competition: getting it right - konkurrensverket.se · to be the best so that customers and...
TRANSCRIPT
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Competition: getting it right How the Swedish Competition Act works
INFORMATION FROM THE SWEDISH COMPETITION AUTHORITY
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Remember!» DO NOT cooperate on prices.» DO NOT share the market.» DO NOT share strategically important information.
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You and your company have a lot to gain from knowing about the competition rules!
Effective competition benefits everyone: consumers, companies and society as a whole. In order to ensure that there is effective competition, the Swedish Competition Act contains rules that all companies – whatever their size – must comply with. When it comes to competition, it’s important to get it right.
This brochure from the Swedish Competition Authority provides you and your company with an overview of the competition rules. The aim is to make it easier for you and your company to comply with the law and thus avoid being fined or banned from carrying out business. Knowing about the rules also makes it easier for you to know if your company is being affected by other companies breaching them.
The competition rules are complex, and in many situations specialist expertise is needed in order to tell whether or not something is permitted. Of course, you and your company don’t need to be competition experts. But if you know the basic principles, it will be easier to tell when specialist expertise is needed.
This brochure also tells you what you can do if you believe your company or another company is in breach of the competition rules.
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Why does my company need to know about the competition rules?
The Swedish Competition Act applies to all companies, large or
small. The act prohibits two practices that are important to
know about:
» Cooperating in a way that limits competition.
» Abusing a dominant position.
Before going into more detail about these practices and their
consequences, it may be useful to understand why the competi-
tion rules exist and why it’s worth knowing about them.
Why do the competition rules exist? Competition between companies involves companies competing
to be the best so that customers and consumers choose to buy
their particular product or service. When companies compete,
they are pushed to become more effective. This creates the right
conditions for higher quality goods and services and for new
products, while also keeping prices down.
The idea is that all companies should compete in the market
without cheating or suffering as a result of others cheating.
When companies cheat by cooperating in a prohibited manner
or by abusing their power in the market, competition is limited.
This leads to situations such as higher prices or a poorer choice
for consumers. This is why competition rules that prohibit such
harmful behaviour are important.
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What do you and your company stand to gain from knowing about the competition rules?The Swedish Competition Act applies to all companies, regard-
less of their size. You and your company are responsible for
complying with the competition rules. Breaching these rules can
be costly.
Although as a general rule it is companies that are held
responsible for breaches of the Swedish Competition Act, it is the
actions of individuals that lead to such breaches. It is therefore
important that managers and employees who enter into
agreements on behalf of the company, for example, know about
these rules and take them into consideration in their day-to-day
work. If you and your company know about the rules, it is less
likely that you will end up in a situation where your company
breaches them.
You and your company can also be adversely affected if other
companies breach the competition rules. If you know about the
rules, it will be easier to detect any breaches and to take action
by contacting us at the Swedish Competition Authority.
If you know what the rules are all about, it will also be easier
for you and your company to identify situations where it may be
worth contacting a competition law expert.
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What happens if the Swedish Competition Act is not complied with?
The Swedish Competition Act contains rules about sanctions for
companies and individuals who do not comply with the rules.
Breaching the competition rules can be costly!
Your company can be finedCompanies that breach the competition rules can be ordered to
pay fines, which are referred to in the Swedish Competition Act
as administrative fines. These fines can be up to a maximum of
ten percent of the company’s total turnover in the previous year.
The size of the fines depends on factors such as the seriousness
of the breach and its duration.
Individuals can be prohibited from carrying out business operationsManagers of a company that is found guilty of participating in a
cartel can be prohibited from carrying out business operations
for a period of three to ten years. Examples of individuals who
can be prohibited from carrying out business operations include
managing directors, deputy managing directors, board members
and others who have exercised a managing position in the
operation involved in the cartel. Such a prohibition means that
the individual in question may not hold a managing position in
any company and may not remain as an employee of the
company in question.
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Your company may be forced to pay damagesThose who are financially disadvantaged by a company
breaching the Swedish Competition Act – other companies,
customers or consumers – may claim damages from the company.
Claims for damages are dealt with via a civil law case between
the parties involved. The Swedish Competition Authority is not
involved in such cases.
Other negative effectsAs well as the above mentioned sanctions, companies that
breach the Swedish Competition Act may also be affected in
other ways, such as through negative media publicity. Confidence
in the company can be quickly destroyed if it transpires that the
company has infringed the competition rules. If this leads to
customers deserting the company, it can be very costly.
A company that has infringed the competition rules also risks
being excluded from future public procurement.
