as their object or effect the prevention, restriction or distortion of competition within Sweden are unlawful if they do not fall within an applicable exemption.
There are also several block exemptions in place that are specifically mentioned in section 2.3 of the Act. Six of the block exemptions (those relating to agreements on specialisation, research and development, motor vehicles, insurance, technology transfer and vertical agreements generally) refer to the corresponding block exemptions under EU rules, which therefore apply even where there is no effect on cross-border trade. However, there is an additional block exemption relating to taxi services that is specific to Sweden. Section 2.5 of the Act contains a further, more generous exemption for taxi companies or joint booking centres provided that these cover a maximum of 40 cars. Furthermore, there are specific exemptions in section 2.4 relating to agricultural associations and its members.
The gravest infringement of section 2.1 would, of course, be a cartel. To encourage cartelists to come forward, Sweden has had a leniency programme in place since 1 August 2002. The current leniency provisions are set out in sections 3.12–3.15 of the Act. The SCA has issued guidelines clarifying its interpretation and application of the leniency programme. Guidelines were first issued in June 2002 and subsequently amended in March 2006, October 2008 and October 2009.2 The guidelines are modelled on the European Commission’s 2006 Leniency Notice and the ECN model programme.3 The two systems are thus relatively similar, albeit with slight differences, such as the fact that the Swedish programme does not include a marker system.
Recent case law
Relatively few cartel cases have led to an infringement decision, and in recent years cartel investigations have tended to be settled with fines.
However, in January 2014, the Stockholm City Court fined two tyre retailers, Däckia and Euromaster, 1.2 million kronor each for rigging bids for state and municipality contracts in 2005 via the Swedish tire association.4 The fine was approximately a quarter of the fine sought by the SCA. In its summons, the SCA had based the calculation of fines on the companies’ respective turnover in the markets where the bid rigging had incurred. However, the Stockholm City Court decided to calculate the fine on the basis of the value of the contracts that were subject to bid rigging, resulting in a substantially lower fine than that requested by the SCA.
It is noteworthy that the final ruling was preceded by an intermediate judgment by the Market Court on the question of whether the statute of limitations had expired for fines to be imposed on Däckia.5 The Act provides a limitation period of five years from when the infringement ceased. However, the limitation period is suspended if a party is subject to a dawn raid or is given an opportunity to express its views on a draft summons application of the SCA (ie, statement of objections) within that period. According to the Market Court, the statement of objections does not have to be made available under the mechanisms in the Service of Process Act for the limitation period to be suspended. The question then was whether Däckia had been given an opportunity to express its views on the drafts summons as required by the Act. The SCA had sent the statement of objections to Däckia in the form of an e-mail to its external counsel and to the managing director. Both of them then signed the service receipt, but the external counsel added on the receipt note that ‘I am not empowered to receive service [of applications for summons] on behalf of Däckia’. Däckia argued that the SCA had not sent the statement of objections to a person who had the right to represent Däckia. In support of this argument, it invoked the limitations in the power of attorney and the fact that the managing director was not a board member and had not been granted any specific authorisation to sign for Däckia. However, the Market Court held that the receipt of documents in an ongoing investigation by the SCA must be considered to fall within the CEOs ongoing management powers. The Market Court also found that the external counsel was empowered to receive statement of objections on behalf of the company. It held that there was a difference between being served a draft summons and a final summons of an application. Therefore, the Market Court held that the statue of limitations had been suspended and that fines could be imposed on Däckia.
There is also a claim for fines case pending in the Stockholm City Court. The SCA filed summons in August 2013 arguing that three health-care companies, Aleris, Capio and Hjärtkärlsgruppen, have been involved rigging bids in tenders carried out by the Stockholm county council in 2008.6 The proposed fines amount to nearly 30 million kronor.
