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What is the legal framework in your jurisdiction covering the behaviour of dominant firms?
Pursuant to national competition law, the behaviour of dominant firms is governed by section 11 of the Competition Act of 5 March 2004 No. 12 (CA), which prohibits ‘any abuse by one or more undertaking of a dominant position’, no prior decision to that effect being required. Section 11 of the CA mirrors article 102 of the Treaty on the Functioning of the European Union (TFEU) and article 54 of the Agreement on the European Economic Area (EEA). It follows from Norwegian case law that the case of the European Court of Justice, the General Court, the European Commission, the EFTA Court and the EFTA Surveillance Authority (ESA) related to these provisions is relevant when enforcing section 11 CA. If the conduct in question affects trade between the EEA or EFTA states or several European Union (EU) states, article 54 of the EEA and article 102 of the TFEU apply in parallel with section 11 of the CA.
Definition of dominance
How is dominance defined in the legislation and case law? What elements are taken into account when assessing dominance?
Section 11 of the CA is phrased in the same way as article 102 of the TFEU. Thus there is no direct definition of dominance in the CA. According to case law under article 102, this implies that the decisive factor is the power to behave to an appreciable extent independently of consumers and competitors, see the United Brands case and subsequent EU case law. The Norwegian Supreme Court held in Tine (2011), Rt-2011-910, in premise 64, that for the application of section 11 of the CA the assessment of whether the undertaking holds a dominant position must be assessed in light of the EU and EEA law. The elements to be taken into account when assessing dominance would therefore mirror those elements included in an assessment under article 102 of the TFEU and article 54 of the EEA.
Purpose of legislation
Is the purpose of the legislation and the underlying dominance standard strictly economic, or does it protect other interests?
The object of the CA is primarily economic and related to overall efficiency and consumer welfare. The CA does, however, contain one provision enshrining other public interests. In order to enhance competition in certain markets, the government (King in Council) may, by regulation, pursuant to section 14 of the CA intervene against terms and conditions, agreements or practices that restrict or are liable to restrict competition in contrast to the general purpose of the CA. There is only one regulation in force based on this provision, imposing online housing advertising companies to grant access on non-discriminatory terms.
Sector-specific dominance rules
Are there sector-specific dominance rules, distinct from the generally applicable dominance provisions?
The CA is of general application and applies in parallel to sector-specific legislation. In relation to electronic communications (including, inter alia, telecoms), special legislation applies through the Electronic Communication Act of 4 July 2003 No. 83. This Act implements the EU directives relating to electronic communications. Chapter 3 of the Electronic Communication Act contains provisions governing firms having ‘significant market power’. The definition of significant market power is akin to the definition of dominance (compare section 3-1) and a firm holding such a position shall be made subject to one or more of the special obligations set out in Chapter 4 of the Act. These obligations are, in general, concerned with access to facilities and non-discrimination. Further, the relevant authority can, under special circumstances, issue orders beyond the obligations contained in Chapter 4. Other sector-specific legislation contains provisions that, although of a general application, are relevant primarily for dominant firms. In particular, this is true for the Energy Act of 29 June 1990, No. 50 and the Postal Act of 29 November 1996, No. 73.
Exemptions from the dominance rules
To whom do the dominance rules apply? Are any entities exempt?
Section 11 of the CA applies to ‘undertakings’. This concept has the same meaning as under article 54 of the EEA and article 102 of the TFEU. Thus, every entity engaged in economic activity regardless of the legal status of the entity must comply with the provision. Section 11 of the CA also applies to public entities to the extent that they engage in economic activities, namely, that are ‘undertakings’. There are no legal exemptions from the general prohibition of section 11. However, the concept of objective justification is applied in the same manner as within the EU and EEA law.
Transition from non-dominant to dominant
Does the legislation only provide for the behaviour of firms that are already dominant?
In the same manner as under article 102 of the TFEU and article 54 of the EEA, abuse is a separate condition for applicability of section 11 of the CA, so neither dominance per se nor the creation of dominance is prohibited per se. The creation of a dominant position may however fall under the rules on merger control of the CA. Moreover, arrangements that create dominance may, depending on the circumstances specific to the case, be prohibited by section 10 on anticompetitive agreements and practices (mirroring article 101 of the TFEU and article 53 of the EEA).
Is collective dominance covered by the legislation? How is it defined in the legislation and case law?
Section 11 of the CA applies to collective dominance. Neither the CA nor Norwegian case law provides for a definition of collective dominance. The preparatory works of the CA explain that the requirements of collective dominance have not been fully clarified through EU case law. There are no cases under section 11 in which collective dominance has been found to exist, but the analysis would mirror that under article 102 of the TFEU and article 54 of the EEA.