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Certain forms of cooperation are always prohibited, whatever the size of the company. These include cartels and other cooperation on pricing and market sharing.
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Prohibition on anti- competitive cooperation
Your company probably has extensive contact with customers,
suppliers and other companies. There may be times when you
cooperate. If so, it’s worth knowing about the rules that apply
to cooperation.
The starting point of the Swedish Competition Act is that
every company should decide individually on its actions in the
market. At the same time, business operations involve interac-
tion with other companies, such as customers and suppliers.
It can also be natural to have some degree of contact with your
competitors. Cooperating in itself isn’t forbidden. In fact, many
forms of cooperation are even good for competition. It can
therefore be hard to draw a general dividing line between
permitted and prohibited cooperation. One basic principle that
is worth bearing in mind is that the risk of cooperation
breaching the Swedish Competition Act is greater when your
company cooperates with a competitor than when it cooperates
with a non-competitor.
The prohibition in the Swedish Competition Act applies to
anticompetitive agreements and cooperation. An agreement
doesn’t have to be in writing or legally binding. It doesn’t even
have to be an agreement in the ordinary sense of the word.
It is enough to count as an agreement if at least two companies
have contact with each other in some way and then coordinate
their behaviour in the market.
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Hefty fines for asphalt cartelNine companies operating in the asphalt industry formed a cartel and agreed on how they would submit tenders in various procurements. The companies were ordered by a court ruling to pay a total of almost SEK 500 million in fines.
In order for cooperation to be prohibited, it must have an
appreciable negative effect on competition. Under certain
circumstances, cooperation may be permitted despite it being
deemed to limit competition. In such a case, the positive effects
of this cooperation must outweigh the negative effects and
must also benefit consumers. For more information about
appreciability and the circumstances for exemption,
see www.konkurrensverket.se
Here are a few circumstances that you should be particularly
aware of:
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Cartels and other forms of cooperation that are always prohibitedCertain types of cooperation between competitors cause
significant competition problems and are always prohibited,
whatever the size of the companies involved. Cases in which
competitors agree on setting prices, limiting production or
sharing markets are particularly serious. These types of cooper-
ation often happen in secret, and are usually called cartels.
Cartels are the most serious form of anticompetitive behaviour
and result in significant harm and costs for society, particularly
in the form of higher prices for customers and consumers.
Price-fixing and price recommendationsIt is usually prohibited for a manufacturer or other supplier of
a product to decide which fixed or minimum prices a retailer
can charge its customers. However, as a general rule it is not
prohibited for a supplier to decide that the retailer may not
exceed a particular maximum price. Price recommendations are
also permitted in principle, so long as this doesn’t mean that the
retailer is actually expected to follow the recommended prices.
Cooperating in procurementsThe main rule is that competitors are not permitted to cooperate
in procurements. Competitors are always prohibited from
coordinating their tenders and deciding on who will win a
procurement.
If your company cannot submit tenders independently, it may
however be permitted to cooperate with another company in
order to be able to participate in the procurement.
In certain situations, it can be hard to determine whether or
not companies are permitted to cooperate in procurements. The
Swedish Competition Authority has therefore produced guidance
to help you and your company. You can find this guidance (in
Swedish) at www.konkurrensverket.se/vagledning-samarbeten
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Trade associationsTrade associations can provide useful support for you and your
company. Since their members are often competing companies,
it is important that you know what your trade association and
you as a member can and cannot do.
Companies within an industry organisation are prohibited
from cooperating on prices or sharing markets. Generally
speaking, the industry organisation may not limit its members’
opportunities to decide on their own actions in the market.
In certain situations, it can be hard to determine what is and
is not permitted in relation to cooperation between companies
within the context of an industry organisation. The Swedish
Competition Authority has therefore produced guidance to help
you and your company. You can find this guidance (in Swedish)
at www.konkurrensverket.se/vagledning-samarbeten
Cooperation that may be permitted Many forms of cooperation can be good for competition. For
small and medium-sized companies in particular, cooperation
can be a good way of reducing costs, sharing various risks,
gaining know-how or launching innovations more quickly.
Cooperation that leads to cost-savings or other efficiencies for
those companies involved can in turn lead to price reductions
or other consumer benefits.
Cooperation that does not relate to aspects of significance to
competition is also permitted. For example, this could involve
cooperating on training, environmental issues or lobbying.
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Examples of what you must not do together with competitors:» DO NOT cooperate on purchase prices or sale prices» DO NOT share markets or supply sources» DO NOT limit production, markets or investments» DO NOT exchange information about prices or other sensitive strategic information
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Prohibition on abusing a dominant position
What is the situation like in your market? Does any company
occupy a particularly strong position? If so, it’s worth knowing
that there are rules governing the actions of companies with a
dominant position.
