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Investigations

Initiating an investigation

Who can initiate an investigation of potential cartel conduct?

The Swedish Competition Authority (SCA) is the only authority that can initiate an investigation of potential cartel conduct. Investigations may be initiated at the SCA’s own initiative or after a complaint or notification from a third party.

If an investigation is initiated by complainants or third parties, what rights (if any) do they have?

A complainant is not considered party to the investigation by the SCA and has very limited rights to take part in such investigation. However, there is a subsidiary right for undertakings concerned to bring an action to the Patent and Market Court claiming an injunction in case the SCA decides not to take action against a suspected infringement. Undertakings concerned may also initiate individual proceedings for damages if the undertaking has suffered harm caused by the alleged infringement.

What obligations does a company have on learning that an investigation has commenced?

There is no obligation for the SCA to inform an undertaking that an investigation has commenced. In case of an on-site inspection (ie, a dawn raid) by the SCA, secrecy provisions apply until the dawn raid is initiated. The SCA’s application to the Patent and Market Court as well as any subsequent decision of the Patent and Market Court authorising the SCA to perform on-site inspections is kept strictly confidential, not only in relation to third parties but also in relation to the undertakings subject to the investigation, until the on-site inspection has been initiated.

What obligations does a company have if it believes that an investigation is likely?

A company suspecting an investigation by the SCA, but that has not yet been informed of such investigation, does not have any legal obligations (please see the question below as regards actions ordered by the SCA).

What are the potential consequences of failing to act or delaying action?

Orders by the SCA to submit information and documents, appear before the SCA for questioning or permit a dawn raid can be imposed under penalty of a fine for non-compliance. Facilitating the SCA’s investigation may have a positive effect on the fines for the undertaking concerned. While denying an infringement or aggravating the SCA’s investigation does not lead to higher fines as long as it does not constitute an attempt to mislead the SCA, it could affect the undertaking’s chances for leniency. Application of the privilege against self-incrimination (reflecting the European Convention for the Protection of Human Rights and Fundamental Freedoms) means that the SCA may not compel answers which might involve an admission of the existence of a competition law (or other) infringement.

Formal stages of investigation

What are the formal stages of and approximate timeframe for investigations?

When the SCA obtains information on a suspected infringement, it will decide whether to proceed with an investigation or formally dismiss the case (leaving concerned undertakings a subsidiary right to bring actions). The SCA may file an application to the Patent and Market Court in order to receive authorisation to conduct an on-site inspection (ie, a dawn raid) on one or more of the suspected companies.

If the SCA finds evidence that confirms its suspicions, it will continue the investigation by questioning the representatives of the suspected undertaking and by contacting consumers and uninvolved competitors.

If the SCA finds that it has sufficient evidence to prove the existence of a cartel, it will issue a statement of objections to the suspected companies, setting out its evidence and position. The suspected companies will then be given an opportunity to respond to the allegations, after which the SCA may:

  • order the undertaking(s) to cease the infringement under penalty of a fine;
  • bring an action against the undertaking(s) before the Patent and Market Court with a request for an administrative fine; or
  • issue a fine order (ie, a binding settlement which can be appealed) if the undertaking concerned consents and does not contest the SCA’s statement of objection.

The approximate timeframe for the SCA’s investigation depends on the complexity and scope of the matter but ranges from approximately one to two years. Fines may be imposed only if the summons application has been served within five years from the date that the infringement ceased. If the affected undertaking has been subject to an on-site investigation (ie, a dawn raid) within this period or is given an opportunity to express its views on a draft summons application of the SCA, then this event stops and the clock is ‘reset’, as long as the party subject to the claim of infringement is served a summons application within 10 years from the date that the infringement ceased.

Investigative powers

What investigative powers do the authorities have?

The Competition Act provides the SCA with extensive powers to require information, documents and other materials both from undertakings suspected of an alleged infringement and from third parties. The SCA may also order persons who are likely to be in a position to provide relevant information to appear for questioning. Orders to provide documentation or information and appear for questioning may be imposed under penalty of an administrative fine for non-compliance. However, privilege against self-incrimination applies.

