The Swedish Merger Control Year 2022 In Review – Highlights And Takeaway

In this blog post, we take a closer look at the merger control year of 2022 in Sweden and the cases that caught the Swedish Competition Authority’s (“SCA”) attention.

2022 in numbers
In 2022, the SCA received 117 merger filings. While this was a slight decrease compared to the record breaking 135 notifications of 2021, the number remained at a high level. As a comparison, the yearly average number of notifications in 2017–2020 was 77. Despite this, the average review time of Phase 1 investigations was 16 working days in 2022, well under the statutory period of 25 workings days. The SCA is often praised amongst counsels for its speedy handling time for non-complex mergers since no pre-notification phase is required for mergers lacking horizontal or vertical overlaps.
While no merger was blocked or subject to conditions, three of the notified mergers were subject to in-depth Phase 2 investigations. In one case, the SCA even sent a statement of objections, prompting the parties to withdraw their notification and to abandon the deal. The average review time of Phase 2 investigations increased from 114 calendar days in 2021 to 128 in 2022. This increase is explained by the high workload as well as by the complexity of the cases. As a reference the SCA should within three months from the start of Phase 2 decide whether to approve the concentration or issue a prohibition, but that time may be extended subject to the consent of the parties or if there are exceptional reasons.

Take caution also in the case of vertical mergers
Historically, vertical mergers have often flown under the radar. That is now changing. One of the SCA’s in depth-investigations concerned Grandvision’s acquisition of Smarteyes. Both parties are optical retailers, but Grandvision is also, via its owner EssilorLuxottica, a wholesaler of e.g. spectacles, prescription lenses and sunglasses (including popular brands such as RayBan and Oakley). While the SCA eventually cleared the merger without conditions, the case demonstrates a new focus on vertical mergers.

Voluntary notifications – a detour or a shortcut?
Parties are required to notify a concentration to the SCA if their combined aggregate turnover in Sweden exceeds SEK 1 billion (approx. EUR 85 million), and at least two of them each has a turnover in Sweden exceeding SEK 200 million (approx. EUR 17 million). If only the first threshold is met, a voluntarily notification may be filed with the SCA. The SCA may also order a notification, even after closing, if there is a particular ground for it.
In February 2022, the SCA ordered S:t Eriks AB to notify its acquisition of Meag VA-System AB, a transaction that had been completed a few months earlier. Only the first turnover threshold was met, but the parties had not made a voluntary notification. Both companies are active in the concrete sector and buyers complained about the merger to the SCA, arguing lack of competition in certain regions of Sweden. While the merger ended up being unconditionally cleared, the parties had to face the challenges with a notification and dealing with stand-still issues etc. post-closing. This case demonstrates the importance of considering a voluntary notification when the 1 billion threshold is met if the merger relates to a concentrated market or if any customers or competitors are likely to complain to the SCA.

Key takeaways
To ensure an efficient merger control process, notifying parties should make sure to identify any possible competition risks at an early stage of the transaction process. To avoid unwelcome surprises, they should conduct a preliminary analysis of both horizontal and vertical aspects and make sure also to involve competition economists if needed at an early stage. It is also worthwhile to consider voluntary notifications for non-notifiable concentrations if there are any competition concerns in narrow market segments or if any complaints to the SCA are likely. With the increasingly complex regulatory landscape with additional regulatory notification requirements for certain mergers subject to the Protective Security Act, the upcoming rules on Foreign Direct Investments and the recent rules on Foreign Subsidies, a joint early merger control and regulatory assessment is recommended in any transaction.