Use the Lexology Getting The Deal Through tool to compare the answers in this article with those from other jurisdictions.

Legal framework

Antitrust law

What are the legal sources that set out the antitrust law applicable to vertical restraints?

Chapter 2, sections 1 and 2 of the Swedish Competition Act (SFS 2008:579) correspond to articles 101(1) and 101(3) of the Treaty on the Functioning of the European Union (TFEU), prohibiting agreements between undertakings that may affect trade within Sweden and have as their object or effect the prevention, restriction or distortion of competition within Sweden, as well as providing for exemption under certain criteria. This includes vertical agreements. Chapter 2, section 7 of the Competition Act sets out a prohibition of abuse of a dominant position equivalent to article 102 TFEU, which may in some instances be relevant to vertical relationships.

EU law on vertical restraints is an important source of guidance when applying the Competition Act; its preparatory works expressly state that guidance shall be sought in EU competition law when applying the Competition Act.

As a practical matter, there have been relatively few decisions on vertical restraints under the Competition Act since the early 2000s.

Types of vertical restraint

List and describe the types of vertical restraints that are subject to antitrust law. Is the concept of vertical restraint defined in the antitrust law?

The Competition Act contains no definition of vertical restraints; any agreement or concerted practice among undertakings active at different levels of trade that restricts competition is liable to be covered. In practice, this has concerned various forms of vertical agreements - distribution, franchise, agency - or provisions such as price maintenance and territorial protection.

Legal objective

Is the only objective pursued by the law on vertical restraints economic, or does it also seek to promote or protect other interests?

Although the main objective of the Competition Act is to safeguard efficient competition, it is also intended to promote the interests of consumers and SMEs. In practice, safeguarding competition takes priority over all other objectives.

Responsible authorities

Which authority is responsible for enforcing prohibitions on anticompetitive vertical restraints? Where there are multiple responsible authorities, how are cases allocated? Do governments or ministers have a role?

The Swedish Competition Authority has sole responsibility for the enforcement of competition law in Sweden. The Competition Authority has the power to issue cease-and-desist orders against conduct infringing the competition rules. It may impose fines where such imposition is not contested. In contested cases, the Competition Authority must lodge an action with the Patent and Market Court requesting that fines be imposed. An appeal lies with the Patent and Market Court of Appeal, subject to leave to appeal. Subject to approval by the Patent and Market Court of Appeal, issues of significance may be appealed to the Supreme Court.

If a complaint is rejected by the Competition Authority, a party concerned by the complaint may apply to the Patent and Market Court of Appeal for a cease-and-desist judgment.

No role is played by the government and ministers in the enforcement of competition law; on the contrary, the Swedish Constitution bars them from involvement in individual cases.

Jurisdiction

What is the test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? Has the law in your jurisdiction regarding vertical restraints been applied extraterritorially? Has it been applied in a pure internet context and if so, what factors were deemed relevant when considering jurisdiction?

The preparatory works of the Competition Act confirm that its application is determined on the basis of the effects doctrine, whereby conduct that produces material effects within all or part of the Swedish market is subject to the Competition Act, regardless of, for example, the location of the parties to the infringing agreement. This is, however, subject to generally accepted principles of international law. In the Booking.com case, which concerned an internet-only booking portal, jurisdiction appears to have been based on hotels located and active in Sweden being party to the investigated arrangements.

Agreements concluded by public entities

To what extent does antitrust law apply to vertical restraints in agreements concluded by public entities?

The Competition Act is fully applicable to public entities in respect of conduct by those entities that constitutes economic activities (as opposed to exercise of public authority). The Patent and Market Court of Appeal made clear in its Vägverket judgment that the Swedish Road Authority could be liable for participation in a cartel, even though it had at the same time acted as purchaser on the relevant market.

Sector-specific rules

Do particular laws or regulations apply to the assessment of vertical restraints in specific sectors of industry (motor cars, insurance, etc)? Please identify the rules and the sectors they cover.

The terms of the European Commission Motor Vehicle Block Exemption regulation have been brought into Swedish law by a separate Act (see below).

