Merger Control: Focus on Larger Companies and More Efficient Procedures
Amongst the amendments adopted by the Norwegian Parliament on 14 June 2013, the substantial procedural changes in the merger control legislation are bound to be of considerable practical importance.
The current turnover thresholds in Norway are very low, as concentrations shall be notified to the Norwegian Competition Authority (“NCA”) if the undertakings concerned have a combined annual turnover in Norway exceeding NOK 50 million, and at least two of the said undertakings have an annual turnover in Norway exceeding NOK 20 million. After the amendments, the turnover thresholds will be increased to NOK 1 billion (approximately EUR128 million) and NOK 100 million (approximately EUR12.5 million) respectively.
This significant amendment will have major practical impact in terms of reducing the number of transactions were filings are mandatory, presumably both with regard to small domestic transactions and foreign-to-foreign transactions where the parties’ export sales to Norwegian customers just exceed the current thresholds.
Yet, even if many more transactions can be completed without filing a pre-notification, the NCA retains the power to investigate and ultimately prohibit also sub-threshold concentrations. The new provisions will give the NCA a three months period from the signing of the agreement or when control was acquired, within which it can decide to open an investigation by requiring a notification of the concentration.
The NCA has intervened and prohibited several concentrations under the current regime, which would not have been subject to mandatory notification under the future thresholds. It remains to be seen how the NCA will approach such possible “problematic” concentrations, e.g. transactions involving local retailers. The option for the NCA to open an investigation within three months may carry an element of legal uncertainty for the market participants. Therefore, the new regime still provides the parties with an option to submit a voluntary notification.
Another notable amendment is that the current two-stage system, involving a rather simple notification followed by a comprehensive notification if the NCA finds that a further examination is required, will be replaced by just one notification. The information required in the new single notification is to a far extent similar to the requirements to the second and comprehensive notification under the current scheme.
The time schedule under the new system implies that the NCA, if the parties have not proposed any remedies, must adopt an intervention decision within 100 working days after receiving the notification. Several sub-deadlines apply, and the time schedule is designed to facilitate early remedy proposals or at least discussions between the parties and the NCA.
More Lenient Leniency Programme
Compared to the EU leniency scheme, where almost every cartel case is initiated by a whistle-blower, the current leniency scheme in Norway has resulted in a few applications only. A feature in the current Norwegian provisions which is different from Brussels is the double track system: There is an inevitable risk of facing criminal prosecution under the criminal code, even where the company applies for leniency under the Competition Act. This may be one of the main reasons of the current ineffectiveness and lack of leniency applicants to the NCA.
Besides placing the leniency provisions into the Competition Act itself, several amendments are adopted in order to promote a more effective system in Norway. Firstly; although criminal responsibility for individuals is still an option, the amended Competition Act makes prosecution subject to the NCA’s request. Secondly; inspired by the EU leniency notice, a so-called marker system is introduced. The scheme makes it possible for leniency applicants to initially bring only limited information, yet receiving leniency rights from the time of the initial application. Thirdly; the new rules will repeal criminal liability for companies as an alternative to criminal fines. Fourthly; the Competition Act will clarify that the officials of the competition authorities are subject to a profession secrecy requirement when handling information in leniency matters.
New Tool in Behavioural Cases: Commitment Decisions
The current Competition Act has no procedure regarding commitment decisions in matters concerning possible infringements of Section 10 and Section 11 of the Act (equivalent to TFEU Article 101 and 102).
The amended Act introduces a procedure of commitment decisions, which is based on the rules laid down in the 10 year old “Modernisation Regulation” in the EC competition law (Article 9 in Regulation 1/2003).
This new tool may prove to end several behavioural cases in a more efficient manner, as the NCA may terminate its investigation if the companies accept remedies by commitment decisions.
Despite being an effective instrument, it is arguably a potential consequence that the companies involved may offer remedies in situations where an in-depth investigation and material assessment of the case would not have led to any intervention at all. The NCA should therefore exercise caution when applying its new tool.
Investigation by the NCA: Strengthening Companies Rights
The NCA has extensive investigative powers under the current Competition Act. Without weakening the actual powers to collect information during and in connection with unannounced inspections (“dawn raids”), the procedural and privacy rights of the undertakings during an investigation will be strengthened by the revised legislation. Firstly; today the NCA has the right to confiscate original documents at the premises of the inspected undertaking. The amended provisions are harmonised with the equivalent legislation in the EU/EEA, as the main rule in the future will be that only copies can be confiscated. Confiscation of original documents are reserved for situations where the original documents have special evidential value, where copying will reduce the evidential value of the documents, or when the documents are supposed to be an important evidence in proving an infringement. Secondly; the suspected company will have the right to receive a copy of confiscated electronic data. Thirdly; the company will be given the right to be present during the NCA’s first examination of the electronic data, in order to clarify whether the data contains information subject to professional secrecy.
The article has been published in the Expert Overview of the Nordic & Baltic Region – Corporate Livewire. Read the publication
By Thomas Sando & Lennart Garnes
Thomas Sando is a partner in Steenstrup Stordrange’s competition law team. He is a former legal advisor in the Norwegian Competition Authority, and worked five years in Thommessen’s competition law team before he joined Steenstrup Stordrange in 2010. Sando has extensive experience in competition law work, and advises and represents clients on a wide range of issues. He has been selected by his peers to be included in Best Lawyers Norway (in the category “Antitrust”) in 2011, 2012 and 2013.
Thomas can be contacted via telephone at +47 951 26 344 and email at email@example.com.
Associate Lennart Garnes joined Steenstrup Stordrange from the Internal Market Affairs Directorate in EFTA Surveillance Authority in 2012. Lennart has long experience from working with EEA law and national public administrative law. Beside competition law matters, he focuses in particular on the implications the four freedoms and EU/EEA secondary legislation have upon the public authorities` regulation of businesses. Having worked for the Public Roads Administration and the Ministry of Transport, Lennart has particular knowledge of and experience from the transport area.
Lennart can be contacted via telephone at +47 228 14 612 and email at firstname.lastname@example.org.