Norway: economist perspective
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Konkurransetilsynet - The Norwegian Competition Authority is the enforcement authority for Norway. Read their profile
Economic evidence plays a prominent role in the decision-making and prioritisation of cases by the Norwegian Competition Authority (NCA). Consequently, this steadfast commitment to economic analysis has solidified a need for expert economic advisory services in Norwegian competition investigations.
At the time of writing, Tina Søreide has been director-general of the NCA for a year and a half. The lawyers interviewed conclude that during this time, Søreide has maintained demand for economic advice at a high level by keeping the NCA’s activity at high levels both in terms of competition law enforcement and merger control. Several high-profile cases, including investigations of competition law infringements and in-depth merger investigations, have moved forward at a rapid pace.
This article discusses the development of competition policy and the use of competition economics in the Norwegian market. It is based on interviews with the law firms Arntzen de Besche, BAHR, Thommessen, Wiersholm, and Wikborg Rein conducted in June 2023.
The high demand for legal and economic advice in competition-related matters persists
The general view among the lawyers interviewed is that the high demand for legal and economic advice in competition-related matters remains and is here to stay. The drivers of the increased demand for advice are several and likely to stem from the increased attention competition matters have in the public debate, the increased complexity in NCA’s investigations, and the severe consequences of violating the competition rules. All these drivers have increased the awareness of competition policy among enterprises, which to a larger degree, request assistance to comply with competition rules or to assess competition-related concerns. The lawyers anticipate that under the leadership of the current director-general, the NCA will maintain its high level of intervention and impose substantial fines for anticompetitive conduct.
To keep up with the developments in demand for legal and economic advice, several of the law firms interviewed have, during recent years, increased their in-house capacity for economic analysis and use of external economic advisers.
A growing challenge emphasised by the law firms in this year’s interviews is the NCA’s public communication, which is deemed to have become vaguer and less targeted. The communication from the NCA is often perceived as ambiguous, and uncertainty lingers regarding NCA’s stance on whether specific conduct is deemed to be illegal or just unfortunate. The situation presents a challenge for law firms, as the increased uncertainty is seen to amplify the complexity of providing legal advice.
The ambiguity has significant implications because law firms perceive the NCA as less predictable and spend more time analysing the intricacies of the NCA’s position to understand what the NCA considers illegal. At the same time, law firms are aware of the fact that enterprises may face severe repercussions if they fail to comply with the competition rules. Some of the law firms interviewed express a concern that legal advice, therefore, is becoming overly cautious. This may result in over-enforcement, which hampers the efficiency of the competition policy.
Among the explanations for this current development of the competitive landscape in Norway, the lawyers interviewed mention the fact that the NCA has for many years had an economist as director-general, which over time has moved the exercise of authority towards an excessive focus on economic considerations. This has led to a potential imbalance towards the legal departments, whose role and influence seem to be decreasing. The lawyers interviewed question whether it may be time to rectify this situation and rebalance the influence of the legal and economic departments within the authority.
The active market for mergers maintains demand for economic analysis at a high level
Mergers continue to dominate as the core service offered by the law firms interviewed. Merger cases represent roughly half of all competition-related legal advice provided by the law firms interviewed. Although competition economics typically has a prominent role in merger cases, only a limited number of cases have necessitated extensive economic analysis due to the recent limited number of in-depth investigations conducted by the authority.
While 2022 witnessed a flurry of merger activity, the first half of 2023 has seen a decline, potentially indicating a return to pre-2021/2022 levels. In general, the lawyers interviewed agree that despite the high number of merger filings in recent years, the NCA maintains commendable efficiency and accessibility in its case handling, particularly when dealing with unproblematic mergers. The parties benefit from the agency's responsive and streamlined approach, ensuring smooth and efficient merger processes.
Among the recent merger cases, one case is notable, namely the merger between Schibsted ASA and Nettbil AS. The case significant attention because it is the first merger case that has been litigated before Norwegian courts, marking it a milestone in local merger history. The case also showcases the pivotal role and need for economic analysis in assessing merger-related effects.
Schibsted, a Norwegian-based media house, acquired Nettbil, an online service for the sale of used cars. The size of the transaction did not reach the thresholds for notification and was therefore completed without notifying the NCA. In March 2020, the NCA was informed about the transaction and required the transaction to be notified, and in November 2020, the NCA announced a prohibition decision rooted in the horizontal relationship between Nettbil and Schibsted’s online marketplace, Finn.no.
Schibsted appealed the prohibition decision to the Competition Appeal Tribunal (CAT), seeking a reversal of the decision. The appeal was dismissed and the CAT upheld NCA’s decision. Schibsted appealed the CAT decision to the Appeal Court, which reached a different conclusion. The Appeal Court did not find NCA’s legal and economic assessments of the factual circumstances in the case to be enough to justify a prohibition of the transaction. The Appeal Court concluded that the NCA had failed to demonstrate that Finn.no and Nettbil operated in the same market and criticised the NCA for its reliance on internal documents without any further economic analysis assessing Nettbil's economic reality or the objective competitive relation between the merging parties and other parties active in the market. The Appeal Court, therefore, annulled the prohibition decision.