General exceptions

Are there any general exceptions from antitrust law for certain types of agreement containing vertical restraints? If so, please describe.

The terms of the European Commission’s Vertical Block Exemption, Motor Vehicle Block Exemption and Technology Transfer Block Exemption have been brought into Swedish law by a separate Act, and equivalent exemption is thus available in Swedish law.

Moreover, there is a specific de minimis exception for conduct otherwise falling within the Competition Act, whereby the Act is not applicable to conduct where either it is covered by the European Commission’s de minimis Notice, or where:

  • the annual turnover of each of the parties to the conduct does not exceed 30 million Swedish kronor;
  • the parties’ aggregate market share does not exceed 15 per cent of the relevant market; and
  • the agreement or conduct includes none of the hardcore restraints listed in the European Commission’s Notice on agreements of minor importance, such as resale price maintenance, sharing of markets or customers, or bid rigging.

Types of agreement

Agreements

Is there a definition of ‘agreement’ - or its equivalent - in the antitrust law of your jurisdiction?

The definition of ‘agreement’ under the Competition Act follows the definition in EU law.

In order to engage the antitrust law in relation to vertical restraints, is it necessary for there to be a formal written agreement or can the relevant rules be engaged by an informal or unwritten understanding?

Swedish law follows EU law: no formal or legally binding agreement is required for the Competition Act to apply, and an oral agreement or concerted practice based on a tacit or informal understanding or ‘gentlemen’s agreement’ is sufficient, provided that the parties have manifested a common will to act in a certain way in the market. A unilateral statement by one party is, however, normally not sufficient.

For example, in the Uppsala Taxi case a company had contacted one of its competitors, asking how it intended to act in a certain situation. The competitor did not reply to those questions, and there was no evidence that it had in any other way adapted its conduct in response to the first company’s questions. The Stockholm City Court found that there was no agreement in the terms of the Competition Act.

Parent and company-related agreements

In what circumstances do the vertical restraints rules apply to agreements between a parent company and a related company (or between related companies of the same parent company)?

The Competition Act follows the principles set out in EU law, and hence applies as soon as the two companies do not form part of the same economic entity.

Agent-principal agreements

In what circumstances does antitrust law on vertical restraints apply to agent-principal agreements in which an undertaking agrees to perform certain services on a supplier’s behalf for a sales-based commission payment?

The Competition Authority made clear in its AGA Gas decision that the principles for applying competition law to agency relationships set out in EU competition law also apply under the Competition Act. The decision even makes reference to the relevant parts of the Commission’s Guidelines on Vertical Restraints.

In that decision, the Competition Authority also analysed the agreement under the rules on both restrictive agreements and abuse of dominant position; the Market Court, in a previous AGA Gas judgment, found that in casu an exclusivity clause in an agency agreement did not constitute an abuse of the principal’s dominant position, on the basis of absence of foreclosure.

Where antitrust rules do not apply (or apply differently) to agent-principal relationships, is there guidance (or are there recent authority decisions) on what constitutes an agent-principal relationship for these purposes?

As indicated above, the Competition Authority and courts can be expected to seek guidance in EU competition law.

Intellectual property rights

Is antitrust law applied differently when the agreement containing the vertical restraint also contains provisions granting intellectual property rights (IPRs)?

The presence of IPRs in a vertical agreement does not alter the competition analysis as such. Such agreements may be exemptible by virtue of the Swedish equivalents to the Vertical Block Exemption, if directly related to the use, sale or resale of goods or services, or the Technology Transfer Block Exemption, if the IPR does not constitute the primary object of the agreement.

Analytical framework for assessment

Analytical framework for assessment

Framework

Explain the analytical framework that applies when assessing vertical restraints under antitrust law.

The analytical framework followed under the Competition Act will be virtually identical to that under EU competition law. It is hence very likely that the Competition Authority or courts would regard typical hardcore vertical restraints, such as resale price maintenance, export bans and market-sharing as per se unlawful.