Does the legislation apply to dominant purchasers? Are there any differences compared with the application of the law to dominant suppliers?
As with article 102 of the TFEU, section 11 of the CA applies to dominant purchasers. There are no cases from Norway concerning this, but it can be presumed that a certain degree of market power downstream is required before upstream abusive behaviour will be at risk of being investigated.
Market definition and share-based dominance thresholds
How are relevant product and geographic markets defined? Are there market-share thresholds at which a company will be presumed to be dominant or not dominant?
The relevant product and geographic markets are defined in the same manner as under article 102 of the TFEU and article 54 of the EEA. There is no specific market share threshold and the question of dominance must be assessed on a case-by-case basis, but certain market share thresholds would normally imply a presumption for dominance. EU guidance is relevant also in this relation and as set forth as a general point of departure in the European Commission’s guidance paper on article 102 of the TFEU, dominance is not likely if the undertaking’s market share is below 40 per cent in the relevant market. There are no cases under section 11 of the CA in which collective dominance is found to exist, but the analysis would mirror that under article 102 of the TFEU and article 54 of the EEA.
Abuse of dominance
Definition of abuse of dominance
How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?
Section 11 of the CA is drafted in line with article 102 of the TFEU, namely, it includes a non-exhaustive list of possible abuses that are identical to the list of possible abuses under article 102 of the TFEU and article 54 of the EEA. In the Tine case from 2011, the Norwegian Supreme Court confirmed that the notion of abuse in section 11 of the CA mirrors that of article 54 of the EEA and 102 of the TFEU.
In the assessment of whether an activity constitutes abuse, the purpose of the CA, namely to ensure economic efficiency and consumer welfare, is of the utmost importance. Moreover, as under the EU and the EEA rules it is clear that the concept of abuse is an objective one. No case laws from Norway establish a particular conduct as subject to a per se prohibition, but the interpretation of section 11 of the CA mirrors that of article 102 of the TFEU and article 54 of the EEA, and will follow relevant developments on this point.
Exploitative and exclusionary practices
Does the concept of abuse cover both exploitative and exclusionary practices?
Link between dominance and abuse
What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?
In relation to this question, the case law related to the application of article 102 of the TFEU and article 54 of the EEA offers important guidance. Consequently, dominance, abuse and potential economic benefit do not necessarily need to occur in the same market. Furthermore, the Norwegian Competition Authority (NCA) in its guidelines holds that showing a link between dominance and abuse is no requirement (eg, a dominant undertaking if entering into an exclusive purchasing agreement could abuse its position even though its dominant position in itself was irrelevant for closing that agreement).
What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?
It is possible to invoke efficiency gains. Moreover, although not expressed in section 11 of the CA (as article 102 of the TFEU), it is possible to defend an allegedly abusive practice on the basis that the conduct in question is necessary to protect legitimate interests (objective justification and proportionality). If exclusionary intent is shown, it appears that such defences cannot be relied upon, see the NCA’s decision V2007-2, Tine v NCA, page 81.
Specific forms of abuse
Types of conduct Types of conduct
Indicate to what extent the following types of conduct (questions 14–25) are considered abusive. Mention briefly any leading precedents on, and the relevant tests for, assessing the categories of conduct: Rebate schemes
Rebate schemes could be considered as abusive pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. One of the few cases investigated under section 11 of the CA concerned a rebate scheme operated by a dominant bus company. The Authority first condemned the scheme as abusive in Decision V2004-29 but then quashed its own decision after the bus company had filed an appeal (Decision V2004-34). The NCA generally holds that incremental rebates that encourage consumer loyalty may be prohibited if competitors are driven, entirely or in part, out of the market and such rebates cannot be objectively justified by the dominant undertaking. Retroactive rebates are mentioned by the NCA as an example of such abuse.
Tying and bundling
Tying and bundling could be considered as abuses pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.
Exclusive dealing, etc, could be considered as abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.
Predatory pricing could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. One of the NCA’s landmark cases under section 11 CA - the SAS case of 2005 - was a predatory pricing case related to certain domestic air travel routes in Norway where the NCA’s decision was quashed by the courts. In the SAS case the NCA applied the test from AKZO v Commission as a cost benchmark. There is no Norwegian case law that clarifies whether recoupment is a necessary element in the assessment of predatory pricing, but the NCA will follow the case law on the interpretation of article 102 of the TFEU and article 54 of the EEA. The possibilities of recoupment would presumably form part of the NCA’s assessment on predatory pricing, although it appears unsettled on the basis of the SAS case whether this is a separate requirement.
