Legal framework

Antitrust law

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

Companies active in Sweden are subject to the Swedish Competition Act (2008:579). Chapter 2, section 1 of the Act mirrors article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and prohibits agreements between undertakings that have as their object or effect to prevent, distort or restrict competition to an appreciable extent. Chapter 2, section 2 of the Act mirrors article 101(3) TFEU and provides for an exception from the prohibition under certain criteria. The preparatory works of the Act state that Swedish competition law should follow EU competition law.

Chapter 2, section 3 of the Act lists the applicable block exemption regulations, for example, the block exemption for vertical agreements act (2008:581), which states that the European Commission’s (the Commission) Regulation 330/2010 (VBER) is applicable as Swedish law.

EU law, EU case law and the Commission’s decision-making practice on vertical restraints constitute the most important sources for guidance on the application of the Act to vertical restraints. The Swedish Competition Authority applies the guidelines and notices issued by the Commission, aiming for a harmonised application between the Act and the TFEU in accordance with the statements in the preparatory works.

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?

There is no definition of vertical restraint in the Swedish Competition Act but any agreement between undertakings that are active on different levels of the value chain that restricts competition is encompassed by the provisions in the Act. Neither is there a set list of vertical restraints subject to antitrust law. Vertical restraints that have been investigated include, inter alia, exclusive distribution, resale price maintenance, territorial protection and franchise.

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?

The overall objective of the Competition Act is to ‘eliminate and counteract obstacles to effective competition in the field of production of and trade in goods, services and other products’. The prohibition against anticompetitive vertical restraints is one of several means to achieve this purpose.

The sole purpose of the Act is the protection of effective competition, the underlying theory being that effective competition leads to economic efficiency, which in turn generates consumer welfare. Neither the Act in general nor the prohibition against anticompetitive agreements serve any other interests.

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 is the sole authority responsible for enforcement under the Swedish Competition Act.

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 effects principle determines the limitations of the jurisdiction, which means that, as long as there are effects of an anticompetitive conduct on the Swedish market, the Swedish Competition Act is applicable to that conduct. Consequently, it is irrelevant if the undertaking responsible for the infringement is domiciled outside Sweden or not.

In relation to Booking.com (596/2013), the Swedish Competition Authority claimed jurisdiction because Booking.com had a Swedish subsidiary responsible for helping the parent company in relation to the Nordic markets and because the parent company had concluded agreements with Swedish hotels.

Agreements concluded by public entities

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

The Swedish Competition Act, and the prohibition against anticompetitive vertical restraints, applies to public entities when those undertakings’ activities constitute economic activities. The Swedish Competition Act explicitly exempts the exercise of public authority from the definition of an undertaking.

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 Swedish parliament has adopted both the Commission’s Motor Vehicle Block Exemption Regulation (MVBER) (Commission Regulation 461/2010), (the Act (2008:584) on block exemption for vertical restrictions in agreements in the motor vehicle sector), and the block exemption regulation regarding technology transfer agreements (TTBER) (Commission Regulation 316/2014), (the Act (2008:586) on block exemption for anticompetition technology transfer agreements), into Swedish law.

General exceptions

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

The Swedish legislator has adopted the VBER, the MVBER and the TTBER as Swedish law.

Moreover, the Swedish Competition Authority’s de minimis notice, essentially transposing the European Commission’s de minimis notice, also provides guidance when an agreement, provided it does not contain any hardcore or by object restrictions, could be considered as not having an appreciable effect on competition warranting an intervention.

Types of agreement

Agreements

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

There is no definition of agreement in the Swedish Competition Act. However, the provision in Chapter 1, section 6 of the Act states that what is said about agreements in the Act also applies to decisions by associations of undertakings and concerted practices. This, read together with the statement in the preparatory works that Swedish competition law should follow EU competition law, provides that the definition of an agreement in Swedish competition law is the same as in EU competition law. Therefore, the concept of an agreement is broad and captures a concurrence of wills as held by the Court of Justice of the European Union (CJEU) to be the framework for when article 101 TFEU is applicable.

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?

It is not necessary for there to be a formal written agreement for an agreement to be caught by the Swedish Competition Act. A concerted practice on the basis of, for example, an informal or oral understanding or agreement that expresses a common will regarding market behaviour is sufficient. Reference can also be made to the Vertical Guidelines, paragraph 25, where guidance can be found on how to interpret the existence of a vertical agreement.

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)?

