The Competition Authority 2014–2015

English
2014
2015
Management (From left to right): Gjermund Nese, Director, Torny Aarbakke, Director of Public Relations, Jan Gaute Sannarnes,
Acting Chief Economist, Ingrid Kjeldstad Gullaksen, Director, Stig Hauge Bendiksen, Director of the Administrative Department,
Magnus Gabrielsen, ­Director, Arild Oma, Director of investigation, Christine B. Meyer, Director General, Kjell Jostein Sunnevåg,
Director External Relations, Karin Stakkestad Laastad, Legal Director, Erlend Pedersen, Acting Director Public Procurements.
All photos: Paul S. Amundsen
About The Norwegian Competition Authority
• Director General Christine B. Meyer
• Established in 1994
• Approximately 100 employees
• Under The Ministry of Trade,
Industry and Fisheries
• In 2014, the Authority reviewed
89 merger notifications. The
Authority intervened against 3
mergers. Besides merger control,
anti-competitive behavior gained
top priority in recourse allocation.
• The Authority received 124 public
enquiries and submitted answers
to 13 hearings.
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There are four types of cases the Authority
deals with:
CARTELS
Instead of competing, some companies
form cartels to maintain high prices. ­Illegal
cooperation between companies harms
competition and can be costly to society.
ABUSE OF DOMINANCE
Dominant firms can make it difficult for
existing and potential competitors to operate
in the markets, for example by engag­ing in
predatory pricing or entering into exclusive
agreements with major retailers.
CONTROL OF MERGERS
To prevent a reduction of competition, the
Competition Authority may prohibit or
impose conditions on mergers and acquisi­
tions.
HEARINGS AND CALLING
ATTENTION
The Authority regularly evaluate government
schemes and regulations and identify
anticompetitive effects.
Read more about
the Norwegian Competition Authority
at www.konkurransetilsynet.no/en
The Authority in figures
Below are figures for
the Competition Authority
in 2014.
107
employees*
60
47
33
44
ECONOMISTS
WOMEN
7
LAWYERS
DOCTORAL DEGREES
38
MEN
0
10
20
30
40
50
Average age of employees
3
31
employees in the
uphill race Stoltzen
10
YEARS
since the authority
moved to Bergen
89
6
3 6 89 interventions
in merger cases
cases involving
dawn raids
merger
notifications
*The number of employees includes KOFA, the Norwegian Complaints Board for Public Procurement, but excludes employees on leave.
People on the front page
Anne Heimark Hanne Dahl Amundsen Christine B. Meyer Andrew Kenneth Essilfie Erlend Smedsdal Eileen Fumagalli Øyvind Nilssen
Sven Heidar Larsen Stig Hauge Bendiksen Torny Aarbakke Svein Erik Olsen Peter Aadland Marita Skjæveland Kjersti M. Bruaas
Hanne L. Falkanger Jan Gaute Sannarnes Marion Stamnes
3
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Spurring
competition
Director General
Christine B. Meyer
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In 2014 there has been an increasing awareness of the importance of competition.
The appointment of a productivity commis­
sion by the Norwegian government reflects
this. A key area for the commission is the
importance of competition as a driving force
for productivity. Another trend, driven by
increased attention on high prices in several
sectors, not least in banking and food retail, is
that Norwegian consumers have become more
aware of their power to change suppliers, thus
stimulating competition.
As a competition authority we have substantial
power to intervene in markets. We can stop or
settle mergers with remedies, we can forbid or
settle abuse of dominance or anti-competitive
cooperation with commitments and we can
issue substantial fines for infringement of
the competition law. These are powerful tools.
Regardless, it is of utmost importance that
the competition authority is humble in its
exercise of power and shows respect for the
parties involved.
In the last three years the competition authority
has intervened in 10 mergers. Six mergers have
been allowed with remedies whereas 4 mergers
have been blocked. Yearly, approximately
400 merger with a duty to notify are carried
out without intervention. Three of the four
blocked mergers have been transactions where
large national corporations have acquired local
market positions close to monopoly. Given the
geographical structure of Norway, with a very
elongated shape and scattered settlements, it
is particularly important to pay close attention
to local mergers which potentially can imply
monopolized markets.
In 2014 the authority had a record high
investigation activity, conducting 6 dawn
raids in 17 sites. Several of the new cases
stem from public tenders where competitors
are involved in bid rigging. Our experience is
that when the tips come from public procurers,
the evidence is often solid and provides a good
basis for the case. However, the experiences
from these cases also demonstrate the need to
intensify advocacy towards small and medium
sized businesses.
