I ENFORCEMENT POLICIES AND GUIDANCE
The primary legal basis for cartel enforcement in Sweden is the Swedish Competition Act (2008:579) (the Act), Chapter 2 Section 1. The provision contains a general prohibition against anticompetitive agreements. Its wording is, in large parts, a verbatim reproduction of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU).2 In Sweden, EU treaty provisions are directly applicable and may be invoked alongside domestic legislation.
The general provision in Chapter 2 Section 1 of the Act prohibits agreements between undertakings3 that have as their object or effect the prevention, restriction or distortion of competition in the market to an appreciable extent,4 unless the conditions for exemption are fulfilled. The prohibition renders cartel agreements null and void, and results in liability to pay fines as well as damages. The conditions for exemption in Chapter 2 Section 2 of the Act correspond to Article 101(3) TFEU, which requires that the efficiencies resulting from an agreement outweigh the anticompetitive effects. Moreover, block exemptions have been adopted in the form of separate regulations, largely incorporating the block exemptions from EU competition law.
In addition to the prohibition on anticompetitive agreements, the Act governs all other aspects of Swedish competition law, including the legal consequences of competition law infringements in civil law (damages and nullity), public sanctions, as well as the scope of the SCA’s powers. Other statutes, as well as general principles of Swedish civil law, apply as lex generalis to the extent that the Act contains no diverging rules. These statutes include the Swedish Code of Judicial Procedure (1942:740), the Tort Liability Act (1972:208) and the Swedish Limitations Act (1981:130). Although Sweden has not criminalised competition law infringements, individuals may, as a result of participation in a cartel, be banned from engaging in commercial activity by virtue of the Trading Prohibitions Act (1986:436).
The purpose of the Act is to eliminate and counteract obstacles to effective competition in the production of and trade in goods and services. The ultimate aim of the legislation is to promote growth and efficiency in Sweden. Consumer protection is covered by other statutes, although consumer interest is often referred to in decisions under the Act.
Apart from the European Commission’s notices and guidelines, which are often cited by the SCA and the courts, the SCA has adopted a number of guidelines with relevance for cartel enforcement. These include a methodology paper on how to determine fines,5 guidelines on the reduction of fines and immunity from fines,6 the Notice on Agreements of Minor Importance7 and guidelines on trading prohibitions in the event of infringements of the rules on competition.8
II COOPERATION WITH OTHER JURISDICTIONS
The SCA cooperates closely with the European Commission and competition authorities in other Member States. Within the framework of the European Competition Network (ECN), a network for discussion and cooperation on the application and enforcement of EU competition law, the SCA comes together with other competition authorities within the EU. Like other competition authorities, the SCA has an obligation to inform the European Commission, as well as the other competition authorities in the EU, of all cartel cases that affect trade between the Member States. Moreover, the members of the ECN may, under certain conditions, exchange confidential information and use such information as evidence.
In addition to the ECN, the SCA participates in the events of international organisations, such as the Organisation for Economic Co-operation and Development and the International Competition Network, on the legal development of antitrust law.
The SCA may, upon application by an authority in a state with which Sweden has entered into an agreement on legal assistance in competition law matters, order an undertaking to provide information, documents and other materials, and require persons who may be able to provide relevant information to attend interrogations. At the request of such an authority, the Patent and Market Court may, upon written application by the SCA, allow the SCA to carry out an on-the-spot investigation (dawn raid) to assist that authority in its investigation if the following conditions are met:
- a there is reason to believe that competition rules have been infringed;
- b the conduct under investigation would have been found to infringe Chapter 2 Sections 1 or 7 of the Act or Article 101 or 102 TFEU, if those rules had been applied;
- c there is particular reason to believe that evidence is in the possession of the party to which the request refers;
- d the party in question does not comply with an order to provide information, documents, etc., or there is otherwise a risk that evidence will be withheld or tampered with; and
- e the importance of the action being taken is sufficient to outweigh the disruption or other inconvenience caused to the party affected by it.
Accordingly, the SCA may ask competition authorities in other Member States for assistance under Article 22 of Regulation (EC) No. 1/2003.9
The Extradition for Criminal Offences Act (1957:668) prohibits the extradition of Swedish nationals. Under Swedish law, extradition requires an offence punishable under the law of both countries (dual criminality) that, in principle, is of a certain degree of seriousness. Since competition law infringements are not criminalised in Sweden, no extradition requests will be granted regarding foreign nationals that have infringed Chapter 2 Section 1 of the Act.
