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Director general Lars Sørgard.

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Lars Sørgard
Director general Lars Sørgard

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Competition crime: One in three business executives say illegal cooperation takes place in their own industry

A survey among Norwegian business leaders shows that many leaders believe that illegal cooperation between companies take place in Norway. The Norwegian Competition Authority (NCA) will now intensify its investigation against cartels.

– We are pleased with the fact that 70 % of the respondents report that there is no illegal cooperation in their industry. On the other hand, there is cause for concern when as many as almost one third of Norwegian business leaders experience unlawful cooperation within their own industry, says director general Lars Sørgard.

In response to the question of which illegal cooperation that occurs, they report that price fixing, exchange of sensitive information and market sharing are the most common.

Prioritising disclosure of cartels

The main assignment of the NCA is to promote competition to the benefit of business and consumers. The disclosure of illegal cooperation is part of this mission.

– Large sums of money are taken from our society`s common funds because illegal cooperation leads to higher prices and less selection. We call this competition crime, and it is a big problem, which harms consumers, says Sørgard.

The feedback from the business leaders confirms that the Authority`s work to disclose cartels is important and must be continued.

– Illegal cooperation is a severe breach of the Competition Act, and we will intensify our efforts to disclose cartels, says Sørgard.

Intensified efforts to stop competition crime

The Competition Authority now introduces new tools to disclose cartels, for example by the use of specialised cartel screening and a strengthening of its investigating capacity.

– Cartel screening means a systematic analysis of tender data from selected markets, looking for signs of price cooperation and market sharing. A new director of investigation with experience from law enforcement will start working for us this spring, and we will strengthen the capacity and competence within tactical investigation in the very near future. We also consider taking part in the Working Crime Network, says Sørgard.

The Norwegian Competition Authority has already established a special Exit-group that works systematically to receive tips and market information from private citizens as well as businesses. The survey shows that Norwegian companies are familiar with the possibility to notify the NCA of anti-competitive issues, and a steady stream of notifications are received at the Authority.

– We are very pleased with the fact that as many as 77 % of business executives are aware that they can notify us on possible breaches of the Competition Law, and that they can do this anonymously. We receive more than 200 notifications every year. In addition to our own investigations, this is an important source of information in our work to disclose competition crime, says Sørgard.

Loss of goodwill, fines and imprisonment

Illegal cooperation may lead to heavy fines for the companies, and in the most severe cases also imprisonment. Since 2008, Norwegian companies have been imposed fines of 197 MNOK. In addition, the companies lose goodwill. This is what the companies themselves regard as the most important reason to operate within the limits of the law. Very surprisingly, the respondents report that imprisonment is what they fear the least.

– We note that 80 % of the business leaders regard the loss of goodwill as the most important reason to avoid competition crime. We also know from the survey that many illegal agreements are either cancelled, revised or blocked because of the Competition Act and the Authority`s enforcement, says Sørgard.

Leniency - a possible way out of illegal cooperation

For companies involved in illegal cooperation, seeking leniency can be an alternative to avoid fines, partly or completely, for the company, and imprisonment for the people involved.

– The company, which participated in the illegal cooperation, must be the first one to inform the Authority of an undetected cartel and provide sufficient information to allow the Authority to prove the cartel infringement in order not be punished. Unfortunately, only 3 % of Norwegian leaders are well aware of the leniency program, and half of them do not know it at all.  We believe that more companies involved in illegal cooperation will contact us about leniency when they learn that we are about to intensify our investigation against cartels, says Sørgard.

The survey in short

The survey measures awareness and knowledge and of the Competition Act and the Competition Authority within Norwegian companies

The purpose of the survey is among other things to identify what effects the Competition Authority`s enforcement has on Norwegian business, and to what extent Norwegian companies experience competition crime within their field of business.

The survey was conducted in December 2017, by Kantar TNS on behalf of the Competition Authority.

A selection of approx. 22,000 companies were drawn from Kantas TNS` business data base. 3,448 business leaders responded. All respondents have been anonymised.

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