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The Norwegian competition rules are laid down in the Norwegian Competition Act (LOV-2004-03-05-12). The Act has been subject to several amendments, lastly by an amendment of 14 April 2016 which made changes in the standard for merger control, rules for settlement in cartel cases, and a new appeal system. The amendment has been approved by the parliament and is expected to enter into effect on 1 January 2017.
The Act applies to all actions and agreements that may have an effect in Norway. As such, an agreement between two foreign undertakings or a foreign-to-foreign merger may be scrutinised under the Norwegian competition legislation insofar as a Norwegian market could be affected.
Generally, the Norwegian competition rules apply to all entities that pursue a commercial activity on a market. However, a few exceptions have been made. The Act does not apply to conditions of appointment of employees (section 3). Further, certain sector-specific exemptions from the rules have been made for the publishing sector, where there is a fixed-price system for new books in place (FOR-2014-12-19-1716), for private doctors, psychologists and physiotherapists (FOR-2012-06-22-570) and for the agriculture and fisheries sector in relation to the annual agricultural agreement and settlement (FOR-2004-04-23-651).
As in most other EU or EEA countries, the Act contains both behavioural and structural competition rules.
Cartels, anticompetitive cooperation and abuse of dominance
On the behavioural side, chapter 3 of the Act contains a prohibition against cartels and other forms of agreements, decisions and concerted practices restricting competition (section 10, corresponding to article 101 TFEU and article 53 of the EEA Agreement) and a prohibition against unilateral abuse of dominance (section 11, corresponding to article 102 TFEU and article 54 of the EEA Agreement).
To bring the Norwegian legislation in line with the corresponding EU and EEA rules, Norway has adopted regulations exempting certain forms of agreements from the scope of the cartel prohibition in section 10, including a general Vertical Agreements Block Exemption Regulation (FOR-2010-06-21-898) as well as exemptions for certain agreements pertaining to agreements for R&D (FOR-2012-04-20-342); specialisation (FOR-2012-04-20-343); motor vehicles (FOR-2010-08-24-1214) and insurance (FOR-2010-05-31-733). These regulations correspond to the similar EU Block Exemption Regulations.
Sanctions, leniency and settlement
Participation in a cartel or other forms of anticompetitive cooperation as well as abuse of dominance may be sanctioned with administrative fines (section 29) imposed upon the participating undertakings, and the illegal conduct of a subsidiary may be imputed on a parent company under the ‘single economic entity’ doctrine developed by the ECJ. Fines are further regulated in the Fining Regulation (FOR-2013-12-11-1465), which sets out detailed rules on the calculation of fines. The calculation of fines follows the EU system whereby fines may be imposed for up to 10 per cent of the turnover in the previous fiscal year.
In the field of cartels and anticompetitive cooperation, the Act provides for full leniency (section 30) or partial leniency (section 31) under a leniency procedure inspired by the EU rules. In addition, the revised Act from 1 January 2014 also provides for a settlement procedure (section 12) in cartel or dominance cases.
With the amendment of 14 April 2016 a system of cartel settlement was established, inspired by the similar arrangement in EU. The cartel settlement procedure allows undertakings who admit wrongdoings to settle with the competition authority with a 10 per cent discount in fines.
Cartel infringements may also lead to penal sanctions for individuals (criminal fines or imprisonment for up to three years, or up to six years in aggravating circumstances), such as key employees involved in illegal collusion. There are no examples of penal sanctions being imposed against individuals under the current Act.
On the structural side, chapter 4 of the Act contains the merger control rules. The merger rules include a mandatory filing obligation for mergers and acquisitions which bring about a change of control and exceed the national turnover thresholds (section 18). The filing obligation rests upon the acquirer in the event of an acquisition, and upon both parties in mergers and the creation of full-function joint ventures.
Pursuant to the rules, mergers and acquisitions must be notified to the Norwegian Competition Authority (NCA) insofar as both the combined turnover in Norway of all undertakings concerned exceeds approximately €120 million and the turnover in Norway of each of at least two undertakings concerned exceeds about €12 million.
With regard to the notion of control, the concept of undertakings concerned, geographic allocation of turnover and other key concepts to the merger control enforcement, the NCA will generally follow the approach set out in the Consolidated Jurisdictional Notice published by the Commission.
