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Changes to Norway's merger controls

05/12/2013

Competition analysis: Changes to the Norwegian Competition Act take effect on 1 January 2014. Carl Christiansen, partner and head of competition law at Advokatfirma Rder DA in Oslo, explains the changes and assesses the likely impact on the number of transactions coming under review.

Background
In May 2013 the Norwegian Parliament adopted the first major revision of Norway's 2004 Competition Act. These revisions are about to come into effect, and as of 1 January 2014, there will be significant changes to procedural provisions, especially those governing mergers.

A number of changes to the Norwegian Competition Act come into force on 1 January 2014. What are the main changes?
The most important changes are:

o o o o o

a significant increase in the merger filing thresholds a new filing system more in line with the EUMR-system a new settlement procedure for infringements cases clarification of the rules governing sanctions in order to enhance the effectiveness of the leniency system during dawn raids the Norwegian Competition Authority (NCA) may only take copies (unless the original contains material of evidentiary value)

What are the new merger thresholds and will this have a significant impact on the number of transactions reviewed by the NCA?
The parties will now have to notify transactions where the parties concerned achieve a combined annual turnover above NOK1bn (approximately EUR 130m) and where at least two of the parties

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concerned achieve an annual turnover above NOK100m (approximately EUR 13m) in Norway. However, the NCA retains its competence to order notifications for transactions below the thresholds for a period of up to three months after a change of control or final agreement has been concluded. We expect that the NCA may want to signal the use of this competence (it has never been used under the existing Competition Act (2004) due to the previous low thresholds). This means that some legal uncertainty may persist for a period of up to three months. Also the NCA may want to scrutinise certain sectors or big players by ordering them to notify or report transactions below the thresholds. The committee preparing the law estimated that the number of notifications will be reduced by more than 70%.

The NCA has recently imposed penalties on companies for failing to file notifiable transactions. What was the background to these?
These cases, as most of the previous cases concerning breach of the duty to notify, are mainly minor players which have not been aware of their obligations to report. Only one case is of more general interest--the ICA Maxi case. In this case NorgesGruppen (a large retail chain) indirectly acquired a number of lease agreements from its competitor ICA which had decided to close down its supermarket concept ICAMaxi. The NCA concluded that the acquisition of a lease agreement may constitute a concentration between undertakings. According to the NCA this is because the major players (retail chains) all had the other factors necessary to operate a store (people, goods, logistics etc), and that the physical building is all they need in order to create a turnover. We believe that the NCA is wrong on this point (the case is not finally decided yet). However, if the NCA position is upheld this may have considerable impact on transactions and lease agreements in the retail sector. (The increase in thresholds will make it difficult to monitor such transactions, and this is one of the reasons we suspect 'additional requirements to notify' may be imposed within certain sectors.)

Is the control test under Norwegian merger control law the same as the EU concept of 'decisive influence'?
Yes--the test is the same.

Are there any other 'stakeholders' other than the NCA?

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In some previous regulated sectors (telecom, media) sector-specific and/or additional regimes apply. The oil industry has no specific rules coverings the same matters as the NCA.

What are the other 'hot issues' with the NCA?

One other hot issue is the leniency system and how the change in the sanction regime will influence the number of leniency applications to the NCA. On the face of it, it seems as though the incentive to submit leniency applications has been strengthened, eg by removing the possibility of bringing a penal charge against the companies, and also by requiring that only in cases where the NCA requests prosecution will individuals be charged. However, the Ministry of Trade and Industry (being the superior authority of the NCA in this respect) has indicated that it will order the NCA to request more charges against individuals for violation of the law. This will apply to individuals in all companies, including those that are granted leniency. Since the (EU conforming) competition law was passed in 2004, no individual has been prosecuted. This is mainly because the police and the NCA have 'informally' agreed not to do so. Individuals that have been questioned by the NCA have been informed about this practice. The effect of this change of 'law in action' is being fiercely discussed. Will the increased possibility/risk of prosecution make individuals hesitate--and avoid reporting under the leniency regime? Interviewed by Jenny Rayner The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.