Norway: Competition Authority

Clear impact in markets

Our goal related to enforcement is to have a clear impact in markets and 2017 has been a successful year in that regard. We issued decisions in two major cartel cases (publishers and electro-services), resulting in significant fines. Our decisions have been upheld on appeal, both by the ministry in the merger area, and not the least by a landmark decision in the Supreme Court in a case of joint bidding in tender procedures by taxi companies. In 2016, the Norwegian Competition Authority (NCA) sent a statement of objection to the major Norwegian telecom company Telenor, where it was informed that a fine of 906 million kroner was being considered related to abuse of dominance. This is the biggest case ever for the NCA in terms of the size of the fine. Preparing in the final decision drained a significant part of our resources the whole year. Regardless, more cases are in pipeline: we conducted dawn raids in the market for beer for suspicion of abuse of dominance, in addition to dawn raids in the market for alarm and security services as well as waste collection in two possible new cartel cases.

Enforcement

Decisions – and maximum media attention regarding these – are obviously very important to achieve deterrence and compliance.

In 2017, the NCA managed to keep a good balance between a strict, but effective merger control, a growing activity in anti-cartel activities and two major ongoing major cases concerning possible abuse of dominance. Some notable key achievements in this respect are as follows.

In the cartel area, the NCA issued two decisions resulting in significant fines for the parties involved. The NCA imposed fines totalling 32 million kroner on four publishers for illegal collusion. The publishers cooperated in the form of a collective boycott of the distributor Interpress, and exchanged competitively sensitive information. The NCA considered that the cooperation had the purpose of restricting competition in the mass market for books. This market includes retail outlets for books that are not traditional bookstores, such as kiosks, grocery stores and gas stations. The NCA also imposed fines exceeding 18 million kroner (approximately €2 million) on six undertakings in the electrical installation sector for illegally cooperating on a tender relating to school buildings in Oslo. The cooperation took place in the spring of 2014, and the tender was for the maintenance and repair of electrical installations in schools managed by Undervisningsbygg Oslo KF, the city of Oslo’s company for managing school construction and maintenance.

In the merger area, one merger was blocked and three were cleared in Phase II after careful assessment of, inter alia, the efficiency gains related to the merger. The blocked merger was the proposed acquisition of Nor Lines by Icelandic Eimskip. In the NCA’s view, the acquisition would have significantly impeded effective competition in the market for transportation of frozen fish with reefer vessels from Northern Norway to Northern Europe. Moreover, in December 2017, the NCA notified it would possibly block the establishment of a joint undertaking (Nordic Port Services) by Greencarrier Shipping & Logistics AS, DFDS Logistics AS and Seafront Group AS. However, in January 2018, the parties announced the merger was abandoned.

Notably, 96 per cent of the mergers in 2017 were cleared within the legal limit of 25 days in Phase I. This is a reflection of efforts to enhance efficient case handling with a focus on front-loading resources in the case – with results obviously of importance for the parties involved as well as freeing internal resources for other prioritised cases. We also notice that blocked mergers the past years have resulted in alternative buyers ultimately causing enhanced competition in the markets concerned – a good indication the decision was correct.

Our ‘reputation and deterrence survey’ conducted among several thousand business managers in the winter 2017–2018 clearly indicates that we have succeeded with respect to deterrence and compliance. A large number of mergers are not implemented or remedies prepared before coming to us. The survey indicates that after 2014, approximately 11 planned mergers were abandoned due to the existence of the mergers control annually. This is five times the amount of merger cases that actually were stopped by the NCA. Agreements potentially in violation of the Competition Act are stopped or altered to comply. More than 50 horizontal agreements are stopped or modified annually due to competition law considerations. However, the survey also indicates that knowledge about the NCA and the law is less than satisfactory, especially for small- and medium-sized enterprises. Thus, targeted information activity is one of our prioritised areas for the coming year.

One of the major strategic goals for the NCA is to have a good and fruitful interaction with external parties. Obviously, if our final decision is not to the liking of the parties, we will not be popular and will be criticised. We endeavour to have an open door policy, and meetings with the parties and their representatives at their request. Nevertheless, there is always room for improvement. In 2017, we held evaluation meetings with the parties in some of our major cases, to get their retrospect views on different aspects of our case handling. Moreover, we have issued guidelines with the purpose to give external parties knowledge related to the case handling process in merger cases. Altogether, these measures provide the basis for even more responsive and professional interaction with the external parties in the future.