Anti-competitive unilateral conduct
As with anti-competitive cooperation, the national rule on abuse of a dominant position in section 2:7 mirrors article 102 TFEU.7
There has been relatively little enforcement in relation to this provision in recent years. One recent decision to close an investigation relating to alleged abusive rebates by Posten (the Swedish public postal operator) is interesting in that it explicitly stated that the SCA based its assessment on the Commission’s Guidance Paper on enforcement priorities in applying article 102 TFEU.
Recent case law
The Market Court’s ruling in April 2013 in TeliaSonera is the main case on abuse.8 The case originates from a decision taken by the SCA back in 2004 that TeliaSonera had abused its dominant position on the market for wholesale ADSL products. In its ruling, the Market Court agreed that TeliaSonera had abused its dominant position on the market for wholesale ADSL products but reduced the amount of the fine to a quarter of that imposed by the Stockholm City Court (35 million kronor instead of 144 million kronor). The ruling is interesting in that it clarifies the evidentiary threshold that needs to be met by the SCA when claiming an infringement: the Market Court stated that the SCA must present a ‘robust’ case that ‘reliably proves’ an infringement.
The first fining case brought on the basis of abuse after TeliaSonera concerns allegations of unfair pricing by Stockholm’s main airport, Arlanda, which is owned by the state company Swedavia. This began in December 2010 when taxi drivers at the airport complained to the SCA about fees being imposed on them for using signs when picking up customers in the waiting halls within the terminal buildings. However, the SCA rejected the complaint after an initial review. The taxi drivers then successfully brought the case before the Market Court under the right to a secondary right of action as mentioned above. In 2011, the Market Court ordered Swedavia to stop charging fees for the use of signs in the terminal buildings.9
In June 2013, the SCA took the surprise step of reopening the case by filing summons requesting the Stockholm City Court to fine Swedavia 340,000 kronor.10 Swedavia argues that the SCA’s claim is illegitimate as the matter has already been resolved by the Market Court and that under the principle of ne bis idem it cannot be tried again. However, in January 2014, the City Court ruled on January 2014 that Swedavia was not subject to double jeopardy.11 Swedavia subsequently appealed the City Court’s decision to the Market Court and, pending a decision, the fining case will not proceed.
Anti-competitive public sales
As well as standard antitrust rules and merger control, as of January 2010, the Act also includes a ban on ‘anti-competitive public sales’. Unless justified by public interest considerations, the new rule contained in section 3:27 of the Act enables the SCA to prohibit (subject to fines) a certain conduct by the state, county council or a municipality within a sales activity, if such conduct distorts, by object or effect, the conditions for effective competition in the market, or impedes, by object or effect, the occurrence or the development of such competition. If such conduct occurs, the SCA may, in certain circumstances, ban municipalities, but not state-owned bodies, from selling on a market altogether.
The SCA gives this area high priority. Indeed, public sales activity in which the state, a county council or municipality compete in an unfair manner has been an area in which the SCA has received complaints for many years. The ban applies to all economic activities. However, the SCA focuses on activities of some economic magnitude, such as the broadband market, restaurant and hotel operations, and management. Less important are certain activities that traditionally have been driven only in the public sphere, and there are valid reasons to engage in activities that are not primarily commercial.
Since the introduction of the ban, the SCA has investigated over 60 cases involving allegations of anti-competitive sales. In many of these cases, the public authorities have altered their conduct voluntary. However, a few public enforcement cases have proceeded to trial. In addition, a private company has used its secondary right of action and the complaint is currently pending before the Market Court.12 The first judgment by the Market Court was rendered in January 2014.13 In it, the Market Court overruled the Stockholm City Court and held that the Kommunalförbundet Räddningstjänsten Dala Mitt’s refusal to grant a private company access to a fire training ground was an infringement, although other alternatives seem to have existed (albeit at slightly higher costs). This is in sharp contrast to the Stockholm City Court, which found for the defendant on the grounds that the SCA had failed to show the requisite economic effects of the behaviour.