For the application of the rules on vertical restraints, as well as the general rule in Chapter 2, section 1 of the Swedish Competition Act and in the TFEU regarding anticompetitive agreements, the agreement must be concluded between independent undertakings.

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?

In AGA Gas (Case No. 270/2000), the SCA concluded that the principles set out in EU competition law were applicable as it applied the Commission’s 2000 Vertical Guidelines. The SCA closed the case owing to the conclusion that Chapter 2, section of the Swedish Competition Act was not applicable as the agents of AGA Gas were not subject to any economic risk. Owing to later case law from the CJEU, SCA would also consider other factors than the economic risk borne by the agent.

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?

Relevant guidance can be found in EU case law and in the Vertical Guidelines.

Intellectual property rights

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

Antitrust law is not applied differently if the agreement with vertical restraints contains IPRs. The Swedish TTBER could, however, be applicable if the IPRs are considered the primary object of the agreement. Otherwise, the Swedish VBER will be applicable if the agreement’s main objective relates to the use, sale or resale of goods or services.

Analytical framework for assessment

Framework

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

The analytical framework for vertical restraints under the Swedish Competition Act is the same as applied in EU Competition law.

First, it should be established that Chapter 2, section 1 of the Act is applicable; for example, the agreement is not concluded between independent undertakings belonging to the same economic entity.

Second, the vertical restraint must have an appreciable effect on the Swedish market, which can be presumed if there are by object restrictions. If there is no effect on the Swedish market, then Chapter 2, section 1 of the Act will not be applicable. Third, it will be assessed if there are any hardcore restraints, as defined in the VBER. Hardcore restraints are:

  • fixed or minimum price fixing;
  • certain territorial restrictions;
  • certain passive sales restrictions;
  • restrictions on cross-supply between members of a selective distribution system; and
  • restrictions on component suppliers that sell their components as spare parts to the buyer’s finished product.

 

Certain vertical restraints relating to online sales can also be considered as hardcore restrictions.

If the agreement contains a hardcore restriction, the agreement cannot benefit from the safe harbour in the de minimis notice or the VBER and it is very difficult for such an agreement to fulfil the criteria in Chapter 2, section 2 of the Act (equivalent to article 101.3 TFEU). In the Swedish Competition Authority’s decision in 13:e Protein Import, however, the SCA did not pursue a hardcore restriction owing to the limited effects it had on the market.

If an agreement contains a hardcore restriction, it is up to the parties to demonstrate and explain why the hardcore restriction is pro-competitive or at least neutral, namely that it does not have a negative effect on competition.

Fourth, if there are no hardcore restrictions, the parties’ market share will be assessed to see if the de minimis notice or the VBER is applicable.

Finally, if neither the de minimis notice nor VBER are applicable, it will have to be assessed if the vertical restraint can benefit from an individual exemption under Chapter 2, section 2 of the Act.

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?

Market shares are relevant when assessing the legality of individual restraints, especially when determining if the de minimis notice is applicable. As the Swedish legislator has implemented the VBER, market shares will be equally important under Swedish competition law as under EU competition law. Market shares of competitors and other market players may also be considered relevant for the assessment.

In one case, the SCA decided not to further investigate resale price maintenance owing to the limited market share of the supplier (below 3 per cent) and the existence of a strong competitive landscape (13:e Protein Import, Case No. 559/2013).

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?

Market shares are relevant when assessing the legality of individual restraints, especially when determining if the de minimis notice is applicable. As the Swedish legislator has implemented the VBER, market shares will be equally important under Swedish competition law as under EU competition law. Market shares of competitors and other market players may also be considered relevant for the assessment.

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.

The Swedish legislator has implemented the Commission's vertical block exemption regulations (VBER, MVBER and TTBER) into Swedish legislation. In essence, the Swedish legislative acts refer to the relevant Commission regulation they implement. Moreover, the SCA will also apply the Vertical Guidelines when assessing vertical agreements and restraints.

For the block exemptions to apply, the agreement must be of a vertical character, that is, the parties must be active on different levels of the market and the market share of neither the supplier nor the buyer can exceed 30 per cent on their respective markets. The safe harbour is not applicable if the agreement contains any hardcore restraints. If the agreement contains excluded restrictions, such as non-compete obligations, the agreement, except for the excluded restrictions, can still benefit from the safe harbour of the VBER.