Following an application by the SCA, the Patent and Market Court may permit the SCA to carry out an inspection on the premises of an undertaking (ie, a dawn raid). A decision on a dawn raid may also refer to the following premises if there is a strong indication that the premises in question may contain relevant evidence:

  • homes and other premises belonging to the board members and employees of the undertaking which is subject to investigation if the infringement under investigation is considered serious; and
  • the premises of an undertaking which is not subject to investigation.

In carrying out dawn raids the SCA’s inspection powers are similar to those of the European Commission. The SCA is empowered to:

  • examine the books and other business records;
  • make copies of or take extracts from the books and business records (including electronic records);
  • ’mirror’ digitally stored material for subsequent in-depth search (however, the SCA is not authorised to review mirrored data on its own premises without prior consent from the undertaking);
  • request oral explanations on the spot (however, the interviewee is not required to provide any incriminating information); and
  • access any premises, land, modes of transport and other areas.

What is the geographic reach of public enforcement actions?

The SCA’s exercise of extraterritorial jurisdiction is restricted by public international law. Unless it is able to enforce an action against foreign companies, the SCA is unlikely to take such action. However, Sweden cooperates with EU member states and participates in a separate Nordic cooperation agreement which allows the authorities to carry out cross-border investigations and exchange information and evidence.

When is court approval required to invoke these powers?

For dawn raids the SCA requires authorisation from the Patent and Market Court. Authorisation will be given only if there is reason to believe that an infringement has been committed.

Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?

Following the Patent and Market Court’s decision, the SCA may carry out on-site inspection of premises, land, modes of transport and other areas of a suspected undertaking. If a serious infringement is suspected, on-site inspection may be authorised for homes and other premises belonging to the board members and employees of the undertaking which is subject to investigation. Undertakings other than those to be investigated may under special circumstances be subject to on-site inspection.

The party on whose premises an inspection is to be carried out has the right to summon a legal representative. Pending the arrival of such a representative, the inspection shall not begin, unless waiting for a legal representative would lead to an unreasonable delay or risk evidence being tampered with. The SCA normally agrees to wait approximately 40 minutes for legal representatives.

What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?

There is no duty to cooperate with the SCA in an investigation. However, an order to provide the SCA with information, documents and names and to permit a dawn raid can be imposed under penalty of a fine for non-compliance.

Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?

Legal privilege applies to communication and documentation to and from members of the Swedish Bar Association and other bar associations or law societies and their associates. Following a 2011 decision by the District Court in Konkurrensverket v Posten (Ä 6673-11) legal privilege also covers all documents which have been given to a lawyer in confidence within the scope of his or her professional duties. Legal privilege entails that the SCA is not entitled to review, take copies of or request verbal explanations of information covered by legal privilege. Legal privilege does not extend to the advice of in-house counsel.

Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?

Privilege against self-incrimination applies (reflecting the European Convention for the Protection of Human Rights and Fundamental Freedoms). Therefore, the SCA may not require answers or information which might involve an admission of the existence of a competition law (or other) infringement.

What is the process for objecting to an authority’s exercise of its claimed powers?

Orders by the SCA to submit information or documents and appear before the SCA for questioning can be appealed to the Patent and Market Court. In the event of a dispute over the question of whether a particular document is legally privileged, the SCA seals the document in question and sends it to the Patent and Market Court for review.

Publicity and confidentiality

What information about investigations will be made publicly available and at which stage(s) of the process?

According to Chapter 17.3 of the Public Access to Information and Secrecy Act (2009:400), confidentiality applies to information relating to the SCA’s ongoing investigations insofar as it is of significant importance to the investigation that the information is not disclosed. The SCA normally considers all material information relating to an ongoing investigation as subject to confidentiality. The SCA can disclose that an investigation is ongoing without mentioning information that the investigation generates.

Following an investigation, information is made publicly available in accordance with the Swedish principle of public access to official documents. However, this is subject to the provisions of the secrecy act which, among other things, protect a party’s business or operational information, inventions and research results. For information contained in official documents, secrecy in accordance with the Secrecy Act may apply for a maximum of 20 years.

