Cooperation that restricts competition – Section 10 of the Norwegian Competition Act

Undertakings are prohibited from cooperating in ways that restrict competition.

Section 10 of the Norwegian Competition Act prohibits cooperation between undertakings which have as its object or effect the prevention, restriction or distortion of competition. Corresponding prohibitions are laid down in Article 53 of the EEA Agreement and Article 101 of the Treaty on the Functioning of the European Union (TFEU).

The prohibition against anti-competitive cooperation applies not only to formal agreements but also to more informal collaborations, for instance where two competitors raise their prices in concertation. Decisions made by business associations may also be subject to the ban. For example, if an industry association decides how its member companies should behave in the market.

 

Vertical and horizontal cooperation
The prohibition includes both horizontal and vertical cooperation. Horizontal cooperation is cooperation between (actual or potential) competitors. Vertical cooperation is cooperation between undertakings operating at different levels of a supply chain, e.g. a supplier and a wholesaler.

Although vertical cooperation can often have positive effects, it may, under certain circumstances, be detrimental to competition and consumers.
Horizontal cooperation is normally considered more damaging to competition than vertical cooperation, particularly if it relates to prices, the division of markets or restrictions on production or sales.

 

Guidance on project collaborations
The prohibition against anti-competitive co-operation means that, in principle, competitors are not permitted to submit a joint bid in connection with a competitive tender.
However, collaboration between undertakings which, for various reasons, cannot individually submit a bid in connection with a competitive tender is not caught by the prohibition. Such collaborations can increase the number of bids submitted and, in this way, promote competition.

The Norwegian Competition Authority has issued guidance on project collaborations. The guidance can be found here (in Norwegian) >>

 

Exceptions from the prohibition
Not all cooperation between undertakings that restricts competition is prohibited. Section 10(3) of the Norwegian Competition Act provides an exception from the prohibition set out in Section 10(1) of the Act. The exception relates to cooperation leading to efficiency gains that outweigh the impact of the reduction in competition resulting from the cooperation. For example, this may be the case when cooperation improves the efficiency of production or distribution in ways that benefit consumers in the form of lower prices or higher quality.

Corresponding exceptions are laid down in Article 53(3) of the EEA Agreement and Article 101(3) in the TFEU. For further information, see the guidelines of the EFTA Surveillance Authority.

 

Suspect wrongdoing? Let us know
The Norwegian Competition Authority urges individuals and undertakings to inform the Authority about cooperation prohibited by the Competition Act.
The Authority has a duty to keep the identity of informants secret. This duty also applies vis-à-vis the parties involved in the case and their representatives.
To contact us you can use our dedicated phone number: +47 55 59 75 55.

 

Securing of evidence
Infringements of the prohibition against anti-competitive cooperation is a serious matter. The Norwegian Competition Authority is therefore empowered to carry out unannounced on-the-spot inspections at the premises of enterprises suspected of violation of Section 10 of the Norwegian Competition Act. Before it can secure evidence by way of an inspection the Competition Authority must obtain an authorisation order from the court, see Section 25 of the Norwegian Competition Act.

Overview of investigation cases by The Norwegian Competition Authority >>

 

Leniency/immunity
The undertaking which first discloses an instance of unlawful cooperation to the Norwegian Competition Authority may avoid administrative fines and prosecution.
A key feature of the leniency programme is that an undertaking may avoid administrative fines by being the first to inform the Norwegian Competition Authority of an instance of unlawful cooperation, and helping the Authority in its subsequent investigation. Leniency for engaging in unlawful cooperation means either complete exemption from administrative fines (full leniency or immunity) or a reduction in the amount of the administrative fines imposed (partial leniency).

 

Sanctions
In case of intentional or negligent violations of Section 10 of the Norwegian Competition Act, the Norwegian Competition Authority may, pursuant to Section 29 of the Act, impose administrative fines of up to 10 per cent of the undertaking’s total turnover.

The Competition Authority may order the undertakings concerned to bring the infringement to an end pursuant to Section 12 of the Act. Such cease and desist orders may be imposed in addition to administrative fines.

A case concerning a possible violation of Section 10 of the Norwegian Competition Act may also be closed by means of a commitment decision. It is up to the undertakings that may have violated the Competition Act to propose appropriate corrective actions in the form of commitments. To ensure compliance with a cease and desist order, period penalty payments can be imposed

Appeals
The Norwegian Competition Authority’s decisions may be appealed to the Norwegian Competition Tribunal.

Appeals are addressed to the Competition Appeals Board but must be sent to the Norwegian Competition Authority.