In the absence of object restrictions, the Competition Authority or courts will engage in an analysis of the possible restrictive effects of the vertical restraint in question, taking into account conditions on the relevant market. So, for example, in the Månadens Bok case, the Market Court assessed whether the recommended price at issue was liable to restrict pricing on the market (and found that it was). In the AGA Gas and Interflora cases, the Market Court analysed whether an exclusivity clause was liable to cause foreclosure in light of market conditions. In Ticnet, the Competition Authority accepted, after an in-depth analysis of market conditions, that certain vertical exclusivity obligations did not constitute abuse of a dominant position. In the 13:e Protein Import case, the Competition Authority found an absence of material effect.

Market shares

To what extent are supplier market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other suppliers relevant? Is it relevant whether certain types of restriction are widely used by suppliers in the market?

The determination is likely to be identical to EU law.

Market share is relevant for the determination of whether the Competition Act de minimis rule is applicable. Market shares also determine the applicability of the Swedish equivalents of the Vertical Block Exemption, the Motor Vehicle Block Exemption and the Technology Transfer Block Exemption.

For example, in its Interflora judgment, the Market Court analysed the restrictive effects of a non-compete clause in the light of prevailing market conditions.

In its 13:e Protein Import decision, the Competition Authority decided not to proceed with a case of retail price maintenance (minimum price) with regard to online distribution, with reference to the low (less than 3 per cent) market share of the supplier and the presence of numerous competitors.

Market shares of parties, their competitors and others may of course also become relevant in an individual assessment of the agreement, in the same way as in EU law.

To what extent are buyer market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other buyers relevant? Is it relevant whether certain types of restriction are widely used by buyers in the market?

See question 16.

Block exemption and safe harbour

Function

Is there a block exemption or safe harbour that provides certainty to companies as to the legality of vertical restraints under certain conditions? If so, please explain how this block exemption or safe harbour functions.

As noted in question 8, the terms of the European Commission’s Vertical Block Exemption, Motor Vehicle Block Exemption and Technology Transfer Block Exemption have been brought into Swedish law, and are thus applicable mutatis mutandis to the prohibition in Chapter 2, section 1 of the Competition Act. As noted, the case law also occasionally relies on the Commission’s Guidelines on Vertical Restraints.

Types of restraint

Assessment of restrictions

How is restricting the buyer’s ability to determine its resale price assessed under antitrust law?

Over the past decade, case law on vertical restraints under the Competition Act has been scarce. Generally, the case law has routinely made reference to EU law principles and legal instruments. It is thus safe to assume that the determination under Swedish law on the points below would follow EU law, including the European Commission’s Block Exemptions and Guidelines.

Vertical price fixing, whether in the form of fixed prices, minimum prices or equivalent measures, is clearly illegal under the Competition Act. On the other hand, the Competition Authority has stated that maximum prices are acceptable in principle.

Recommended prices are not considered to breach competition law when limited to a unilateral communication. In the Reitan, GB Glace and Make Up Store cases, the Competition Authority challenged systems of recommended pricing where the practical difficulties of diverging from the recommendation resulted in most resellers following the recommended price. Interestingly, in these cases the Competition Authority based its findings on a high degree of compliance with the recommended price in practice as well as, in the Reitan case, the existence of technical facilities enabling the supplier to monitor compliance with the price.

In its Månadens Bok decision, the Market Court analysed a non-binding recommended price for books, finding that on the facts it was liable to produce restrictive effects and hence infringed the Competition Act. Again, reference was made to the practical difficulties of diverging from the recommendation and the apparent widespread compliance with the recommended price.

Have the authorities considered in their decisions or guidelines resale price maintenance restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign; or specifically to prevent a retailer using a brand as a ‘loss leader’?

When the Competition Authority has been confronted with such pricing in the past (such as the Seiko Sweden case), it has been considered a concerted practice between supplier and seller. In the Philips case, no infringement was found since it was expressly provided that resellers could diverge from the launch price.

Relevant decisions

Have decisions or guidelines relating to resale price maintenance addressed the possible links between such conduct and other forms of restraint?