Finally, when it comes to our most important asset, our staff, after years of falling personnel turnover, we have succeeded in building a staff of highly qualified and experienced case handlers. In 2017, we have worked to develop overall and individual plans for competence and career development, train project managers, assemble efficient and multidisciplinary teams and develop mechanisms for sharing knowledge horizontally and over time. As a final note, we are honoured that our staff is in demand internationally, inter alia, in areas such as forensic IT, investigation techniques and economic methods.

Success on appeals

One of the strategic goals of the NCA is to have case handling at a high international professional level. That we have succeeded in this respect is, for example, reflected in the fact that all our decisions that have been tested in the courts and appealed to the Ministry of Trade, Industry and Fisheries (the Ministry) the last few last year have been confirmed.

More specifically, the outcome against appeals in 2017 are as follows.

In 2016, a decision in a merger case in the pizza market (Umoe Restaurants’ acquisition of Dolly Dimple’s Norge) was appealed to the Ministry. In January 2017, the Ministry decided to uphold NCA’s decision.

A key achievement for the NCA in 2017 was the dismissal by the Norwegian Supreme Court of an appeal from two taxi companies against a ruling of the Court of Appeal, thus confirming NCA’s decision concerning the submission of joint bidding in tender procedures. First of all, the judgment is important since it confirms that the submission of joint bids in a tender procedure where the operators concerned could have submitted separate bids amounts to an infringement by object of the Competition Act. In addition to being an important victory in a case that has drained significant resources over many years, the outcome also has significant signaling effects, not the least deterring unlawful consortium bidding, in addition to increased awareness by public procurers to identify potential illegal co-operation by suppliers.

In 2016, the NCA blocked Blue Energy’s acquisition of 39 self-serving gas stations from St1 Norge due to considerations based on insufficient independence between seller and acquirer. St1 Norge was obliged to sell these stations, as a remedial condition set by the NCA in order to approve a previously notified merger. This decision was appealed to the Ministry. While the Ministry handled the appeal, the parties renegotiated the deal in order to assure satisfactory independency. Consequently, the Ministry of Trade, Industry and Fisheries decided to approve Blue Energy as a buyer of the stations.

An important development related to appeals is that until April 2017, decisions where the NCA imposes fines were appealed to the courts. Merger decisions and other administrative decisions were appealed to the Ministry of Trade, Industry and Fisheries. From April 2017, all decisions shall be appealed to the newly established Competition Complaints Board.

Active advocacy efforts

Related to advocacy, we work to extend the competition frontier. In general, decisions and hearing statements of the NCA from the past few years receive substantial attention by the media. The NCA also follows up earlier reports by presenting findings on, inter alia, conferences and by dialogue with operators in the relevant markets.

A key advocacy achievement is related to the highly regulated taxi market. The NCA has repeatedly advocated for a deregulation reflecting current realities and developments; not the least related to digital markets. In February 2017, a committee appointed by the Norwegian government to analyse the impact of the sharing economy followed up with proposals in the same direction, inter alia, based on input from the NCA. In the fall of 2017, it became clear that the government is prepared to consider changes to deregulate the market. The government’s decision to consider changes in the regulatory framework for the taxi industry in accordance with recommendations in the NCA’s advocacy efforts is an important step in the right direction.

A new price portal for price comparison in the retail grocery market was launched by the National Consumer Council in 2017. Due to objections and input from the NCA, the portal will be introduced in a way that prevents the three main chains in the market to use the portal to coordinate on prices.

The NCA received much media attention after the Supreme Court decision in favour of the authority’s decision in the taxi case concerning the limits for open consortium bidding in a public tender. The NCA has used this window of opportunity to give guidance both to lawyers and companies in the building sector, as well as other actors.

It can also be mentioned that NCA employees are active in the media, eg, by regular publishing op-eds in the leading national business newspapers and by presentations at conferences, guest lectures at the university and at the major business schools as well as industry association meetings.

High visibility and increased effort in social media

Our website www.kt.no is still our main platform for information. Regardless, to visualise our social mission and to further enhance the deterrent effects of our activities, the NCA continues to work strategically and proactively to maximise visibility and our public footprint. In 2017 we received about 2,800 news coverages referring to the NCA in the media. This number will, of course, vary from year-to-year according to the number of relevant decisions and hearings we are involved in.