Types of restraint

Assessment of restrictions

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

Resale price maintenance is considered a hardcore restriction under the Swedish Competition Act with regard to minimum or fixed resale prices. In general, a hardcore restraint is presumed to be prohibited according to Chapter 2, section 1 of the Act without being able to benefit from the safe harbour in the VBER. It is further unlikely that a hardcore restraint can fulfil the criteria in Chapter 2, section 2 of the Act, to benefit from an individual exemption.

Equivalent to fixed and minimum prices is the determination of maximum discount levels that a buyer can offer its customers. Recommended prices are considered legal when such prices are just that, namely, recommended, and not disguised fixed prices.

In Reitan (Case No. 994/2004) and Make Up Store (Case No. 402/2010), the Swedish Competition Authority (SCA) concluded that the applicable franchise systems made it difficult for the franchisees to deviate from the franchisor’s recommended price. As the franchisees had to explicitly ask the franchisor to change the price in the system, it was considered to prevent the franchisees from deviating from the recommended prices.

The SCA has also pursued cases regarding pre-printed recommended sales prices on books and on product displays for ice cream. In Månpocket (MD 2002:5), the Market Court found that if a retailer wanted to sell books at another price than the pre-printed recommended price on the back of the book, the retailer had to clearly remark the price on the book or take some other action, clearly indicating to the consumer that another price was applicable. In GB Glace (Case No. 427/2000), the SCA considered that product displays with pre-printed recommended prices amounted to price fixing as the retailers could not easily set their own prices.

Consequently, if there are practical difficulties for buyers to diverge from the suppliers’ recommended prices, the practice can be considered as price fixing. When evaluating the practical difficulties, the SCA has assessed the resellers’ compliance level with the recommended prices as well as if the suppliers have technical means to monitor compliance.

In Ifö (Case No. 339/2015), the SCA started investigating vertical price fixing, but owing to the information collected during the investigation, the focus shifted to investigating a possible horizontal infringement. The investigation was later closed without action because no expression of concurrent wills could be demonstrated (vertical relation) and the information exchange was not sufficiently concrete to remove the strategic uncertainty in the market to such an extent than an agreement can be considered to have been established (horizontal hub-and-spoke).

The SCA’s (motivated) decision to close its investigation in 13:e Protein Import (Case No. 559/2013) is interesting as the SCA decided to not pursue a clear resale price maintenance case with reference to its prioritisation policy and the lack of effects on the market. The SCA’s reasons were that 13:e Protein Import had a negligent market share of 3 per cent and there were strong competitors on the market both on the supply and retail level. Consequently, it could not be supposed that the resale price maintenance brought any harm to competition and consumers.

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’?

In relation to campaign prices, the SCA has concluded that, in cases when resellers are forced to adhere to a price, those practices are not compatible with the Act. In Seiko Sweden (Case No. 647/1995), Seiko had placed advertisements with coupons in newspapers giving readers the possibility to purchase certain watches at a discounted price. The practice was considered restrictive as the resellers could not deviate from the prices set by Seiko regarding the specific watches. In Philips (Case No. 261/1994), the circumstances were similar, but the advertisement contained information that resellers could deviate from the advertised price. Therefore, the SCA considered that the practice was not restrictive.

Relevant decisions

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

We are not aware of any such decisions or guidelines. However, it is possible that price parity clauses could be seen as a type of resale price maintenance in combination with a most-favoured nation clause.

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

To our knowledge, the Swedish Competition Authority (SCA) has neither assessed nor issued any guidance in relation to any such cases.

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.

 By linking the resale price to the resale price of a competing product, the supplier is engaging in resale price maintenance according to the Vertical Guidelines (paragraph 48). The SCA will, therefore, as a starting point, also consider such practice as restrictive according to the Swedish Competition Act. In Lithells Meat Fast Food (Case No. 1243/1993), the SCA considered that the application of conversion tables, to ensure the application of a level margin with the only price differences following from differences in the purchase price, was restrictive of competition.

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.

 To our knowledge, the Swedish Compeititon Authority (SCA) has not assessed any cases relating to wholesale most-favoured nation clauses, unless vertical parity clauses could be considered.

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.

In Booking.com (Case No. 596/2013) and Expedia (Case No. 595/2013), the SCA investigated most-favoured customer clauses at retail level, or parity clauses relating to price. The parity clauses that the market actors applied obliged the hotels to offer their rooms on the platforms at terms that were not less favourable as compared with competing platforms (horizontal parity clause) and the hotels’ own websites (vertical parity clause). The parity clauses only covered prices that were publicly available. The SCA considered that the horizontal parity clauses were restrictive owing to the creation of price uniformity between both online reservation sites and online travel agent sites. Booking.com and Expedia both offered commitments to change the terms and to not apply the horizontal parity clauses and, consequently, the SCA closed its investigation.