Regarding disclosure to other parties to a proceeding by the SCA, there must be strong reasons for refusing full access to information.

Is any information automatically confidential and is confidentiality available on request?

Even though the SCA is obliged to follow the provisions of the secrecy act, the SCA’s attention should be actively drawn to information that is considered to be a trade secret or otherwise sensitive in nature. SCA decisions which do not disclose information with reference to the secrecy act can be appealed to the Administrative Court of Appeal.

International cooperation

Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?

The SCA applies EU competition rules in close cooperation with the competition authorities in the European Competition Network (ECN), which entails informing one another of proposed decisions and inviting comments from the other authorities to ensure consistent application of the competition rules.

The SCA is also obligated to cooperate with the European Commission regarding competition matters and investigations, which includes the obligation to cooperate with and help other national competition authorities within the European Union. This allows the authorities to carry out cross-border investigations and exchange information and evidence.

Sweden also has a separate cooperation agreement with Denmark, Norway and Iceland which, besides general assistance in cases, enables the national competition authorities in these countries to exchange both confidential and non-confidential information.

From a global perspective, the SCA exchanges experience, methodology and best practices with other authorities (eg, within the framework of the Organisation for Economic Cooperation and Development Competition Committee, the United Nations Conference on Trade and Development and the International Competition Network.

Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?

The Competition Act provides that the SCA, following an application by an enforcement authority in a state with which Sweden has entered into an agreement, may make use of its investigation powers to (for example) order undertakings to provide information and documentation and conduct hearings. Following a request of such agency, the SCA may also apply to the Patent and Market Court for authorisation to conduct on-site inspections (ie, dawn raids).

Decisions

How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?

A cartel investigation can be resolved in four ways:

  • the SCA orders the undertaking(s) to cease the infringement under penalty of a fine;
  • the SCA bring action against the undertaking(s) before the Patent and Market Court;
  • if the undertaking concerned consents and does not contest the SCA’s statement of objection, the SCA issues a fine order (a binding settlement which can be appealed); or
  • the SCA drops the investigation without further actions.

What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?

The SCA has the authority to issue a fine order corresponding to a binding settlement only in cases where the facts are uncontested and there is a sufficiently clear infringement, allowing for a simplified and expedited process. The system of fine orders is built on a voluntary basis but does not entail any element of plea bargain or negotiated solution. The settlement can be appealed to the Patent and Market Court within one year of written confirmation.

If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?

If the SCA does not find it appropriate to issue a fine order for a specific case or if there is no consent for such fine order from the party concerned, the SCA must sue the suspected undertaking before the Patent and Market Court for a charge of cartel conduct to be adjudicated and penalised. Such application results in a civil litigation under the procedural framework for civil litigation.

Which party must prove its case? What is the relevant standard of proof?

The burden of proof lies with the SCA and it is therefore up to the SCA to prove that an infringement of the Competition Act has been committed.

Is there a hearing? If so, what is the process for submitting evidence and testimony?

The proceeding in the Patent and Market court is a civil proceeding that includes an oral hearing as well as submission of evidence and the possibility to invoke testimonies.

What are the accused’s procedural rights?

As a party to the proceeding, the suspected undertaking has rights of defence. There are also specific provisions in the Secrecy Act providing a subject of an enforcement proceeding with a more extensive right of access to the case file. A party subject to an enforcement proceeding has the right to be informed about factual information submitted by parties other than itself and to express its view on such information.

Appeal process

What is the appeal process?

As a court of first instance, the Patent and Market Court is a division of the Stockholm District Court. Judgments and decisions reached by the Patent and Market Court can be appealed to the Patent and Market Court of Appeal, which is a division of the Svea Court of Appeal. The Patent and Market Court of Appeal must grant leave to appeal before the court can conduct a more complete examination of an appealed case or matter. Leave to appeal is usually granted in cartel cases.

Leave to appeal to the Supreme Court (the final instance) is granted only if the case is considered important as a precedent. Therefore, the Patent and Market Court of Appeal is in practice the final instance for most cases.