III JURISDICTIONAL LIMITATIONS, AFFIRMATIVE DEFENCES AND EXEMPTIONS
The Act does not have a territorial limitation. Thus, an agreement between undertakings situated outside Sweden may be prohibited under the Act if the agreement has actual or potential effects in Sweden. In practice, this means that a cartel may be prohibited under Swedish law, and the undertakings involved pursued under the Act, if the cartel has appreciable effects on competition in Sweden, even if the cartel in question is organised outside Sweden or the undertakings involved are not Swedish.
However, public international law imposes restrictions on the exercise of extraterritorial jurisdiction under the Act, and the SCA is unlikely to take action against foreign undertakings unless such action can be enforced.
Arguably, the same extraterritorial principle outlined in EU case law limits the scope of the Act. An infringement of Chapter 2 Section 1 of the Act consists of conduct made up of two elements: the formation of the agreement and the implementation thereof. According to the European Court of Justice, the decisive factor should be the place where the agreement is implemented, since undertakings otherwise could easily evade the prohibition.10 Consequently, it makes no difference whether a producer or seller has subsidiaries or agents, etc., within Sweden.
The conduct of a subsidiary may be imputed to its parent company, either by joint and several liability or sole responsibility. In line with established EU law, there is a rebuttable presumption that parent companies direct the actions of wholly owned subsidiaries in this regard.
IV LENIENCY PROGRAMMES
i The Swedish leniency programme
A leniency and immunity programme was introduced in Sweden in 2002. The rules are applied by the SCA in accordance with statements in the preparatory works.11 Furthermore, the SCA has issued general guidelines on reduction of fines and immunity from fines12 that are modelled on the European Commission’s 2006 Notice on Immunity from Fines and Reduction of Fines in Cartel Cases. The guidelines provide information on the interpretation and application of the Act’s leniency rules, and cover a reduction of fines and immunity from fines only in relation to infringements of the prohibition against restrictive agreements. Furthermore, the guidelines are without prejudice to the interpretations made by the courts in relation to fines under the Act. In contrast to the leniency programme under EU law, the Swedish programme encompasses all kinds of restrictive agreements covered by the provision in Chapter 2 Section 1 of the Act, and not only cartels.
ii Full immunity
Full leniency (i.e., immunity from fines) may only be granted to the first undertaking to notify the SCA and to submit sufficient evidence, or to an undertaking that to a very significant extent has assisted the SCA in its investigation. However, the fine cannot be waived if another undertaking has been granted a marker (see subsection iv, infra) and such information that is necessary for immunity has been provided prior to the expiry of the grace period, or if the SCA has already granted an undertaking immunity. Undertakings that do not qualify for immunity have a chance of partial leniency through a reduction in fines of up to 50 per cent (see subsection iii, infra).
The first undertaking that reports the infringement to the SCA before the authority itself has sufficient grounds to intervene against the infringement may qualify for immunity from fines if the undertaking:
- a provides the SCA with all the information about the infringement that it has at its disposal;
- b cooperates fully with the SCA throughout the investigation of the infringement;
- c does not destroy, falsify or conceal relevant information or evidence relating to the alleged anticompetitive agreement; and
- d has ended its involvement in the infringement, or ends it as soon as possible after informing the SCA.
Thus, qualification for immunity requires that the application is filed by a single undertaking. The application may be made in writing or verbally. Furthermore, it must be made by an authorised representative of the undertaking or by an agent with a power of attorney. A joint application, made by several undertakings together, does not qualify for immunity.
All the information that the filing undertaking has at its disposal relating to the alleged anticompetitive agreement at the time of the application must be provided for an application to be considered as filed. In addition, the information must be relevant to prove the infringement, and must include the names of the other participants, the affected market, and the type and duration of the infringement. Even when the SCA already suspects an infringement at the time of the filing, this does not prevent an undertaking from being granted immunity. However, the requirements are not fulfilled if the SCA has in some other manner already received sufficient information to intervene. It is irrelevant whether a decision to intervene has already been made.
Additional information to which the undertaking may subsequently gain access during the ongoing investigation must also be given to the SCA. In other words, the undertaking must continuously and voluntarily submit all relevant information regarding the infringement and copies of all relevant material the undertaking has access to (e.g., notes or minutes from meetings). Informing other participants about the application or supplied evidence and other measures that hinder the SCA’s investigation will remove the possibility of immunity.
An undertaking that has forced another undertaking to participate in the infringement may not obtain immunity.