Until the amendments of 14 April 2016, the NCA was authorised to intervene in mergers and acquisitions insofar as they were likely to lead to or strengthen a significant restriction of competition contrary to the objectives of the Act (section 16). A total welfare standard applied to the test. However, with the amendments of 14 April 2016 the test was harmonised with the EU significant-impediment-to-effective-competition (SIEC) test with consumer welfare as the welfare standard to be applied to the test. According to commentators this change is not likely to make much difference in practice.
The relevant markets are defined along a product dimension and a geographic dimension under the approach set out in the Relevant Market Notice published by the Commission. The NCA will also often look to the merger practice of the Commission when defining the relevant markets for the purpose of its own merger control practice, as has been seen in several recent merger cases.
Mergers and acquisitions fulfilling the turnover thresholds are subject to a ‘standstill obligation’ and may consequently not be implemented prior to clearance from the NCA (section 19), although the notifying party may apply for an exemption from the standstill obligation in individual cases. Infringements of the standstill obligation may be sanctioned with fines (section 29). This has happened in several cases.
Clearance may take the form of a full clearance or conditional clearance (subject to structural or behavioural remedies). The merger control procedure follows a two-stage procedure, somewhat akin to the one followed by the Commission in the EU (section 20). At the end of the first stage (Phase I), which may generally last for up to 25 business days after the filing of a complete notification, the NCA will either clear the transaction or issue a preliminary notice of possible intervention, which will bring the procedure to the second stage (Phase II).
The NCA will generally either clear the transaction or issue a statement of objections 70 business days after the filing was submitted. Insofar as a statement of objections is issued by the NCA, the parties are then given 15 business days to submit their comments to the statement of objections, and the NCA has 15 business days thereafter to issue a final decision in the case. The final decision will take the form of a full clearance, conditional clearance or prohibition.
Remedies may be offered by the parties at any stage of the procedure. If remedies are submitted together with the filing (or at the latest within 20 business days), the NCA may opt for clearing the transaction with the remedies already in Phase I after 35 business days (fast-track procedure). If remedies are submitted later than day 55, the deadline for the NCA to issue a statement of objections is extended incrementally (ie, the deadline will be 71 business days if remedies are submitted on day 56 and so on). If remedies are submitted after the statement of objections, the NCA’s deadline is prolonged by 15 business days.
Further rules on the merger control procedure are laid down in the Merger Control Regulation (FOR-2013-12-11-1466), including rules for the possibility to submit a simplified notification in cases where no competition problems arise (eg, owing to the absence of, or negligible, horizontal or vertical overlaps).
To summarise, simplified concentrations are generally cleared in Phase I within 25 business days, whereas the merger control procedure in more complex and potentially problematic concentrations may take significantly longer, often between 100 and 115 business days, which equals approximately six months.
The NCA’s recent enforcement practice
Recent NCA fining decisions for cartels and anticompetitive cooperation
In May 2015, the NCA imposed fines upon the three undertakings – Arro Elektro AS/Arro Holding AS, Caverion Norge AS/Caverion Oyj and Ingeniør Ivar Pettersen AS/Pettersen AS – for illegal bid rigging in relation to individual call-off tenders under a framework agreement for electrician services to the regional health institution Viken Helseforetak. According to the NCA, the bid rigging consisted of agreements between the three undertakings whereby they would submit tender offers, albeit agreeing beforehand on the prices offered by each of them and on which of the undertakings would win the contract in each call-off, thereby maintaining artificially high prices which, otherwise, would not have been competitive.
Caverion applied for full leniency in the case, but was only granted partial leniency by the NCA since its leniency application was submitted after the NCA had conducted a dawn raid at its premises. Following the granting of partial leniency, Caverion’s fine was reduced from the original amount of about €170,000. Pettersen and Arro received fines of about €340,000 and €220,000 respectively.
No recent NCA decisions regarding abuse of dominance
Similar to the trend in recent years, there were no abuse of dominance cases in 2014 or 2015, although the NCA conducted a dawn raid at the Norwegian paints and coatings company Jotun in April 2015 to investigate circumstances related to allegations of Jotun’s abuse of dominance in Norway. The outcome of the recent dawn raid and investigation of Jotun is, however, not yet known.