To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?

The SCA does not have authority to impose fines. Therefore, if the SCA decides to penalise an undertaking for infringement of the competition rules, it must invoke a civil proceeding with the Patent and Market Court as court of first instance. The Patent and Market Court’s decision may in turn be appealed to the Patent and Market Court of Appeal, which will try the case on its merits. The Patent and Market Court of Appeal can therefore review the agency’s and the first-instance court’s findings of fact, legal assessment and penalties in order with the standard court procedure. The appeal body can then take all of the circumstances presented by each party into account and make a decision based on the information provided by each party.

Penalties

Penalties for companies

What are the potential penalties for companies involved in a cartel?

The maximum fine is limited to 10% of the undertaking’s turnover of the preceding financial year. The Swedish Competition Authority (SCA) may also order a cease of the infringement, subject to a fine for non-compliance.

The legislation subjects companies to civil liability. Infringement of the prohibition against anti-competitive agreements renders cartel agreements null and void and may result in liability to pay fines as well as damages.

Are there guidelines in place for penalties? If not, how are penalties normally calculated?

The SCA has issued non-binding guidelines on the calculation of fines following the method used under EU law. Fines are calculated mainly on the basis of the gravity and duration of the infringement. Mitigating or aggravating circumstances (eg, limited involvement versus a cartel leader) and the market power of the undertaking may also be taken into account, as well as previous violations of the competition rules.

Do the authorities take into account any penalties imposed in other jurisdictions?

There are no grounds in the Competition Act or the SCA’s guidelines for taking into account penalties imposed in other jurisdictions, nor is such a circumstance mentioned as a mitigating circumstance.

However, the principles of ‘ne bis in idem’ and ‘identity of facts’ entail that an undertaking can be fined only in a Swedish national court for the same infringement of competition law as it has been fined for in another EU member state, if the Swedish aspects of the infringement have not been already taken into account and considered in the previous proceeding.

With respect to penalties imposed in non-EU member states, there are no such protections against double fines or penalties.

How can a company mitigate its exposure to fines?

An undertaking that is alleged to have infringed the competition rules can avail itself of the leniency programme to mitigate its exposure to fines.

In calculating the fine, mitigating circumstances are also taken in account (eg, an undertaking’s limited involvement in the infringement).

Penalties for individuals

What are the potential penalties for individuals involved in a cartel?

In conjunction with an administrative fine for breach of the competition rules imposed by a Swedish decision, an EU Commission decision or a decision from another EU jurisdiction (the latter two under condition that the infringement has effects on the Swedish market and that the undertaking’s operation may be deemed to be conducted in Sweden), the SCA may apply for a trading prohibition in relation to persons who have participated in serious cartel infringements, in accordance with the Competition Act and the Trading Prohibition Act (1986:436).

A person on whom a trading prohibition is imposed may not conduct business operations or hold a senior position in an undertaking, nor may such a person be employed by or have regular assignments from a closely related party or from the business operation where the person has previously failed to fulfil his or her obligations. A trading prohibition is issued for at least three years and at most 10 years. A person who breaches a trading prohibition may be sentenced to imprisonment for a maximum of two years.

Do the authorities take into account any penalties imposed in other jurisdictions?

No. However, it follows from the Trading Prohibition Act and the SCA’s general guidelines on trading prohibition that, in the event of infringements of the rules on competition (KKVFS 2015:2), a trading prohibition is generally not in order if the relevant person has cooperated to a significant extent in facilitating the SCA’s investigation of the infringement (the same will apply for cooperation in investigations conducted by a competition authority in another EU member state or the European Commission).

Is a company permitted to pay a penalty imposed on its employee?

N/A.

Is a company permitted to continue to employ an employee involved in cartel conduct?

There is no general rule against continued employment of an employee involved in cartel conduct. However, if the employee is penalised with a trading prohibition, the person in question may not be employed by nor have regular assignments from a closely related party or from the business operation where the person has previously failed to fulfil his or her obligations. 

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