The NCA appealed the Appeal Court’s annulation of the prohibition decision to the Supreme Court, who, in February 2023, dismissed the appeal and upheld the Appeal Court’s decision confirming there was no basis for the NCA to intervene against the transaction. The Court's ruling emphasises the need for caution in the use of internal documents, and the NCA must be careful when relying solely on such evidence without clear, concise and economically supported arguments to substantiate claims of competition harm.
It is a consensus among the lawyers interviewed that this case has set a significant precedent, not only as the first merger prohibition case to be litigated before the Norwegian courts but also due to the critical examination of the (lack of) evidence provided by the NCA. The final ruling by the Supreme Court has provided very welcome clarity to evidence evaluation in merger cases.
Several high-profile investigations by the NCA remain pending
It has become apparent that companies found to violate antitrust rules in Norway face severe consequences from the NCA. The NCA has gradually increased fines and has now reached a position as one of the highest-ranking authorities in terms of the size of the fines imposed.
Currently, several cases related to anticompetitive agreements are ongoing. These cases are, like many of the recent investigations by the NCA, primarily focused on the direct or indirect exchange of information. Of the currently ongoing cases, two cases with significant fines at stake stand out:
- The so-called price hunter investigation, where the three largest grocery chains in Norway are under investigation, has been allowing (joint practise of not hindering) competitors to access their stores to collect shelf prices. The practice was established through a long-running industry standard for comparative advertisement. The case has been ongoing for several years and dates to 2018, when the NCA conducted a dawn raid. If the NCA’s Statement of Objections is upheld, the grocery chains could face a record-breaking fine of 21 billion kroner (€2 billion).
- The so-called Bokbasen case, where the NCA in November 2022 fined the four largest publishers in Norway 540 million kroner (€51 million) for sharing future prices and publication dates through the online platform Bokbasen. Although the shared information was public to the publishers’ customers, such as bookstores and libraries, which purchase books through Bokbasen, the NCA considers the practise a serious breach of the competition rules because it facilitates coordination of prices and publications. The case has been appealed.
With respect to the prohibition against the abuse of dominance, fewer cases have surfaced.
Recent decisions show that the private enforcement environment in Norway is developing
In contrast to the significant fines incurred for violating the competition rules, recent developments in the area of private enforcement indicate that the compensation to customers suffering harm due to a competition law violation is less certain.
Follow-on damage claims following competition cases are increasingly on the agenda for European courts. Follow-on damage claims in Norway have also become more accessible after, for example, the introduction of specific rules on statutory limitations concerning legally binding decisions. Two recent judgments on the topic are noteworthy in the context:
- Following the European Commission’s finding that the truck manufacturers had colluded in the setting of gross list prices over a period of 14 years, Posten Norge claimed compensation. Posten claimed €47 million plus interest for the overcharge it paid for the trucks procured from the truck manufacturers during the infringement. The case was heard in the District Court in the second half of 2022. In February 2023, the Oslo District Court ruled against Posten Norge and acquitted the truck manufacturers. The court rejected the presumption of harm and stated that this must be assessed case-by-case. All parties presented empirical analyses prepared by economic experts to evidence their positions, but the court had to struggle to evaluate the presented evidence and did, in the end, reject all analyses presented by the parties because they were not convincing. The case has been appealed.
- In the so-called Alarm case, the Supreme Court clarified restrictions on third-party funding of opt-out class action suits. The Alarm case was a class action damage claim by the consumer interest organisation (Alarm Customer Association), which sought compensation from Verisure and Sector Alarm following a concluded violation of competition law. To cover both the association’s and the alarm providers’ legal costs if the action should fail, the Alarm Customer Association secured third-party funding for their class action. In the event of success, the funder would receive compensation equivalent to three times itsinvestment in the class action. The funder’s share would be given priority, resulting in reduced compensation for each member of the class action. The Alarm Customer Association would only accept the position as a class representative if the court approved the funding agreement because it could not bear the potential liability for costs on its own. In June 2023, the Supreme Court dismissed the Alarm Customer Association as the class representative due to its condition to split the awarded amount with a third-party funder. However, the Supreme Court’s decision only restricts opt-out class actions while allowing customers to bring class action as an opt-in where the members can be held liable for the group representative’s costs. It is also worth noting that the Supreme Court suggested the need for legislative consideration to alter the current regulations to make compensation more accessible to harmed parties.
It is a consensus among the lawyers interviewed that these recent developments in the area of private enforcement indicate that the trends that can be seen in other parts of Europe are also coming to Norway. Several of the lawyers interviewed also confirm that the demand for legal and economic advice in private enforcement matters is increasing, so the recent judgments in the area have been very welcome to navigate this environment of private enforcement.