It may be too early to read too much into this judgment by the Market Court. In any case, the typical issue under this provision is not a refusal to deal, but sales by a municipally owned company in violation of what is called the municipal competence (ie, the rules determining what they can do in the commercial field). If the activity falls outside the municipal competence, the SCA’s view is that it distorts competition per se. However, in April 2014, the Stockholm City Court held in Strömstad Badanstalt that this did not suffice for an infringement to be established.14 According to the judgment, the SCA has to prove that the municipal activities affect competition or at least that the conduct is of such nature that there is a considerable risk that it will adversely affect competition. The City Court clearly criticises the SCA’s (lack of) investigation of effects. The SCA has appealed the judgment to the Market Court. In the press release it issued in conjunction with the appeal, the SCA stated that a municipality that conducts business outside its municipal competence has inappropriate competitive advantages that should not be permitted.
Section 4:6 of the Act provides that notification to the SCA is mandatory in transactions where the following turnover thresholds are met:
- the combined aggregate turnover of all undertakings concerned in the concentration exceeds 1 billion kronor in Sweden; and
- each of at least two of the undertakings concerned has turnover in excess of 200 million kronor in Sweden.
If only the first threshold is fulfilled, the SCA may request a filing from the parties to a concentration (and the parties may opt to make a voluntary notification). The SCA has used this power in a couple of cases, one of which was cleared as recently as September 2012.
Recent case law
In 2013, 48 notifications were filed with the SCA (36 in 2013); most of them were cleared in Phase I. Throughout the spring of 2014, the SCA’s the main focus has been on Swedbank’s real estate deal. Swedbank is one of Sweden’s largest banks and owns the country’s largest estate agent chain, Swedbank Fastighetsbyrå. It also held a 25 per cent stake in the popular property website Hemnet. In December, Swedbank purchased the second-largest estate agent chain in Sweden, Svensk Fastighetsförmedling, as a result of which Swedbank acquired a further 25 per cent share of Hemnet. The deal was closed without prior approval as it did not reach the thresholds for a mandatory notification (as Svensk Fastighetsförmedling is a franchise). Following negotiations with the SCA, however, Swedbank notified the deal retrospectively in January and the SCA opened a Phase II investigation in mid-March 2014.15 The SCA filed its summons application on 17 June 2014. In Phase I, the SCA issued a standstill order to prevent Swedbank from integrating further with Hemnet and also from exercising its voting rights.16 If it contravened these terms, Swedbank would be liable for a fine of 20 million kronor. This is the first time the SCA has combined a standstill obligation with a sanction. It is worth noting that the standstill order only applied in Phase I and the SCA had to go to the Stockholm City Court to request a prolongation of the standstill throughout the review, which it obtained.17
It will be interesting to follow the case closely. If the SCA wins, difficulties in fashioning remedies will arise. Blocking the transaction outright could be one possibility, but as a long period of time has elapsed since the transaction was implemented, disentangling the merged companies may be difficult or impossible, and may not be the best way to restore competition if, for example, key personnel have left since the announcement in December 2013.
The only material rules on state aid applicable in Sweden are contained in articles 106 to 109 TFEU; there are no purely national rules on state aid. There are currently several ways of bringing cases against alleged state aid infringements. However, the procedural path is not clearly spelt out in any legislative framework.
Recent case law
One recent example of national proceedings relating to state aid is the Stokab case, where the appellate court found that there was indeed illegal state aid, thus overturning the lower court’s decision.18 The case concerned the roll-out of broadband in multi-family dwellings in Stockholm. The aid was given through municipality-owned housing corporations and one issue was whether the money constituted state aid (ie, whether the municipality had sufficient control over the housing corporations). The appellate court found that there was sufficient control, especially as Swedish law requires the municipality to control its companies. The main issue, however, was whether or not the aid fulfilled the market economy investor principle (MEIP) criteria. The appellate court found that the criteria were not fulfilled as the municipality had not sufficiently demonstrated that there was a sound underlying business rationale for the broadband roll-out. Significantly, there were no business plans showing when a fair return on the 700 million kronor investment was expected.