Recent NCA interventions in mergers and acquisitions
During 2015, the NCA received 101 notifications, compared to 89 the year before. As of May 2016, 18 notifications have been submitted so far. The NCA intervened in six concentrations, whereby all were approved subject to conditions.
As of May 1016 the NCA has intervened in one concentration in 2016. This case was AT Skog AS’s acquisition of NEG Skog AS. The products under scrutiny were lumber mill products, which are considered by the NCA to be local. The case is interesting in at least two aspects. First, it manifests the authority’s emphasis and concern for the competition in local markets. Secondly, the case shows that the competition authority follows the trend of supporting its argument by relatively sophisticated quantitative analyses.
In 2016 the NCA has also exercised is authority to order a party to a concentration to submit a notification subject to the general mandatory notification rules, the reason being the concentration of a minority shareholding position. The acquirer in this case was AT Skog Invest AS, which acquired 34 per cent of the shares in SB Skog AS. However, the competition authority seems not to have continued to Phase II, possibly because of the intervention in the first case against AT Skog AS.
Recent NCA fining decisions for infringements of the standstill obligation
As has been the trend in recent years, most of the NCA’s fining decisions have concerned infringements of the standstill obligation. During 2014, five companies were fined for such infringements, with the most notable decision being the fine of approximately €3 million imposed upon the major Norwegian grocery store chain Norgesgruppen for intentionally implementing its takeover of several lease contracts pertaining to Ica Norge’s Ica Maxi stores without notifying the transaction to the NCA.
In 2015, the NCA imposed fines for infringement of the standstill obligation in two cases. One case concerned the energy suppliers Tafjord Kraft AS and Tussa Kraft AS’s implementation of the ‘full-function’ joint venture Mørenett AS in February 2014, which was later notified to the NCA in June 2014. In its fining decision of March 2015, the owners of Tafjord Kraft AS and Tussa Kraft AS received fines of approximately €35,000 and €30,000 respectively. In the other case, Contiga AS received a fine in December 2015 for failing to comply with the standstill obligation with respect of a concentration involving a change of control from joint control to individual control.
Developments in case law from the Norwegian courts
On 17 March 2015, the Borgarting High Court handed down its ruling in the Ski Follo Taxidrift case (13075034ASD-BORG/01), on appeal from the Follo District Court.
The case concerned the validity of the NCA’s fining decision of 4 July 2011 pertaining to the joint tendering by the taxi companies (V2011-12) Ski Taxi BA and Follo Taxisentral BA through the joint venture Ski Follo Taxidrift AS in two patient transport tenders for Oslo University Hospital in 2010.
In its original decision, the NCA took the view that it would have been possible for the taxi companies to submit individual offers in both tenders, and that the joint tender offer therefore constituted a restriction of competition ‘by object’ infringing section 10 of the Act. As a result, the NCA imposed three fines upon Ski Taxi, Follo Taxisentral and Ski Follo Taxidrift in the amounts of approximately €30,000, €47,000 and €260,000 respectively.
The taxi companies brought the case before the Follo District Court, which, in a ruling of 8 February 2013 (11-202508TVI-FOLL), acquitted the companies and annulled the fines imposed by the NCA.
The district court found, contrary to what the NCA had invoked, that for joint tendering to be illegal, both companies must have been able to submit individual offers of their own meeting the tender requirements. On the other hand, if only one of the joint tenderers concerned could not have met the tender requirements with an offer of its own, the joint tendering would be legal.
Further, the district court found that that both companies possibly could have submitted offers for one limited geographic transport area in the second tender, but that the companies otherwise could not be regarded as potential competitors in the two tenders, since Ski Taxi would not have been able to submit an offer of its own meeting the tender requirements in other areas. As to whether the joint tendering with respect to the limited area concerned in the second tender could be regarded as a restriction of competition by object, the district court found that a joint tender which is openly submitted to the contracting authority, such as the joint tender in the case, could not be regarded as a restriction by object.
Thus, the district court went on to assess the anticompetitive effects of the joint tendering, and found that the limited anticompetitive effect stemming from reduced competition for transport within one limited geographic area in the second tender was not sufficient to appreciably restrict competition, which is a requirement for establishing infringements under section 10 of the Act, as under the EU and EEA rules.