Magrethe Vestager, the new Commissioner
for Competition in the EU, has stated
that advocacy will be a key priority in her
period as commissioner. We welcome this
prioritization. In addition to addressing our
own concerns, it highlights the important and
independent role of competition authorities
in pinpointing competition problems created
through exemptions and anti-competitive
regulations. Accordingly, the Norwegian
competition authority has over the last couple
of years taken a more active role in the public
sphere in promoting competition in both the
private and public sector. We have called for
a thorough investigation of anti-competitive
regulations to unleash the potential for more
competition in several markets. This has
been done through many channels, among
others written articles, columns and not least
many speeches and presentations addressing
competition problems which arise due to
public regulations.
We are also pleased that the new government
has initiated a number of new measures
to strengthen the legal framework for
competition and its effective enforcement.
These initiatives are partly based on a report
from a commission that suggested an
independent appeals commission for merger
cases, but there are also plans to transfer
the supervision of ownership in the media
sector to the competition authority as well
as a process of simplifying the law of public
procurement.
Finally, the government has given the
competition authority the responsibility to
allocate funds for research in competition law
and economics in the order of approximately
6 million NOK per year. This will strengthen
the ties between the academic community
and the competition authority but not least
improve the knowledge basis for competition
enforcement.
Christine B. Meyer
DIRECTOR GENERAL
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Many dawn raids
in 2014
The Competition Authority carried
out dawn raids in a total of 17 places
connected to six cases in 2014. This is
an increase compared to recent years.
Only two of the six cases have
been made public. The collection of
evidence from five companies within
the market for book distribution in
April 2014 was one of them. The case
concerned a possible refusal to supply
in the market for the distribution
of books to the mass market, such
as grocery stores and kiosks. The
second case involved assistance to
a dawn raid conducted under the
EFTA Surveillance Authority, ESA.
The inspections were carried out at
the premises of airline company
Widerøe’s Flyveselskap AS.
Funding for competition research
In 2014, the Competition Authority requested applications for research into competition
economics and competition law projects. From 2015, up to NOK 6 million will be allocated yearly
from the general price regulation fund.This will help to strengthen competition policy research
and facilitate knowledge-sharing between competition authorities and academia. Educational
and research institutions, enterprises and independent individuals can apply for funding from the
Fund. In this round, the Competition Authority received 21 applications from a variety of different
disciplines. Research topics for the allocation in 2015/16 is a mix of what the Competition
Authority sees as needing to be researched and proposals from applicants.
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Competition problems in
the market for residential
development
KEY ISSUES IN 2014
The Competition Authority has conducted an inquiry on
competition in the market for residential development in six
of the largest urban areas in Norway.
The Authority has found indications that competition in several
of the urban areas studied is limited. The data collected and the
Authority’s calculations show that the market is concentrated
in most urban areas, especially if the assessment is based on
land ownership by the different housing developers.
The supply of land is limited, and is one of the main challenges
in urban areas. In periods of rising land prices and limited
supply of parcels, smaller operators in particular face a
relatively significant competitive challenge. These challenges
are increased by municipal regulatory and planning processes
that are time­consuming and might be experienced as
inefficient, and often unpredictable. Smaller players have fewer
opportunities than the larger ones to bear the economic risk
that a long and uncertain regulatory process entails.
Report on petrol prices: New peak
on Thursdays
Gross margins on retail fuel have increased significantly in
Norway in the last few years, and are considerably higher
in Norway than in Sweden. As part of the Competition
Authority’s long­term focus on the retail fuel market, the
Authority collected price data from more than two thousand
petrol stations for the years 2006 to 2011, and published its
findings in a report in March 2014.
The analyses show that the recommended retail price had
increased, but also that all firms adhered to a new pattern. There
was already a price peak on Mondays, but in addition new
price peaks were introduced on Thursdays. However, motorists
had not significantly reduced consumption on Thursdays and
Fridays. Because of this, margins could increase significantly.
The Competition Authority has proposed several measures that
can help to strengthen competition in the market.
Knowledge and awareness of prices is important to ensure
adequate competition. With its report, the Competition
Authority aimed to increase consumer awareness and give
consumers the possibility to adapt to the price cycle by buying
petrol on the cheapest days. The report received much attention
from the media, and the Authority continues to monitor the
market. Further measures to improve the level of competition
will be considered.
For more information: www.kt.no. (Photo: iStock).
For more information: www.kt.no. (Photo: Marit Hommedal).
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KEY ISSUES IN 2014
TeliaSonera-Tele2
On 5th August the Competition Authority
received a notification on the aquisition
of Tele2 by TeliaSonera. The acquisition
involves a merger of two of the three
largest players in mobile phone market in
Norway. The Competition Authority may
use up to 130 working days to handle a
merger case. After 70 days, the Authority
notified the parties that it may intervene
against TeliaSonera’s acquisition of Tele2. In
its Statement of Objections, the Authority
wrote that the mobile telephony market
is already highly concentrated, and that
it feared that prices for consumers would
be higher and the quality of services
lower after the acquisition. Before the
Statement of Objections, TeliaSonera had
sent proposals for merger remedies, but
the Competition Authority considered
them to be insufficient to offset the harm
to competition that the acquisition would
give rise to. On Wednesday, 14th January,
TeliaSonera came with new proposals for
merger remedies, and proceedings were thus
extended. The new and final deadline for the
case is Thursday, 5th February.