The SCA decided not to pursue the vertical parity clauses as those were not considered to be as harmful to competition as the horizontal parity clauses. However, Visita, the sector and employer organisation representing the Swedish hospitality sector, brought a private enforcement action against Booking.com successfully requesting the Patent and Market Court to order Booking.com to cease its application of vertical parity clauses. In May 2019, the Patent and Market Court of Appeal delivered its judgment (PMT 7779-18), overturning the Patent and Market Court’s judgment. The Patent and Market Court of Appeal found that Visita had not proved that the vertical parity clause was restrictive of competition, either by object or by effect, on the identified relevant markets.

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.

To our knowledge, the SCA has not assessed any such practices. However, the SCA has assessed a similar practice, the restriction on price advertisement in general. KGK Suzuki (Case No. 1323/93) applied a condition in its exclusive distribution agreements prohibiting resellers from communicating prices in their advertisements. The SCA considered that such a condition restricted competition.

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.

To our knowledge, the SCA has not assessed any such practices.

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?

EU competition law guides the Swedish Competition Authority when assessing territorial restrictions. Consequently, territorial restrictions are, at the outset, considered to restrict competition. According to the VBER, a supplier is allowed to limit the buyer from actively marketing or selling the relevant products or services within an area that has been exclusively allocated to another buyer or reserved by the supplier for itself. However, a territorial restriction cannot limit the buyers’ customers.

In Amylum (Case No. 19/1998), the SCA assessed an agreement that contained a restriction on the reseller to not sell to certain customers and an obligation to consult the supplier before selling to certain customers. The SCA concluded that the agreement was restrictive of competition but as the agreement was de minimis, no action was taken.

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?

To our knowledge, the SCA has neither assessed nor issued any guidance in relation to any such cases.

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?

Customer restrictions are assessed in a similar manner as territorial restrictions. Terms that oblige a reseller to only sell products or services to certain customers, certain customer groups or to customers in certain areas can be considered as restrictive of competition although the VBER contains exceptions to this rule, for example, that the customer restrictions can apply to active sales within an exclusive distribution system or a selective distribution system as a supplier can restrict sales to unauthorised distributors.

Restrictions on use

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

Conditions obliging the buyer to use the purchased products only in its own production can be considered restrictive and must be objectively justified, for example, for security reasons, to not be found restrictive.

Restrictions on online sales

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

To our knowledge, the Swedish Competition Authority (SCA) has not assessed any such cases. As online sales are considered as passive sales, resellers are, as a main rule, allowed to use the internet to advertise and sell products. However, online advertisements directed at customers within an area that has been exclusively reserved for another reseller are considered as active sales and can be restricted.

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’?

 To our knowledge, the SCA has not assessed any cases relating to platform bans. The SCA has, however, found a practice restrictive where an internet advertisement platform, Blocket, required car dealers that wanted to advertise on the platform to also purchase advertisement space on its specialised automobile platform, Blocket Bil (Case No. 601/2015).

Selective distribution systems

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

Based on the Swedish Competition Authority (SCA)’s decision-making practice, a selective distribution system is compatible with Chapter 2, section 1 of the Swedish Competition Act if four criteria are met:

  • the product's characteristics merit a selective distribution system;
  • the distributors are chosen based on objective qualitative criteria that are applied in a non-discriminatory manner;
  • the result of the distribution system must outweigh the restriction on intra-brand competition; and
  • the terms regulating the selective distribution system cannot go beyond what is necessary to ensure an efficient distribution of the products. It is the actual application of the selective distribution system that will be assessed.

 

The SCA has considered a selective distribution system that only accepted a limited number of distributors within a specific area. Boråstapeter justified the condition on a requirement to ensure that distributors needed a sufficient customer base to conduct business. With reference to the then newly issued 2000 Vertical Guidelines, the SCA did not take any action (Case No. 669/1998). In a follow-up case, the SCA assessed the same contractual clause. This time, the SCA considered that the condition was restrictive and Boråstapeter committed to remove the criteria (Case No. 532/2004).

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 SCA, just as the Commission, will assess if products are of the nature that a selective distribution system can be justified. The SCA has accepted selective distribution systems, for example, for television and stereo equipment (Bang & Olufsen, 181/97), wristwatches (SMH Sweden, 1435/94) and alpine skiing outfits (Salomon Sport, 1054/97). On the other hand, the SCA has not accepted selective distribution systems for beds (DUX Industrier, 659/95), health food (MaxMedica, 94/95) and baby chairs (Stokke Fabriker, 674/94), etc.