There are no such decisions or guidelines.

Have decisions or guidelines relating to resale price maintenance addressed the efficiencies that can arguably arise out of such restrictions?

We are aware of no such decisions or guidelines.

Explain how a buyer agreeing to set its retail price for supplier A’s products by reference to its retail price for supplier B’s equivalent products is assessed.

To our knowledge the issue has not been considered.

Suppliers

Explain how a supplier warranting to the buyer that it will supply the contract products on the terms applied to the supplier’s most-favoured customer, or that it will not supply the contract products on more favourable terms to other buyers, is assessed.

The case law on such clauses is unclear - in at least one decision the Competition Authority has found such provisions restrictive of competition and not exemptible, while appearing to accept them in other decisions.

Explain how a supplier agreeing to sell a product via internet platform A at the same price as it sells the product via internet platform B is assessed.

These issues have been considered in the Competition Authority’s Booking.com and Expedia decisions. The Booking.com case concerned price parity clauses whereby hotels agreed to offer rooms over Booking.com, an online reservation site, at no less favourable conditions than those at which they offered rooms in other distribution channels. The Competition Authority found the clauses restrictive of competition, inter alia, since they resulted in price uniformity over all online reservation sites, independently of the level of commission charged by the individual site, reducing the incentive for a site to reduce its commissions. The case was ultimately settled on the basis of commitments coordinated among the Swedish, French and Italian competition authorities.

Explain how a supplier preventing a buyer from advertising its products for sale below a certain price (but allowing that buyer subsequently to offer discounts to its customers) is assessed.

The Competition Authority considered a similar clause in KGK Suzuki concerning a prohibition on sellers from setting out prices in advertisements; the clause was found to be restrictive.

Explain how a buyer’s warranting to the supplier that it will purchase the contract products on terms applied to the buyer’s most-favoured supplier, or that it will not purchase the contract products on more favourable terms from other suppliers, is assessed.

The Competition Authority has to our knowledge not considered such a clause.

Restrictions on territory

How is restricting the territory into which a buyer may resell contract products assessed? In what circumstances may a supplier require a buyer of its products not to resell the products in certain territories?

The Competition Authority will apply EU law principles in this assessment. For example, in the Hemglass case, the Competition Authority exempted a distribution agreement featuring territorial exclusivity for sale to private households. In the Amylum case, the Competition Authority found prima facie restrictive an obligation on the reseller to refrain from selling to other customers and to consult the supplier before selling to certain others. The agreement was, however, considered de minimis. In a recent case concerning a procurement process regarding kitchen equipment, one brand’s exclusive distributors submitted bids covering only their own contract territory - this appears to have been accepted by the authority (case closed without measures).

Have decisions or guidance on vertical restraints dealt in any way with restrictions on the territory into which a buyer selling via the internet may resell contract products?

The issue has to our knowledge not been considered.

Restrictions on customers

Explain how restricting the customers to whom a buyer may resell contract products is assessed. In what circumstances may a supplier require a buyer not to resell products to certain resellers or end-consumers?

The Competition Authority will follow EU law principles. Agreements where the reseller has been prevented from selling to specific customers have been found restrictive; the assessment has been the same where the reseller has been incentivised to act in such a manner.

Restrictions on use

How is restricting the uses to which a buyer puts the contract products assessed?

In its practice the Competition Authority has found such clauses restrictive.

Restrictions on online sales

How is restricting the buyer’s ability to generate or effect sales via the internet assessed?

The issue has to our knowledge not been considered. See question 25.

Have decisions or guidelines on vertical restraints dealt in any way with the differential treatment of different types of internet sales channel? In particular, have there been any developments in relation to ‘platform bans’?

The question has to our knowledge not been considered. A similar issue did arise in the Blocket case. Here, the operator of a general internet advertising platform required that car dealers who wanted to advertise on that platform also purchased advertising on the operator’s specialised car dealer advertising platform. Both platforms held a strong market position for automotive advertising in Sweden. The case was closed when the operator stated that it would cease to apply the requirement. At the time of writing, the Competition Authority is conducting a follow-up of the case and has invited comments.

