The Swedish Competition Authority may get new tools to combat structural threats to competition in the Swedish market
Following two sector inquiries the Swedish Competition Authority (the SCA) announced in October last year that it considered the existing competition rules to be inadequate and not sufficient to ensure competitive and well-functioning markets in Sweden. The SCA therefore requested new and more flexible tools to remedy problems in markets already suffering from weak competition, but also to prevent competition from being weakened in the first place, including structural and behavioural remedies. The Swedish Government appears to agree that new tools may be required as it has now decided to commission an inquiry to investigate the need for new and expanded tools in this area. The inquiry shall present its findings in February 2025.
Scope of the inquiry
More precisely, the inquiry shall investigate:
- the need for a new and broader tool to complement those now available to the SCA under the Swedish Competition Act, and
- whether companies should be required to inform the SCA of transactions that are not notifiable under the Competition Act.
Depending on the outcome of such investigation, the inquiry shall also propose new legislation to meet any needs identified.
A new tool to remedy structural market problems
The Government notes that the tools currently available under the Competition Act allow the SCA to investigate and sanction the behavior of individual undertakings when they infringe the prohibitions laid down in the Competition Act, but that there is no possibility for the SCA to intervene where it identifies structural problems in the market that are not due to such infringements.
The SCA now requests a tool that is designed to ensure effective competition in concentrated markets or in markets lacking price transparency. Such tool should be used to remedy problems in markets already suffering from weak competition, but also to prevent competition from being weakened in the first place.
In its decision to commission the inquiry, the Government notes that tools like the one suggested by the SCA already exist in several European jurisdictions, including the UK and Germany, and that other jurisdictions, such as Norway, are contemplating the introduction of such tools. In the UK, the Competition and Markets Authority may adopt forceful measures aimed at the entire market and not just individual companies. If a sector inquiry shows that a market is characterized by e.g. a high level of concentration, vertical integration, high entry barriers or switching costs, it may take the appropriate measures ¬ including both behavioral and structural remedies ¬ to restore competition in that market.
The Swedish Government now sees a potential need to expand the current regime to include a more flexible tool like the one available in the UK.
A duty to inform the SCA of concentrations falling below the thresholds
The inquiry should also look into the need to impose a duty on companies to report concentrations falling below the Competition Act’s turnover thresholds to the SCA. Here, the Government refers to the newly revived Article 22 of the EU Merger Regulation which allows Member States to request the Commission to review mergers that are not subject to mandatory review in the EU. The Government notes that some of our neighboring countries, such as Norway, have introduced reporting duties to make sure that competition is not unduly weakened in oligopolistic markets or in markets with an incumbent player. The Government also refers to the EU Digital Markets Act which imposes a duty on gatekeepers to inform the European Commission of all acquisitions, irrespective of the size of the target. The Government acknowledges that there are situations where the SCA may need to be informed of transactions that fall below applicable turnover thresholds and which are thus not subject to mandatory notification. It may be noted that under the current Competition Act the SCA may call in merger filings for transactions which do not fulfil the lower of the two thresholds for mandatory filing and the parties may in such situations also file a voluntary notification.
To conclude, the inquiry should investigate the need for (i) a reporting duty in this respect, and (ii) a more flexible tool to address structural market problems. It is required to assess how such duties and tools would relate to comparable tools in other jurisdictions. If new rules are deemed necessary, the inquiry should propose how they should be framed. The inquiry shall present its findings no later than 28 February 2025.
Increased competition law scrutiny in Sweden may however be expected sooner than that since the Government in the end of September suggested that the SCA should be assigned an enlarged budget (approx. 3 MEUR) in order to intensify its enforcement actions.