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?

The SCA will be guided by the Vertical Guidelines and the CJEU’s case law. In a selective distribution system, authorised distributors have the right to sell, both actively and passively, to all end-consumers. The supplier can require that the distributors operate a brick-and-mortar shop and restrict distributors from only selling via an online sales channel. The supplier can also set quantitative standards in relation to an online sales channel.

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?

To our knowledge, the SCA has not assessed any such cases.

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

To our knowledge, the SCA has not assessed any such cases. Nevertheless, we believe that the SCA would consider such effects.

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?

To our knowledge, the SCA has neither assessed nor issued guidance regarding such cases. Refer, however, the Boråstapeter case, which applied a selective distribution system that restricted the number of distributors per area.

Other restrictions

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

Exclusive purchasing is mainly considered as restrictive if combined with selective distribution as it prevents authorised distributors from cross-supplying. Moreover, as long as the exclusive purchasing obligation is not associated with a selective distribution system and does not apply to more than 80 per cent of the products, such obligations are normally not considered as restrictive.

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

To our knowledge, the Swedish Competition Authority (SCA) has not assessed any such cases.

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

Non-compete obligations can fall within the prohibition in Chapter 2, section 1 of the Swedish Competition Act depending on their effects. The potential anticompetitive effects include market foreclosure and loss of inter-brand competition. VBER provides for a safe harbour if the non-compete obligation is not longer than five years and requires explicit prolongation if relevant.

The SCA has investigated some cases involving restricting a buyer from enter into agreement with the supplier's competitors. In Onlinepizza (658/2015), the agreement between Onlinepizza, an online platform provider for takeaway food, and the restaurants limited the restaurants from also entering into agreements with competing platforms. If the restaurants entered into agreements with competing platforms, Onlinepizza had the right to terminate the agreement. The SCA investigated the non-compete obligations but closed the case without action after Onlinepizza’s commitment to change the relevant condition. In an ongoing investigation regarding exclusivity obligations in contracts between fitness centres and fitness aggregators (IM WITH BRUCE, 572/2019), the SCA is investigating whether the exclusivity obligations are restrictive under both the prohibition of anticompetitive agreements as well as the prohibition of abuse of dominance. The SCA has imposed an obligation not to apply the exclusivity clauses as an interim measure, in relation to Chapter 2, section 1 of the Swedish Competition Act, which has been upheld by the Patent and Market Court (PMÄ 17901-19). The Patent and Market Court's judgment became final in February 2020 as the Patent and Market Court of Appeal did not grant IM WITH BRUCE leave to appeal.

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?

Such clauses are normally not considered to be restrictive as long as the purchasing obligation does not foreclose competing suppliers.

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

To our knowledge, the SCA has not assessed any such cases.

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

As the CJEU has stated that it is not contrary to article 101(1) TFEU to limit a supplier from selling directly to end-consumers, the SCA has followed such case law. In Compaq Computer (Case No. 847/95), the SCA concluded that it was not restrictive to restrict a wholesaler or supplier from selling directly to end-customers with reference to the CJEU case law.

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?

In KIA Motors (MD 2012:13), the Market Court found the agreement between KIA and its authorised repair shops, relating to the seven-year new-car warranty was conditional upon the customer using authorised repair shops for the regular service during the warranty, to be restrictive.

The Vertical Guidelines deal with other restrictions that the SCA would also contemplate.

Notification

Notifying agreements

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

The Swedish Competition Act does not provide for a procedure for notifying agreements containing vertical restraints. Instead, it is up to the undertakings to make their own assessment of whether their agreement is compliant with applicable competition law.

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 Swedish Competition Act neither provides for a procedure to obtain guidance from the Swedish Competition Authority nor the possibility to obtain a declaratory judgment from the Patent and Market Court.

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?

There is no formal procedure, but the Swedish Competition Authority (SCA) encourages undertakings to submit complaints to the Complaints unit at the SCA or use the whistle-blower function on its website. The SCA has published a list of questions on its website it wishes complainants to respond to, allowing it to better assess the complaint. The questions relate to who the complainant is, the anticompetitive conduct, the market structure and the market affected by the anticompetitive conduct.

