Amendments to the competition act
The amendments to the competition act came into force 1 July 2008.
On 7 March 2008 the Norwegian Ministry of Government Administration and Reform presented a proposal for amendments to the Competition Act of 5 March 2004 (White paper (Ot.prp.) No. 35 (2007-2008)). The proposal was approved by the preparatory meeting of the Council of State the same day, and adopted by the King in Council 20 June 2008. The amendments came into force 1 July 2008.
The principal amendments will be dealt with below and concern Section 18 (clarification and extension of the requirements to the standardized notification), Section 19 (automatic prohibition of implementation) and Section 21 (modification of the procedures for examination of cases involving questions of principle or interests of major significance to society). Furthermore, the proposal includes some other material and linguistic amendments to the Competition Act.
EXTENDED REQUIREMENTS TO THE CONTENT OF THE STANDARDIZED NOTIFICATION
The current law – market information is required only where the market share exceeds 20%
The second paragraph of Section 18 of the Competition Act regulates what information the standardized notification must include. According to letters e) cf. d) of this provision, the notification must include the names of the five most important competitors, customers and suppliers on the relevant market where the participating undertakings at the time of the notification are involved in overlapping business activities and have an accumulated market share of more than 20%.
The amendments – provided overlapping activities, market information is required independently of the parties’ market shares
The amendments include one clarification and one extension of the requirements to the standardized notification. The clarification implies that informationabout “the undertakings’ areas of business” shall be included in the notification, cf. letter c) of the second paragraph of Section 18. The extension of the previous requirements, implies that undertakings are obliged to name the five most important competitors, customers and suppliers regardless of the size of the market shares, provided the parties have overlapping
business activities.
The amendments are founded in the need for further information. Information about the names of customers, competitors and suppliers is regarded by the Norwegian Competition Authority (NCA) as necessary to, inter alia, be able to verify the grounds for the parties opinion of their own market share calculation. This information will equip the NCA to evaluate whether the concentration might create or strengthen a significant restriction on competition or not. The existing rules in Section 18 have led to a situation where the NCA has to rely on the undertakings’ own calculations of their market shares when evaluating the concentration.
INTRODUCTION OF AN AUTOMATIC SUSPENSION OF CONCENTRATIONS (“STAND-STILL OBLIGATION”)
The current law – prohibition against implementation only when the parties receive an order to submit a complete notification
There is currently no general or automatic stand-still obligation pursuant to Norwegian Competition Law. However, according to the first paragraph of Section 19, it is prohibited to implement the merger from the point in time when the parties have received an order to submit a complete notification, or when a complete notification is submitted voluntarily. The prohibition will according to the first paragraph of Section 19, be in effect until notice is given by the NCA that an intervention may take place, i.e. at the latest 25 days after the notification was submitted.
The amendments – “stand still” for all concentrations which have to be notified to the NCA and the time limit for submitting a notification will be abolished
As a consequence of the amendment, all transactions which have to be notified to the NCA will automatically be suspended until approval is given by the NCA (i.e. until the Authority’s deadline for ordering the submission of a complete notification has expired) or until the NCA notifies the parties that intervention may take place, or a complete notification is submitted voluntarily.
This introduction of automatic suspension obligation/”stand still” is primarily due to experiences, which have revealed the necessity of a more effective control with concentrations. If a concentration is implemented prior to the NCA’s assessment, an intervention could be made more difficult because it is virtually impossible or at least more complicated and very expensive to reverse the implementation.
As a consequence of the introduction of a stand still obligation for all transactions that must be notified, the duty to inform the NCA of the concentration no later than when a final agreement has been concluded or control has been acquired, is abolished. If the concentration is not notified, it will be illegal to implement it.
EXAMINATION OF CASES INVOLVING QUESTIONS OF PRINCIPLE OR INTERESTS OF MAJOR SIGNIFICANCE TO SOCIETY - MODIFICATIONS OF THE PROCEDURES
The current law – examination by a political procedure presupposes prior consideration of the Ministry
According to the currently applicable law, the NCA is only authorised to evaluate the concentration’s effect on competition. Hence, the NCA will not take into consideration other possible consequences of the concentration. Correspondingly, the Ministry cannot consider other aspects than those relating to the competition when evaluating appeals. In cases involving questions of principle or interests of major significance to society, the King in Council may according to Section 21 reverse the decision made by the NCA. Such a reversal is only possible when the Ministry has handled and rejected the complaint according to an evaluation of the competitive aspects.
The amendments – there is no longer a need for the Ministry to consider the complaint before a political examination
Still, in cases involving questions of principle or interests of major significance to society, the King in Council may approve a concentration or an acquisition of shares, only after the NCAs has intervened. However, the amendment of the first paragraph of Section 21 implies that there will no longer be necessary to await the Ministry’s handling of complaints. Accordingly, the politically examination may take place immediately after the NCA has intervened, but before the Ministry has reached a decision regarding the complaint. However, the time of the reversal will be optional and the parties may choose to await the Ministry’s final decision of the complaint. The amendment will depart from the normal forms of procedure in the government administration.
The amendment is founded on a wish for a more efficient and simplified handling of complaints in cases concerning concentrations regulated in chapter four of the Competition Act. The procedure in Section 21 has turned out to be difficult for the outside world to understand. In addition, the provision may imply that time and recourses are being wasted in cases where it is clear at an early stage of the procedures that an intervention from the NCA will be reversed because the case involves questions of principle or interests of major significance to society.
Contacts:
Lawyer Jan Magne Juuhl-Langseth
Lawyer Anne Elisabeth Wedum
Lawyer Christian Bendiksen