Significant changes to the Norwegian Competition Act

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In December last year the Ministry of Trade, Industry and Fisheries put forward a draft bill containing proposals for significant reform of the Norwegian Competition Act. The bill has now passed its second reading in Parliament and includes:
Monday, April 11, 2016

Authors: Partner Aksel J. Hageler, Partner Thomas Sando and Associate Heidi Magnussen

  • A new merger control standard harmonized with EU merger control rules
  • The introduction of a settlement procedure in cartel cases similar to the EU rules
  • The creation of a new Appeal Tribunal for competition cases

The changes will come into force 1 July 2016, whereas the Competition Appeals Tribunal will be set up 1 January 2017. The decision to remove the Ministry as the appellate body and the removal of the possibility of political interference in merger review procedures, were strongly contested in Parliament and upheld by only one vote.

New merger control standard – EU harmonization

Under the current legal framework the NCA shall prohibit a concentration which will create or strengthen a significant lessening of competition contrary to the purpose of the Act (the SLC-test; Substantial Lessening of Competition). After the amendments come into force the NCA shall prohibit concentrations that will significantly impede effective competition, in particular as a result of the strengthening of a dominant positon (the SIEC-test; Significant Impediment to Effective Competition).

The new standard harmonizes the Norwegian merger control review standard with the EU/EEA merger control rules, and will be interpreted in line with EU precedents.

The new and EU-harmonized standard entails two practical changes. First, the new norm implies that there must be a qualified increase in concentration before the NCA may intervene. In principle this may mean that the NCA will no longer as easily be able to prohibit transactions leading only to small additional increases in an already concentrated market.

Another consequence of the amendment is a shift in the role of the evaluation of efficiencies. Following the amendment the NCA will no longer take into account all relevant social economic gains, but focus on the pro-competitive effects which are likely to benefit consumers.

Settlement procedure in cartel cases inspired by the EU procedure

The Ministry has proposed a settlement procedure for cartels which will allow the NCA to settle cartel cases through a simplified procedure. Under this procedure, parties, having seen the evidence in the NCA’s file, may choose to acknowledge their involvement in the cartel and their liability for it. In return for this acknowledgement, the NCA can reduce the fine imposed on the parties by 10%. The procedure is inspired by the similar settlement procedure under EU law, and like the EU Commission, the NCA will retain a broad margin of discretion to determine which cases may be suitable for settlement.

Settlements aim to simplify the administrative proceedings and could reduce litigation before the courts in cartel cases. This will in turn free the NCA’s resources to pursue other cases.

A new Competition Appeals Tribunal

The Competition Appeals Tribunal will be a new independent administrative body. Its function will be to hear appeals on the merits in respect of all first instance decisions made by the NCA, which today is heard by the Ministry or brought directly before the ordinary courts of Law.

The Tribunal will also entertain applications for review of decisions made by the NCA relating to administrative fines, which is typically given in response to a breach of the Competition Act prohibitions (restrictive business practices and abuse of a dominant market position) and merger review decisions. The amendment may lower the threshold to seek to challenge such decisions.

The leniency programme

Entities that apply for full immunity from fines may under the current legal framework be granted priority (a so called ‘marker’), which will preserve and protect the applicant’s place in a leniency queue for a definite period of time, until sufficient evidence is collected.

The draft bill makes clear that the marker system will apply equally to entities which do not qualify for full immunity, but are instead granted partial leniency (a reduction of the financial penalty imposed under the Act).

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Steenstrup Stordrange has an experienced team of EU/EEA and competition lawyers. The team has comprehensive knowledge of the Norwegian market and considerable experience in advising both domestic firms, and foreign companies operating or looking to enter into the Norwegian market.

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Lars Selmar Alsaker
Lars Selmar Alsaker
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Aksel Joachim Hageler
Aksel Joachim Hageler
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Halfdan Mellbye
Halfdan Mellbye
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