Year in Review: EU, EEA and Competition Law
In 2019, the NCA rendered its first decision in a merger control matter involving a minority shareholding. The Norwegian market for home alarm systems is highly concentrated with mainly two players: Sector and Verisure. Sector Alarm acquired a 49.9 stake in Nokas, a small but “maverick contender” in the market. After the phase II investigation, the stake was reduced to 25 percent and both structural and behavioral commitments were imposed.
The acquisition would not lead to a change in control, but the NCA’s assessment was still that the shareholding would give Sector the opportunity and incentive to influence Nokas’ strategic behavior in an already highly concentrated market where Nokas was the only real maverick contender to the incumbents. The NCA stated that it was essential to ensure workable competition in the alarm market and that Nokas’ freedom to continue as a challenger by actively offering alarm services to homes and small businesses could not be limited. It cannot be ruled out that the decision was, at least partially, influenced by findings the Sector/Verisure cartel matter commented on below.
Abuse of dominance
In 2018, the NCA ordered Telenor to pay a NOK 788 million (€ 78 million) fine. The Competition Complaints Board upheld the fine in its entirety in June 2019. The abuse related to the transition from pure variable traffic-related prices to the introduction of a “SIM-fee” and reduced traffic prices suitable for limiting the development of the third mobile network, thus hampering the competition in the wholesale and retail market for mobile telephony services. Telenor’s intention, according to the NCA demonstrated by internal documents, was a “strong indication” that the price structure was suitable to limit the development of the third network.
The fact that the price structure did not, de facto, lead to reduced development of the third mobile network was not deemed relevant. The Complaints Board concluded that it was not a requirement to establish actual effect to apply an abuse of dominance under Section 11 CA and article 54 EEA (cf. Article 102 TFEU). The case is now pending before the Appeals Court.
The NCA issued a Statement of Objections in June 2019 indicating fines of NOK 784 (€ 78) million and NOK 423 (€ 42) million to Verisure and Sector Alarm. The NCA’s preliminary assessment was that the companies had cooperated by not approaching each other’s customers during the period 2011 to 2017.
The NCA stated that: “We have extensive documentation and evidence in the case, and our preliminary assessment is that it has been very close contact between the companies for several years.” Sector Alarm accepted the fine but did not admit illegal collusion. Verisure awaits the final decision from the NCA, expected in 2020. This is the first time that a significant fine has been accepted before a final decision had been issued by the NCA.
Dawn raids and pending investigations
Dawn raids were conducted in the recycling sector after bid-rigging allegations by BaneNor against Stena Recycling and a local company (Østbø). The case was closed in October 2019 due to lack of evidence that collusion had taken place.
In April 2018, dawn raids were carried out in the grocery sector in the so-called “price hunter case.” The matter concerns alleged infringements of Section 10 of the Competition Act (collusion and information exchange). The NCA’s focus on the grocery sector continued in 2019 with a sectorial inquiry regarding rebates and pricing to the various grocery chains. The results from the inquiry were published in October 2019 and the main findings were that the largest suppliers’ pricing to the chains was significant:
- The investigation showed that Norgesgruppen consistently achieved better purchasing prices than the other two chains.
- Five of a total of 16 suppliers had price differences of over 15 percent.
- Three of the suppliers had differences in the range of between 10 and 15 percent and for eight suppliers in the range of 0 to 10 percent.
- However: No per se infringement of the Competition Act linked to the price differences.
NCA will look further into the basis for the differences in 2020. At the same time, the NCA announced and conducted several new dawn raids in the grocery sector:
- Norgesgruppen – Norway’s biggest grocery retailer (48.5 percent of the market).
- Orkla/Lilleborg – The leading supplier of detergents and household products.
- Freia/Mondelez – The leading producer of chocolate and candies.
It is not yet publicly known what the scope of the inspections is, but the common denominator is likely that all companies may be deemed dominant in specific relevant product markets.
In 2019, the EFTA Surveillance Authority (ESA) confirmed that the so-called ‘TV 2 agreement’ for public service broadcasting in Norway was in line with the state aid rules. In September 2018, the Norwegian Ministry of Culture entered into an agreement with TV 2 for granting the granting of compensation for public service broadcasting. ESA received a complaint from TV 2’s competitor Discovery, which argued that the agreement was in breach of the EEA state aid rules.
According to the agreement, TV 2 shall broadcast daily news on its main channel, Norwegian-language children’s programs during the weekends and invest in Norwegian film and drama. The aim of the agreement is to ensure media pluralism, production of news outside of the Oslo area, and an alternative to the public broadcaster NRK. TV 2 receives up to NOK 135 million a year for rendering these services.
ESA concluded that the agreement meets the conditions laid down in the SGEI Decision (2012/21/EU). The agreement is, therefore, block exempted and ESA rejected the complaint as unfounded. In doing so, ESA recognized the vital role of public service broadcasting for ensuring media pluralism. This is in line with the Norwegian Parliament and Government’s expressed views.
ESA’s decision also provides useful guidance on the application of the EEA state aid rules in the field of broadcasting. Furthermore, the case is an excellent example of how the SGEI framework, when used correctly, may be utilized to benefit public authorities, suppliers and the community as a whole.
SVW’s Competition team was involved in several of the matters commented on above.
This article is part of a series of articles where the different practice groups in SVW will summarize the most important regulatory happenings in Norway in 2019.