Selective distribution systems

Briefly explain how agreements establishing ‘selective’ distribution systems are assessed. Must the criteria for selection be published?

The Competition Authority’s practice on selective distribution systems follows EU law as regards products that may be the subject-matter of a selective distribution system, admission of members, etc. Admission to the system may be reserved for the supplier (decisions in Bang & Olufsen; Helena Rubinstein) In the Step in Watch Center case, the Competition Authority declined to intervene where a retailer had been excluded from a qualitative selective distribution system, following the supplier’s inspections and written warnings of the risk of exclusion if failures to comply with the selective criteria were not addressed.

The position on quantitative selective distribution is unclear. In prior decisions the Competition Authority has found restrictive limitations on the number of selective distributors per geographic area. In a subsequent decision (Boråstapeter) - at a time where the European Commission’s Guidelines on Vertical Agreements had been published - it accepted such a restriction; in a more recent case, the opposite position was again adopted (Eco-Boråstapeter) and the requirement was not accepted.

Are selective distribution systems more likely to be lawful where they relate to certain types of product? If so, which types of product and why?

The Competition Authority has taken into account in its analysis whether the contract products were of such a nature as to justify a selective system, in a manner equivalent to EU law.

In selective distribution systems, what kinds of restrictions on internet sales by approved distributors are permitted and in what circumstances? To what extent must internet sales criteria mirror offline sales criteria?

No such restrictions have been assessed in the Competition Authority’s practice.

Has the authority taken any decisions in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorised buyers or sales by authorised buyers in an unauthorised manner?

We are aware of no such decisions.

Does the relevant authority take into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market?

We are not aware of the issue having been considered, but the Competition Authority can be expected to take such effects into account.

Has the authority taken decisions (or is there guidance) concerning distribution arrangements that combine selective distribution with restrictions on the territory into which approved buyers may resell the contract products?

No such decisions have been taken.

Other restrictions

How is restricting the buyer’s ability to obtain the supplier’s products from alternative sources assessed?

The issue has to our knowledge not been considered.

How is restricting the buyer’s ability to sell non-competing products that the supplier deems ‘inappropriate’ assessed?

The issue has to our knowledge not been considered.

Explain how restricting the buyer’s ability to stock products competing with those supplied by the supplier under the agreement is assessed.

The Competition Authority has on numerous occasions (in decisions such as Interflora, AGA Gas and Ticnet) accepted non-compete obligations under Chapter 2, sections 1 and 7 (restrictive agreements and abuse of dominance respectively) of the Competition Act.

How is requiring the buyer to purchase from the supplier a certain amount or minimum percentage of the contract products or a full range of the supplier’s products assessed?

The Competition Authority has found such clauses not to be restrictive.

The authority was recently called upon to assess a selective distribution system where a rebate on purchases was conditioned on the purchase of spare parts and consumables from the supplier. The case was closed without measures.

Explain how restricting the supplier’s ability to supply to other buyers is assessed.

There is little case law on the subject. In the Lundgren case, an agreement between the supplier and distributor not to supply certain companies was found restrictive, and (moderate) fines were imposed. In the Geomatik case the purchaser of a service included a clause to the effect that if the supplier provided the same services to one of Geomatik’s (the purchaser) competitors, the latter could terminate the agreement. Geomatik declared that it had ceased to apply the clause, and the Competition authority closed the file. A similar clause was the subject of the Apphero case; it provided that if a restaurant that had contracted with the company Onlinepizza’s online food order platform started working with a competing platform, Onlinepizza could terminate the agreement. Although on the facts as described in the decision it is unclear on which basis an infringement existed, the clause was amended to cover only cases of disloyal competition.

Explain how restricting the supplier’s ability to sell directly to end-consumers is assessed.

As far as we are aware the issue has not been considered.

Have guidelines or agency decisions in your jurisdiction dealt with the antitrust assessment of restrictions on suppliers other than those covered above? If so, what were the restrictions in question and how were they assessed?

No.