The relevant enforcement authority is the SCA. Its decision-making powers are not as extensive as those of other competition enforcement authorities in the EU.
For example, in antitrust cases, the SCA may not impose fines itself; it must file a summons application and it is the City Court of Stockholm (subject to appeal to the Market Court) that imposes the fine.
The SCA may, however, decide on a ‘fine order’ in cases where parties agree on substance. So far, the SCA has rendered fine orders in three cases, all of which concerned bid rigging in public tenders.
The SCA may also issue a cease-and-desist order, subject to appeal to the Market Court. Under Swedish law, cease-and-desist orders must be more precisely worded than corresponding decisions taken by the European Commission: it is not sufficient merely to state that the infringement should cease; the SCA must clarify how such a cessation should be carried out (though the SCA can only impose behavioural remedies that are proportionate and necessary to bring the infringement to an end – structural remedies may not be imposed). The SCA may accept commitments, except for where there are serious infringements. In such commitment decisions, the SCA does not hold that an infringement has been committed but only that there is no ground for action.
Although competition law infringements are not criminalised as such, grave infringements of section 2.1 or article 101 TFEU may lead to the imposition of a so-called trading prohibition. The trading prohibition, as opposed to other sanctions under competition law, is imposed on a physical person. The provision has so far never been applied to competition law infringements.
As mentioned above, should the SCA decide not to investigate a complaint relating to antitrust, the complainant has a secondary right of action. Such actions are to be brought directly before the Market Court. As it is a subsidiary right of action, the Market Court will rule on the substantive issues and will not remand the case to the SCA. This right has been employed successfully on several occasions in recent years.
Further, the Act expressly enables private parties to initiate claims for damages for competition law infringements. Notwithstanding the legal possibilities, so far only a few damages claims have been reported in Sweden: the best-known damages case hitherto is undoubtly Europe Investor Direct and Others v VPC, which concerned a refusal to deal.19
Finally, it should be noted that a specific overall feature of competition law enforcement in Sweden is that Swedish administrative law offers extensive rights to access documents. This right arguably goes further than corresponding rights in other jurisdictions and under EU law. As a general rule, all documents are accessible apart from those that contain business secrets. Consequently, generally only the particular sentences or pieces of information referring to business secrets will be redacted, and the rest of the document will be available to the public. A further distinction is that the right of access to documents generally applies to the period prior to the submission of the statement of objections and as a consequence before any decision.
The limits on confidentiality were recently tested in Net at Once.20 In that case, the SCA refused to give access to certain documents on the basis that divulging them would adversely affect the investigation and cause damage to the party under investigation. The company requesting the documents appealed to the Stockholm Court of Administrative Appeals and argued it had a right to access to the documents as it was the complainant and should therefore have access as a party in the proceedings – which is subject to a more narrow exemption for refusal. The Administrative Court of Appeals found that there was no reason to give access to the documents to the complainant based on the Swedish rules. The question was therefore whether there would be a right to access to the documents under EU law. In line with Donau Chemie,21 the Stockholm Court of Administrative Appeals acknowledged that access could be granted to a third party if such party was considering bringing a damages claim as private enforcement plays an important role in the maintenance of effective competition. However, a complainant cannot be considered to fulfil such a function. The Stockholm Court of Administrative Appeals therefore held that that company was not entitled to the documents on the basis of EU law either.
Proposals for reform
In 2012, the Swedish government commissioned a former Supreme Court judge, Severin Blomstrand, to assess whether – and if so, how – the competition law rules should be updated to become more effective. The report was presented to the government in April 2013.22 The following measures were proposed:
- adopt a stop-the-clock possibility in merger reviews;
- introduce a marker system in the Swedish leniency programme; and
- explicitly allow the SCA to analyse the digitally retrieved material it has collected in dawn raids at the SCA’s premises.