Price or margin squeezes
Price or margin squeezes could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. In 2016 the ESA issued a statement of objections against Telenor ASA related to (among other things) possible illegal margin squeeze of competitors in respect of the provision of retail mobile telephony services. An oral hearing was held in late 2016 and a decision from the Surveillance Authority is expected in 2018.
Refusals to deal and denied access to essential facilities
Refusal to deal could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. There are no such cases from the NCA. However, the SA has dealt with several cases related to exclusivity. In 2010 the company Posten Norge AS was fined approximately €13 million for exclusive arrangements excluding competitors in the domestic parcel delivery market. The decision was upheld on substance by the EFTA Court. In 2011, the ESA fined Color Line AS and Color Group AS approximately €19 million related to an abuse in the form of maintaining long-term exclusive rights to access the harbour in Strömstad, Sweden.
Predatory product design or a failure to disclose new technology
Predatory product design or a failure to disclose new technology could be considered as abuses pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. There are no cases regarding this from the NCA.
Price discrimination could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.
Exploitative prices or terms of supply
Exploitative prices could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA. Pursuant to section 2 of the Act Relating to Price Policy (The Price Policy Act), it is forbidden to receive, demand or agree upon prices that are unfair for the purchasing party. In practice, allegations of unfair pricing based on the Pricing Policy Act have rarely been successful in the courts. Contrary to section 11 of the CA, however, section 2 of the Pricing Policy Act does not require that an undertaking holds a dominant position.
Abuse of administrative or government process
Abuse of government processes could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA.
Mergers and acquisitions as exclusionary practices
Mergers and acquisitions are covered by the CA’s provisions on merger control, and generally not considered as an abuse pursuant to section 11 of the CA. In principle, however, mergers and acquisitions could be considered as an abuse pursuant to section 11 of the CA, namely, such behaviour would be prohibited to the same extent as under article 102 of the TFEU and article 54 of the EEA,
Other types of abuse pursuant to section 11 of the CA would follow the abuse concept as enshrined in article 102 of the TFEU and article 54 of the EEA.
Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?
Enforcement is carried out by the Norwegian competition authorities, which are the King (ie, the Council of Ministers), the Ministry of Trade, Industry and Fisheries, the newly established Competition Complaints Board and the Norwegian Competition Authority (NCA). In practice the NCA is main enforcer in Norway. In addition, the ESA can enforce article 54 of the EEA. In 2016 the CA was amended by the introduction of the Competition Complaints Board, which started its functioning in April 2017. Somewhat simplified, the Complaints Board is the exclusive appeals body for all decisions by the NCA. The decisions of the Competition Complaints Board can be brought before Gulating Appeals Court.
The powers of investigation conferred upon the NCA are set out in Chapter 6 of the CA. Pursuant to section 24, everybody is obliged to provide the NCA with the requested information in respect of a suspected breach of section 11 of the CA. Moreover, the NCA can, on the basis of section 25 of the CA, carry out on-the-spot surprise investigations with a view to securing evidence on business premises or other places where relevant information may be found. Prior consent from the District Court is required to this effect. The Authority can require police assistance when it carries out such surprise investigation. The investigatory powers correspond roughly with those of the European Commission under Council Regulation (EC) No. 1/2003.
Decisions by the NCA imposing a fine for abuse of dominant position may be appealed to the Competition Complaint Board, and subsequently before Gulating Appeals Court, which then may examine and consider all aspects of the case. A decision from the NCA may not be challenged in court without having complained before the Competition Complaints Board. Nevertheless, national courts have the power to enforce section 11 of the CA in relation to private litigation.
Sanctions and remedies
What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?
The basic remedy is to require the abusive practice to be brought to an end, see section 12 of the CA. In addition to behavioural remedies, this may involve structural remedies provided that there are no behavioural remedies equally effective or if such remedies would be more burdensome on the company. Structural remedies have not yet been imposed.
According to section 29 of the CA, the NCA may also issue an administrative fine provided that the abusive practice was carried out with negligence or intent. The NCA imposed fines in the SAS and Tine cases; however, these decisions were annulled on appeal and no final fines have yet been imposed in other section 11 cases. The principles for calculating fines for violations of the CA are in line with the principles for calculating fines under the EEA and EU competition rules. Accordingly, fines may amount to up to 10 per cent of the worldwide turnover of the undertaking. However, this is a maximum limit and the level of the fine will be determined on a case-by-case basis.