Notification

Notifying agreements

Outline any formal procedure for notifying agreements containing vertical restraints to the authority responsible for antitrust enforcement.

There is no formal possibility of notifying an agreement to the Competition Authority.

Authority guidance

If there is no formal procedure for notification, is it possible to obtain guidance from the authority responsible for antitrust enforcement or a declaratory judgment from a court as to the assessment of a particular agreement in certain circumstances?

The Competition Authority provides no mechanism for formal guidance in regard to particular cases or on general issues.

Enforcement

Complaints procedure for private parties

Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?

Complaints can be lodged with the Competition Authority’s complaints unit. While there is no mandatory format for complaints, complainants are encouraged to use a form supplied by the Competition Authority. There is no legal time limit for the processing of complaints, but the Competition Authority states that it normally aims to issue a decision on whether or not to investigate within one month or, at the most, four months. The Competition Authority may then decide not to take any further action, or to proceed with an investigation that may have the results set out in question 4. If the Competition Authority decides not to initiate an investigation, an interested party may lodge an action with the Patent and Market Court of Appeal for a cease and desist judgment against the conduct complained of.

Regulatory enforcement

How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?

The Competition Authority and courts have taken very limited enforcement action in regard of vertical restraints in recent times. The principles and priorities of enforcement are likely to mirror those following from EU law, in particular the European Commission’s Block Exemptions and Guidelines.

What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?

Agreements or concerted practices that are prohibited under Chapter 2, section 1 of the Competition Act are invalid according to section 6 of said Chapter. The invalidity has effect ex tunc (ie, from the time the infringement commenced, or, if the agreement originally fell under the de minimis exception, from the time when it had a material effect on the market).

The effect of the invalidity is that the agreement or practice cannot be invoked according to its content or enforced before the courts.

The invalidity can be claimed both by the contracting parties or a third party. In the ALIS case, the Stockholm City Court found that the collecting rights association ALIS had no right to claim remuneration from Mediearkivet, since ALIS’s agreement with the individual right holders constituted an infringement of the Competition Act.

The invalidity catches as a rule only those parts of agreements that constitute an infringement of the competition rules. However, other parts of the agreement, or the agreement as a whole, may be modified or the whole agreement set aside under section 36 of the Contracts Act if the infringing parts are deemed essential to the agreement as a whole.

May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?

The Competition Authority may issue a cease-and-desist order in regard of conduct found to infringe the competition rules. In addition, it may impose a fine in cases where the undertaking in question does not contest such imposition. If the authority otherwise wishes to impose fines, it must lodge an application with the Patent and Market Court, requesting that the court impose such a fine. As yet, while cease-and-desist orders have been issued, no fines have been imposed in respect of vertical restraints.

Albeit not a sanction as such, in recent years, the trend in respect of vertical restraints cases has clearly been to settle, or to close the investigation following voluntary remedies by the parties.

Investigative powers of the authority

What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?

The Competition Authority has powers of investigation similar to those of the European Commission under Regulation 1/2003. The principal powers of investigation are requests for information, unannounced on-site inspections - the Competition Authority may carry out inspections at the premises of undertakings or in private homes - and the right to summon persons to be interviewed.

Private enforcement

To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?

Where the Competition Authority decides to take no action in respect of an alleged conduct, parties concerned may lodge an action before the Patent and Market Court for that court to assess the legality of that conduct.

On 27 December 2016, the Competition Damages Act entered into force in Sweden. The Act implements the EU Competition Damages Directive, and broadens the scope for actions for damages resulting from competition law infringements. Any party having suffered injury is entitled to claim damages (including parties to the agreement themselves). Claims under the Act are heard by the Patent and Market Court. All remedies available to secure a claim in the Code of Judicial Procedure (such as retention) are available to such a claimant. The general rules in the Code of Judicial Procedure on costs apply, mainly providing that the losing party shall pay for the successful party’s reasonable costs (including legal fees).

Other issues

Other issues

Is there any unique point relating to the assessment of vertical restraints in your jurisdiction that is not covered above?

No.