To enhance our visibility, we take an active part in the public debate by using the complete toolbox of communication means and channels, such as op-eds, interviews, participation in public debates and presentations in relevant conferences. In addition, we are also increasingly active in social media; Facebook, Twitter, LinkedIn and Instagram. The director general has his own professional Twitter account for professional statements. We use social media mainly for advocacy activities but not least to proactively take part in the public debate with our views.

In sum, this makes us an important professional source on issues related to competition. With increased visibility in media and social media we are able to reach our main target groups. We also aim to publish our press releases in English as Norwegian cases are of high international relevance.

Revisions in the competition law

New amendments to the Competition Act entered into force in 2017. One of the important developments is that an independent competition complaints board will be established as a measure to enhance the NCA’s independence. At the same time, the possibility to reverse the NCA’s decisions based on public interest considerations will be abolished.

The background is as follows. In Norway, the Norwegian Competition Authority’s independence in individual cases is secured by law. Even though the NCA may be ordered to deal with a case, it cannot be instructed as to decisions in individual cases. Nevertheless, the Ministry for Industry, Trade and Fisheries has been the appellate body for the NCA’s merger decisions. In addition, the NCA’s decisions to intervene in mergers could be reversed by the government based on public interest considerations.

The new amendments imply that the possibility to reverse the NCA’s decisions based on public interest considerations will be abolished. As an additional measure to enhance the NCA’s independence, an independent competition complaints board will be established. The board will be the appellate body for all decisions by the NCA, in mergers as well as cartel and abuse of dominance cases.

In addition, the SLC-test for intervention in mergers has been replaced. According to the new amendments, the NCA shall prohibit concentrations that will significantly impede effective competition, in particular as a result of the strengthening of a dominant positon (the Significant Impediment to Effective Competition test; SIEC-test). The new standard harmonises the Norwegian merger control review standard with the EU/Euopean Economic Area merger control rules, and will be interpreted in line with EU precedents. One consequence of the new and EU-harmonised standard is a shift in the role of the evaluation of efficiencies. Following the amendment, the NCA can no longer take into account all relevant social economic gains, but focus on the pro-competitive effects which are likely to benefit consumers.

Funding for competition research

The NCA allocates funds for research in competition law and economics. The purpose of the grants is to strengthen competition policy research and facilitate knowledge sharing between competition authorities and academia. Educational and research institutions, enterprises and independent individuals can apply for funding. Starting in 2015, the NCA has thus far allocated funds after four application rounds. After the application round in 2017, five new projects or activities received funding. These projects will improve the knowledge basis for competition enforcement, and contribute to strengthen the ties between the academic community and the competition authority.

Looking ahead

In December 2017, the NCA commissioned a survey to measure both the reputation of the authority, the respondents’ knowledge about the competition rules, as well as the indirect and direct effects of the NCA’s work and decisions. The respondents included 17,375 business leaders and 1,595 business lawyers, in addition to 16 lawyers specialised in competition law.

Remarkably, 85 per cent of the business leaders, 90 per cent of the business lawyers and 94 per cent of the lawyers specialised in competition law think that the NCA’s work is important for well-functioning markets. Among the lawyers specialising in competition law, the NCA scores high on important dimensions as professional level and quality of decisions.

As mentioned above, the survey also documents the deterrent effects of law and the NCA’s enforcement. On the negative side, the survey reveals that almost 30 per cent of the business leaders in the survey experience or suspect illegal cooperation occurring in the market they operate. The survey also indicated that knowledge relating to the competition law can be improved. The respondents were also asked about what they considered as regulations restricting competition, resulting in suggestions from almost 700 business managers. This feedback gives the NCA valuable information to consider for follow up in future advocacy and enforcement activity.

The results from the survey accords well with the NCA’s key priorities for 2018. To achieve our strategic goal to have a clear impact in markets, we will endeavor to have different types of cases in different markets combined with high quality decisions. We will also work to increase knowledge and compliance and work to be even more visible in media. Our advocacy and outreach efforts will in particular be directed towards small and medium sized enterprises to enhance knowledge and compliance. We also aim to generate more cases ex officio, inter alia, by continued market surveillance to generate more cases and the use of screening methods. To enhance deterrence, we will prioritise severe cartel cases that might lead to imprisonment.