Infringement of section 11 of the CA does not trigger criminal sanctions. However, such sanctions are available in respect of anticompetitive agreements violating section 10 of the CA. Moreover, failure to comply with decisions by the NCA or the obligation to provide information to the NCA and the provision of incomplete or incorrect information can result in criminal sanctions being imposed.
The ESA has imposed fines in two major cases being the Posten Norge case (2010) (approximately €11 million) and the Color Line case (2013) (approximately €19 million).
Can the competition enforcers impose sanctions directly or must they petition a court or other authority?
The Competition Authority may pursuant to section 29 of the CA issue administrative fines directly. Criminal sanctions must be decided by a court (or by way of the undertaking in question accepting a fine proposed by the public prosecutor). As mentioned above, violations of section 11 of the CA are in themselves not subject to criminal sanctions.
What is the recent enforcement record in your jurisdiction?
Section 11 of the CA has been infrequently enforced, and the NCA has not taken any section 11 decisions in the past few years. After its adoption in 2004, the ambition of the NCA was to enforce the provision in more than one case annually. However, this ambition has not been met.
After its adoption, the NCA has adopted two landmark section 11 decisions - the SAS case regarding predatory pricing in the air transport industry in 2005 and the Tine case relating to exclusionary practices in the dairy sector in 2011. The SAS case was settled during appeals proceedings and the Tine decision was quashed by the courts. A few cases are currently under investigation, but the NCA has not adopted a final decision in any section 11 cases after the Tine case of 2011.
Currently the NCA and the ESA are investigating two cases against Telenor ASA relating to alleged abuse of dominance in the Norwegian telecoms market. These two cases are currently the most high-profile ongoing dominance cases in Norway.
Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?
As under article 102 of the TFEU and article 54 of the EEA, contracts are void as far as they are in breach of section 11 of the CA. Thus, if it is possible to separate the illegal provisions from the remaining terms, the latter will be valid and enforceable. The assessment of partial vs total invalidity is a matter of general Norwegian contract law.
To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?
Private parties can make complaints to the NCA, requesting that an allegedly abusive practice is brought to an end. The NCA must state its reasons when refusing to issue such an order (see section 12 of the Act). Rejections may be appealed to the Ministry (and, when it enters into function, the new Complaints Board for competition cases described above). Further, it is possible to initiate private enforcement actions before national courts in order to compel a dominant firm to grant access, supply goods or services, or conclude a contract.
The Norwegian Patent Act contains a provision that empowers the NCA to grant compulsory licences based on a substantive assessment that for all practical purposes corresponds to that applied pursuant to section 11 of the CA. This provision is rarely relied upon in practice.
Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?
Companies harmed by abusive practices can claim damages (economic loss). This is executed by way of general court proceedings if an out-of-court settlement cannot be reached. Class actions are possible according to Chapter 35 of the Civil Procedure Act.
To what court may authority decisions finding an abuse be appealed?
The authority decisions finding an abuse may be appealed, and the Competition Complaints Board may examine and consider all aspects of the case - both facts and law. As mentioned above, the new appellate body - the Competition Complaints Board now handles all complaints against decisions by the NCA, including in dominance cases. The district courts no longer review appeals against NCA decisions in abuse cases as they did before. However, decisions from the Complaints Board may subsequently be appealed to Gulating Court of Appeal in Bergen. Judgments from the Gulating Court of Appeal can be appealed to the Supreme Court of Norway, but any matter brought before the Supreme Court must initially be considered by the Appeals Selection Committee. An appeal cannot be brought before the Supreme Court without the leave of the Appeals Selection Committee, and leave to appeal is often granted in cases that raise matters of principle beyond the specific subject matter of the issue in dispute.
Unilateral conduct by non-dominant firms
Are there any rules applying to the unilateral conduct of non-dominant firms?
Norway is not part of the EU. Nevertheless, the substantive scope of section 11 of the CA mirrors article 102 of the TFEU and article 54 of the EEA. There are no rules applying to the unilateral conduct of non-dominant firms.
Update and trends
Update and trends
Updates and trends
The competitive environment in the grocery sector has been subject to particular discussion the past few years. During 2017, two rapports were delivered to the Ministry of Trade, Industry and Fisheries on possible new regulations in the grocery sector. Under consideration are measures that could reduce barriers to entry, as well as the possible inclusion of new legislation against unilateral behaviour in the grocery sector by non-dominant undertakings (eg, unfair trading practices and unfair purchasing practices). A public hearing process was initiated on 15 November 2017 and the respondents have been asked to share their views by 15 March 2018. Updated information will be given on the Ministry’s webpage, www.regjeringen.no.