This annual report went to press before the
final decision was taken.
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SATS and ELIXIA
merger approved
subject to conditions
The Norwegian Competition Authority
decided to allow the merger between fitness
centre operators ELIXIA and Health &
Fitness Nordic (with the chains SATS and
Fresh Fitness). The merger was conditonal
on the companies selling out several training
centres in areas that the Competition
Authority had identified as areas where
competition would be significantly restricted.
The merger involved the two largest players
in the fitness centre industry in Norway. In
its assessment of market conditions, the
Competition Authority found that the
merger would lead to higher prices and
poorer services for customers in five different
areas.
The Authority communicated these
concerns to the parties during the process
of assessing the merger. The parties proposed
merger remedies according to which they
were obliged to divest 11 fitness centers.
SATS and ELIXIA had to complete the
sales of the fitness centers before they were
allowed to complete the merger in these five
areas. (Photo: iStock).
The groceries market
The consolidation of the Norwegian retail
grocery market continued in 2014.
In January 2013 Ica Norge, Norway’s fourthlargest grocery chain, and Norgesgruppen,
by far the largest grocery chain in Norway,
entered into a five year agreement to
cooperate in purchasing and distribution.
On 13th February 2014, the Competition
Authority announced its intention to block
the agreement. However, in October 2014,
just before the Authority would take a
final decision, the Authority was informed
that Coop, the third largest grocery chain
in Norway, had bought Ica Norge. The
proposed acquisition led to the suspension
of the Competition Authority’s assessment
of the cooperation agreement between Ica
and Norgesgruppen.
The Competition Authority is now assessing
whether to agree to Coop’s purchase of Ica
Norge. The Authority may use up to 130
working days, so the final decision in the case
is expected in the first half of 2015.
New Competition Act
Norgesgruppen fined
A revision of the Competition Act entered into force from 1 January 2014. The
aim of the changes was to simplify the legislation and to further harmonize
it with the laws of the EU. One of the main changes is the increase in the
turnover thresholds for notification of concentrations. Under the revised law, a
concentration should be notified if the merging firms have a combined annual
turnover in Norway over one billion Norwegian kroner, and each of at least
two of the firms has a turnover in Norway over 100 million Norwegian kroner.
In February 2014 the Competition Authority
imposed a fine of NOK 25 million on the
grocery chain Norgesgruppen for having
breached the standstill obligation in connection
with Norgesgruppen’s acquisition of large
parts of Ica Maxi. Norgesgruppen breached
the obligation by taking over and operating
the grocery business before the Competition
Authority had cleared the notified transaction.
Norgesgruppen was aware that this could violate
the standstill obligation, but nevertheless chose
to implement the transaction. The fine of NOK
25 million is the largest fine the Competition
Authority has imposed in a case of breach of the
standstill obligation.
New board of appeals
for competition matters
An expert committee began work in May 2014 to establish a new independent
board of appeals for competition matters. Attorney Siri Teigum was chair of
the Committee. The Ministry for Trade, Industry and Fisheries, the Ministry
for Children, Equality and Social Inclusion, and the Competition Authority
acted as secretariat, under the leadership of senior adviser Marion Stamnes.
The expert committee delivered its report six months later to Industry Minister
Monica Mæland. The report forms the basis for the establishment of the new
independent appeals board for competition matters, and a public hearing was
conducted in November 2014.
Director General in the Productivity
Commission
Director General Christine B. Meyer was appointed in February to be a member
of the Productivity Commission established by the Government.
The Productivity Commission shall identify the causes of lower productivity
growth and put forward concrete proposals that can strengthen the productivity
and growth potential of the Norwegian economy.
The Productivity Commission has ten members and is chaired by Professor
Jørn Rattsø.
Hosts two
international meetings
In 2015, the Competition Authority shall be
hosting two meeting with guests from various
countries.
Wednesday, June 10th and Thursday, June 11th
the European directors general of competition
will meet in Bergen. Most European countries
and the EU Competition Commission will be
represented at the meeting, which assembles
around 30 participants.
Friday, June 12th is the meeting of the Nordic
directors general of competition. Participants
come from Denmark, Iceland, Finland, Faroe
Islands, Greenland, Sweden and Norway.
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WWW.KONKURRANSETILSYNET.NO
ANNUAL REPORT 2014