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 Swedish Competition Authority (SCA) and the courts have not dealt with many vertical restraint actions. However, in the past year the SCA, as other competition authorities, has investigated vertical restraint more than usually. The SCA has a prioritisation policy that guides its decisions regarding which cases to further investigate and which ones to not pursue. The policy does not differentiate between different competition law infringements, but states that the SCA will prioritise cases of general interest and that will lead to clear results to promote effective competition to the benefit of consumers.

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

If an agreement is found to be anticompetitive according to Chapter 2, section 1 of the Swedish Competition Act, the agreement is, as a general rule, not valid according to Chapter 2, section 6 of the Act which mirrors article 101(2) TFEU. The nullity only applies to binding agreements, terms and decisions and implies that it cannot be applied or enforced. According to the preparatory works, only the part of the agreement that is anticompetitive is null whereas other parts of the agreement remain valid.

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 SCA can order firms to cease with an anticompetitive conduct, subject to a periodic penalty payment in the case of violation. The SCA cannot impose fines itself if the facts are disputed by the parties. In the case of dispute, the SCA must file an application with the Patent and Market Court and request the court to impose a fine. The maximum fine is 10 per cent of the infringing undertaking's turnover. Sanctions in vertical cases are not common; instead, the SCA has mainly accepted commitments subject to periodic penalty payments in the case of violation.

Investigative powers of the authority

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

The Swedish Competition Authority (SCA)’s investigative powers include the possibility to carry out dawn raids, issue requests for information, conduct sector specific inquires, interview physical persons and order interim measures. It is very rare for the SCA to order interim measures, although it did so in December 2019 in IM WITH BRUCE.

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?

Private enforcement of vertical restraints is possible, a claimant that has suffered damage caused by a vertical restraint may claim compensation in a Swedish court. The Competition Damages Act (2016:964), implementing the EU Damages Directive, is the applicable legislation for competition law damages claims. Compensation for damage caused by an infringement includes compensation for factual loss and loss of income. The objective being to restore the claimant's financial situation to that which it would have been had infringement never occurred. Punitive damages are not recognised.

Private enforcement is not common in Sweden. Reasons for this may be excessively long court proceedings, difficulties in obtaining evidence and a non-litigious culture. However, private enforcement is on the rise in both follow-on and standalone actions.

A private enforcement hybrid in Swedish competition law, ‘secondary standing’ is available for complainants to the SCA. If the SCA decides to not investigate a complaint, or (following an investigation) to close a case without taking action, the complainant (or rather ‘an undertaking that is affected by the infringement’) can itself take the case to the Patent and Market Court and request the court to judge the conduct as well as impose damages. The latest private enforcement case relating to vertical restraints is Visita’s action against Booking.com.

The total time required for processing competition law matters in the SCA, through appeals to both the Patent and Market Court and the Patent and Market Court of Appeal, is estimated at between three and five years from the launch of a case. In general, the losing party bears the legal costs and the winning party can recover all reasonable litigation costs.

Other issues

Other issues

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

The most unique point refers to the Swedish Competition Authority (SCA)’s decision in 13:e Protein Import, when the SCA decided not to enforce a clear hardcore restraint (resale price maintenance) with reference to the absence of effects.

Update and trends

Recent developments

What were the most significant two or three decisions or developments in this area in the last 12 months?

Recent developments

The most significant development in Sweden was the Patent and Market Court of Appeal’s judgment in Booking.com relating to vertical parity clauses, finding that they were not restrictive of competition and overturning the convincing judgment by the Patent and Market Court, that they were restrictive. Another significant development is the Swedish Competition Authority (SCA)’s use of interim measures in an ongoing investigation regarding exclusivity clauses (IM WITH BRUCE, 572/2917) for the first time in a long time.

 

Anticipated developments

In February 2020, the Ministry of Enterprise and Innovation published a memorandum in the Ministry publication series regarding a proposed legislative change regarding the enforcement powers of the SCA (Ds 2020:3). The main objective of the memorandum was to propose legislative changes to implement the ECN+ directive (directive 2019/1). However, the memorandum also contains a proposal for legislative changes to the procedural system regarding enforcement of anticompetitive agreements and abuse of dominance. The Ministry proposes that the SCA should be given the authority to, as a first instance, impose fines for antitrust violations, bringing the Swedish system more in line with the rest of the European Union member states and the European Commission. When this proposal for procedural change was first presented in 2016 (SOU 2016:49), criticism against the reform was voiced by the legal community (including courts), mainly for reasons of legal certainty and rights of defence.