New Swedish Competition Act

On 1 November 2008, a new Swedish Competition Act (the “Act”) will enter into force. The Act aims to make the procedures thereunder more efficient and to further harmonize Swedish competition rules with EC competition rules. Below follows a survey of the most important changes introduced by the Act.

Merger Control

Notification thresholds. The Act introduces new notification thresholds that solely relate to turnover achieved in Sweden. Concentrations will have to be notified to the Swedish Competition Authority (the “SCA”) under the Act if in the previous financial year the parties’ combined annual turnover in Sweden exceeded SEK 1 billion (approx. EUR 108 million); and each of at least two of the parties’ annual turnover in Sweden exceeded SEK 200 million (approx. EUR 22 million). If particular reasons exist, the SCA may also order a party to a concentration that meets the first threshold but not the second threshold to submit a notification. The Act explicitly provides that a concentration shall be notified to the SCA before any measures to implement it are taken. As of January 2008, the SCA has been accepting notifications based on a “good faith” intention to conclude an agreement. The Act codifies this practice.

Substantive test. The Act replaces the current “dominance test” with the “SIEC-test” that corresponds to the substantive test under the current EC merger regulation. Hence, under the new substantive test a concentration shall be prohibited if the concentration significantly impedes effective competition or the development of effective competition in Sweden or a substantial part thereof, in particular due to the creation or strengthening of a dominant position. This test is generally referred to as the “SIEC-test”.

Ancillary restraints. The Act removes the possibility to request the SCA to assess restrictions that are directly related and necessary to the concentration, i.e. ancillary restraints. The parties themselves have to assess whether their restrictions are permissible or not according to the competition law.

Review period. In line with the EC rules, the SCA may in cases where commitments are submitted extend the initial (phase I) review period from 25 to 35 working days.

Procedure

Several changes have been made in the Act in order to promote efficient application of the competition rules and faster handling of competition cases.

Leave to appeal. In order to shorten the total handling time of competition cases, leave to appeal to the Market Court (i.e. the last resort) will be required when appealing judgments and decisions issued by the Stockholm District Court.

Settlement procedure. The Act allows the SCA to issue fines in uncontested cases concerning agreements and other collusive behavior between undertakings that restrict competition, and in cases concerning abuse of dominant position. Thus the Act introduces a settlement procedure in infringement cases if the undertaking accepts the fines. Settlements will generally be allowed in all kinds of cases where the factual circumstances are clear.

Limitation periods. The limitation periods for issuing fines for infringements of the competition law are increased. A fine may only be issued if an undertaking has been served with an application for summons within five years from the day on which the infringement ceased. However, if the undertaking receives a decision regarding an inspection of its premises or gets the opportunity to comment on the SCA’s draft of an application for summons, the limitation period starts from that day. The absolute limitation period will be ten years.

Fines and sanctions

The rules for setting fines are clarified in the Act in order to facilitate classification of infringements. This will allow concerned parties and the court to easier identify infringements that are particularly harmful to competition and thus mandate higher fines.

Fines. Fines under the Act may not exceed 10% of the total turnover in the previous financial year of the undertaking participating in the infringement. The previous specific amount ranges are thus removed. It should be noted that the fines only relate to the infringing undertaking and not the whole group which the undertaking belongs to.

Ban on carrying on business. The Act introduces a completely new sanction, a ban on carrying on business for infringements relating to horizontal price fixing, market sharing and limiting or controlling production. The ban may be issued upon one or several persons that control an undertaking, such as a managing director or a board member. A ban to carry on business may be issued for a time of three to ten years.

Leniency. The Act clarifies the rules on leniency and explicitly provides that leniency may only be granted in cases regarding infringements that involve agreements and other collusive behavior between undertakings that restrict competition. In comparison to the current system, under which more than one undertaking could theoretically get full immunity from fines, the new system only allows one undertaking to get full immunity.

Roschier, Attorneys Ltd. - Sweden