The NCA appealed the district court’s acquittal before the Borgarting High Court. The High Court first assessed the legality of the joint tendering arrangement, and whether it was sufficient for the joint tender offer to avoid the scope of section 10 that only Ski Taxi could not have submitted an offer of its own. Here, the High Court departed from the approach taken by the district court. With reference to the updated joint tendering guidance paper issued by the NCA in February 2014, the High Court found that for joint tendering to be legal in cases where only one of the joint tenderers could have submitted a bid of its own, the cooperation between the tenderer that could have submitted its own offer and the tenderer that lacked the requirements to do so must not exclude other possible cooperation arrangements.
The High Court’s reasoning, following the approach from the NCA’s 2014 guidance paper, seems to imply that a joint tendering arrangement between supplier A (which could have submitted its own offer) and supplier B (which could not) would be illegal insofar as a third supplier C (which neither could have submitted its own offer), instead of not participating, could have submitted a joint offer with B.
While it is true that competition in a tender would have been stronger in a hypothetical scenario where the offer from supplier A had competed with a joint offer from suppliers B and C (two competing offers), as opposed to a single joint offer from A and B (with C not being able to submit its own offer), this approach seems to raise questions under a counterfactual angle. Since, in some cases, the relevant counterfactual to one joint offer from A and B would not be one individual offer from A and a second joint offer from B and C, but one single offer from A alone, it seems unwarranted to take such an hypothetic scenario into account. Otherwise, this would imply, to put it bluntly, that the NCA could ‘dictate’ which company a supplier with insufficient capacity to meet the tender requirements would need to cooperate with.
Nonetheless, the High Court followed the NCA’s line of reasoning without addressing these points.
In any event, the High Court did not need to determine the exact scope of the possible legality of joint tendering arrangements, since it interpreted the tender documents differently from the district court and found that Ski Taxi could have submitted its own offers in both tenders.
Moving on to the question of whether a joint tender offer submitted openly to the contracting authority constitutes a restriction of competition by object, the High Court again departed from the district court’s view. The High Court took a somewhat more formalistic approach and attributed decisive weight to the fact that a joint tender offer by two companies, which each could have submitted individual offers of their own, would as such be capable to restrict competition, thus without it being necessary to assess its effects. In reaching that conclusion, the High Court rejected the argument brought by the taxi companies that a cooperation between competitors in the context of tenders must be ‘secret’ (collusive) in order to constitute a restriction by object. Contrary to what has been suggested by some legal scholars, the notion of restrictions of competition by object in the context of tenders is therefore not limited to bid rigging (such as in the Caverion, Arro and Pettersen case mentioned above).
The fact that the joint tender was submitted in an open and transparent manner was, however, taken into account in the High Court’s assessment of the NCA’s calculation of the fines imposed in the case. Since the taxi companies had openly submitted their offer to Oslo University Hospital as a joint tender, the High Court did not find a clear preponderance of evidence for an intentional infringement, in contrast to what the NCA had argued (the reasoning here was that if the taxi companies intended to infringe the competition rules, they would presumably not have been open about the arrangement).
As a result, the High Court reduced the fines owing to the more limited degree of guilt, with fines imposed upon Ski Taxi, Follo Taxisentral and Ski Follo Taxidrift in the amounts of approximately €12,000, €24,000 and €120,000 respectively.
In a decision of 1 June 2015 the Borgarting appeal court raised the original fine of approximately €17 million issued by the NCA to NCC Roads AS to approximately €18 million, after the district court had reduced the fine to approximately €5 million. The court confirmed that the parent company NCC AB was jointly liable, contrary to the district court’s opinion. The court also confirmed that a company must be held liable for the action of employees although the employee acted on its own contrary to the interest of the company. The case was appealed to the Supreme Court, but not accepted for appeal, rendering the appeal court decision final.
The NCA is the surveillance authority and the competent authority to investigate infringements and impose administrative fines under the Act. Before the amendments of 14 April 2016, the NCA’s intervention in mergers and acquisitions was subject to appeal to the Ministry of Trade, Industry and Fisheries, while to challenge and annul a fining decision from the NCA, the case needed to be brought before the ordinary Norwegian courts. With the amendments of 14 April 2016 a separate independent appeal body will be established. The appeal body will handle, in practice, all appeal cases. Furthermore, the decisions of the appeal body will be brought directly into the appeal court, instead of a first instance trial.