When does a company have a dominant position?A company has a dominant position if it has such power within
the market that it can act without paying any – or by paying only
limited – attention to its competitors, customers and suppliers.
A market share of more than 40 percent is usually said to be a
sign of dominance. The higher a company’s market share, the
greater the likelihood that the company is dominant. Other
circumstances are also relevant, such as competitors’ market
shares and the barriers to market entry that exist.
Having a dominant position is not prohibited. However, it is
prohibited to abuse such a position so that competition and
consumers are harmed.
A dominant company has a particular responsibility not to harm competition.
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What is abuse of a dominant position?A dominant company has a particular responsibility not to harm
competition. The same type of action that may be permitted
– and may even be good for competition – when applied by a
non-dominant company can constitute abuse when carried out
by a dominant company. Abuse often involves a dominant
company using its market power to exclude competition, which
in turn can harm consumers. However, if a dominant company
can demonstrate that it has legitimate reasons for its actions or
that there are predominantly positive effects, this does not count
as prohibited abuse.
Here are some examples of what can count as abuse.
Refusal to supplyAs a starting point, even a dominant company can decide who to
enter into agreements with. However, a dominant company may
be prohibited from refusing to supply goods or services that are
essential in order for the customer in question to compete
effectively.
Exclusive dealingStipulating that a customer must buy all or much of what it
needs from a dominant company can make it harder for other
companies to compete effectively. The same applies to terms
that oblige a supplier to supply only the dominant company.
Such terms may therefore be prohibited.
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Predatory pricingAs a starting point, low prices are good for consumers. But if a
dominant company sets such low prices that they do not cover
the company’s costs, this can lead to competitors being excluded
from the market. This in turn can lead to higher prices. Such
predatory pricing may therefore be prohibited.
Loyalty discountsAs a starting point, discounts are also good for consumers. If a
dominant company applies discounts to encourage loyalty that
tie in customers, it can be hard for other companies to compete
effectively in the market. Such discounts may therefore be
prohibited.
Examples of abuseA dominant company that supplied recycling equipment to large retail chains offered the chains loyalty discounts. This made it harder for other manufacturers to introduce their equipment to the market. The company was deemed to have abused its dominant position and was forced to pay large fines.
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What does the Swedish Competition Authority do?
The Swedish Competition Authority investigates suspected
breaches of the Swedish Competition Act. Such an investigation
may be prompted by a tip-off or a complaint from a third party,
e.g. a customer or a competitor of a company that is suspected of
having infringed the competition rules, but the Swedish Compe-
tition Authority also investigates suspicions on its own initiative.
During the course of an investigation, the Swedish Competition
Authority may request such information and documentation
from companies as required for its investigation. The authority
may also summon individuals for questioning.
What are dawn raids?If a company is suspected of having breached the Swedish
Competition Act, the Swedish Competition Authority can carry
out unannounced investigations at the premises of the company
in question. These investigations are often referred to as ‘dawn
raids’. The aim of a dawn raid is to obtain evidence at the
company’s premises. Staff from the Swedish Competition
Authority can search the premises and take copies of documents
containing evidence and other relevant information. The
authority can also make copies of digital materials such as hard
drives and USB memory sticks.
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When should you contact the Swedish Competition Authority?
Let us know!You and your company know what is happening in the market.
If you suspect that a company is breaching the Swedish
Competition Act, you can always contact us.
The Swedish Competition Authority has a special unit that
deals with tip-offs and complaints. You can contact us anony-
mously. You can find our contact details on the next page.
Is your company part of a cartel?A company that is part of a cartel can avoid fines by contacting
the Swedish Competition Authority and reporting the cartel.
This is known as leniency. Only one company – the company
that is first to report the cartel to the Swedish Competition
Authority or the first to provide enough information to establish
that a cartel has operated – can be granted leniency. Individuals
can also be granted leniency in connection with a ban on
carrying out business.
Companies that are part of a cartel but are not the first to
contact the Swedish Competition Authority can pay lower fines
by cooperating with the Swedish Competition Authority and
helping to establish that there has been a breach of the Swedish
Competition Act.
The Swedish Competition Authority has a dedicated leniency
group that companies who want to report their involvement
in a cartel can contact. You can find our contact details on the
next page.
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Tip-off functiontel.: +46 8 700 16 00e-mail: [email protected]
Leniency grouptel.: +46 8 700 15 99 (weekdays 08:00–17:00) e-mail: [email protected]