None of them are regarded as particularly controversial. The government bill was issued in February 2014 proposing that the changes enter into effect 1 August 2014.23
In addition, there may soon be a reform of the court system relating to competition, market and intellectual property law matters. Currently, the Market Court is the highest court with jurisdiction over public enforcement competition matters in Sweden. However, in early 2014, the Ministry of Justice published a memorandum in which it proposes to abolish the Market Court.24 In its place, the Ministry of Justice proposes that competition law matters should be handled in special courts called the Patent and Market Court, and the Patent and Market Court of Appeals with the Supreme Court being the court of record (deciding precedents). The lower courts should be part of the Stockholm District Court and the Svea Court of Appeal in Stockholm, which is one of six appeal courts in Sweden.
In the memorandum, the Ministry of Justice also states that the time may be ripe to give the SCA greater enforcement powers in order to achieve a more efficient and appropriate application of the competition law rules. This is in line with the SCA’s own wishes. It believes it should have the same type of enforcement powers as most of the authorities in the other EU member states, such as adopting decisions on fines on its own and the ability to block mergers. However, as the Ministry points out, the question of greater enforcement powers is not unproblematic from a due process point of view. It therefore proposes that the government should initiate an inquiry to examine the possibility of granting the SCA greater enforcement powers. As the SCA is pushing for this quite strongly it may be expected that an inquiry may be put in place after the general elections in the autumn of 2014.
- Swedish Competition Act, in Swedish Konkurrenslagen (SFS 2008:579), available in English: www.kkv.se/upload/Filer/ENG/Publications/The_Swedish_Competition_Act.pdf. ↑
- KKVFS 2009:2. The guidelines are not available in English. ↑
- Commission Notice on Immunity from fines and reduction of fines in cartel cases, OJ 2006/C 298/11, and the ECN Model Leniency Programme: http://ec.europa.eu/competition/ecn/model_leniency_en.pdf. ↑
- Judgment by the Stockholm City Court on 2014-01-21, T 18896-10. ↑
- Judgment by the Market Court on 2012-08-22, MD 2012:9. ↑
- Summons application 2013-08-28, Dnr 483/2013. ↑
- Decision of the SCA 2012-05-03, Dnr 262/2011. ↑
- Judgment by the Market Court on 2013-04-12, MD 2013:5. ↑
- Judgment by the Market Court on 2011-11-23, MD 2011:28. ↑
- Summons application 2013-06-18, Dnr 378/2013. ↑
- Decision by the Stockholm City Court on 2014-01-13, T 9131-13. ↑
- ATV-Media AB/Kommunförbundet Mediecenter Jönköpings län, A 6/14. ↑
- Judgment by the Market Court on 2014-01-31, MD 2014:1. ↑
- Judgment by the Stockholm City Court on 2014-04-09, T 16810-12. ↑
- Decision by the SCA on 2014-03-17, Dnr 72/2014. ↑
- Decision by the SCA on 2014-02-20, Dnr 72/2014. ↑
- Decision by the Stockholm City Court on 2014-03-18, T 3629-14. ↑
- Judgment by the Stockholm Administrative Court of Appeal on 2009-12-16, 4514-07. ↑
- Judgment by Svea Court of Appeal on 2011-01-19, T 10012-08. ↑
- Judgment by the Stockholm Administrative Court of Appeal on 2013-12-17, 6265-13. ↑
- Court of Justice of the European Union, case C-536/11. ↑
- SOU 2013:16. ↑
- Prop. 2013/14:135. ↑
- DS 2014:2. ↑
Kastell Advokatbyrå AB
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Kastell is an independent boutique practising antitrust, intellectual property (including marketing law and media). It is considered to be one of the top firms in Sweden by established ranking guide Chambers & Partners. Kastell’s antitrust team has extensive experience assisting clients in matters before competition authorities, such as the Swedish Competition Authority and the European Commission, and regulatory authorities, such as the Swedish Post and Telecom Agency, as well as before courts - for example, the Market Court, the Swedish Supreme Court and the EU courts.
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