In the event that the SCA has received sufficient information to take action against an infringement and no undertaking has applied for leniency in accordance with the above, immunity may still be granted to an undertaking if the undertaking, in addition to the criteria set out above (in (a) to (d)), is the first to provide information that makes it possible to establish that an infringement has occurred, or in some other way to a very significant extent has facilitated the investigation of an infringement.
According to the SCA’s guidelines, ‘to a very substantial extent’ will be interpreted strictly, and the availability of immunity is intended to be very limited under this provision.
iii Reduction of fines
As stated in subsection ii, supra, immunity may only be obtained under certain exhaustive circumstances. Nevertheless, an undertaking may be granted a reduction of fine if it provides the SCA with information that facilitates the investigation of the infringement to a significant extent and on the condition that it fulfils the criteria set out in (a) to (d) above.
The fine of the first undertaking to fulfil the conditions for reduction will be decreased by 30 to 50 per cent, the second will get a reduction of 20 to 30 per cent, and the fines of subsequent undertakings to fulfil the conditions will be reduced by up to 20 per cent.
In its writ of summons, the SCA presents its views on whether the information provided by an undertaking has added considerable value and on the level of reduction that is appropriate. When determining the level of reduction, the SCA will take into consideration the point in time that the evidence was submitted, the degree to which value was added, the degree of cooperation and the continuity of cooperation after the information was provided.
iv Marker system
In August 2014, a marker system was introduced into the Swedish leniency regime. The provisions are found in Chapter 3 Sections 12 and 14a of the Act. An undertaking may apply for a marker and be granted a ‘grace period’ within which to submit information necessary to obtain immunity. A marker may be obtained if the company in question makes information available about the product or service to which the infringement relates, its purpose and the other participating companies. Provision of this basic information secures the marker and will protect the applicant’s place in the leniency queue. In the event that the SCA already has sufficient information to intervene against an infringement, a marker may be obtained by the first undertaking to provide information that allows the authority to establish that an infringement has occurred. In either case, the undertaking must then submit additional information required to perfect the marker before the expiry of the period specified by the SCA in order to meet the relevant thresholds for immunity.
An undertaking that is considering to apply for immunity may contact the SCA anonymously and describe the infringement in hypothetical terms. Based on the information provided by the undertaking, the SCA takes a non-binding preliminary position as to whether the conditions for immunity have been fulfilled. At this stage, the SCA cannot guarantee that another undertaking does not make a proper notification before the anonymous undertaking has done so.
Sweden has a strong constitutional tradition of safeguarding the openness and transparency of documents submitted to the authorities. Information on preparations for dawn raids and other investigations is confidential if it can be assumed that, if revealed, it would negatively affect the purpose of the investigation according to the rules in the Public Access to Information and Secrecy Act (2009:400).
Other information related to the SCA’s investigations will be confidential if, considering the object of the investigation, it is of exceptional importance that the information is not disclosed. The information is primarily confidential in relation to the undertakings subject to investigation, but may also be confidential in relation to third parties. Information provided by leniency applicants or other cooperating parties may thus be treated as confidential.
If it can be assumed that the leniency applicant will suffer substantial damage or other substantial detriment if the information is revealed, confidentiality of reports and other information provided to the SCA is guaranteed. Confidentiality applies to both legal and natural persons. Both information given on an applicant’s own initiative and information provided at the request of the SCA may be confidential under this rule. However, since the object of the rule is to protect the applicant, the confidentiality is limited to information that could somehow disclose the identity of the applicant. As regards leniency material, the full extent and duration of this protection is largely untested.
According to Chapter 2 Section 1 of the Act and Article 101 TFEU, anticompetitive agreements are void from the outset (ex tunc). To the extent that anticompetitive clauses in agreements are severable from the rest of the agreement, other parts of an agreement may still be applied.
For the purpose of quickly putting an end to ongoing infringements, the SCA may order parties of a cartel to cease the activity, subject to a fine for non-compliance with the order. However, the imposition of fines requires a decision by the Patent and Market Court. In addition, the cartel members may, upon application by the SCA, be ordered by the Patent and Market Court to pay fines as an economic sanction for their illegal activities. The decisions of the Patent and Market Court may be appealed to the Patent and Market Court of Appeal.
The amount of a fine may not exceed 10 per cent of the turnover of the undertaking concerned during the previous financial year. Rather than the turnover of all undertakings belonging to the same group, as is the case under EU law, it is only the turnover of the infringing entity that is taken into account in the calculation of the maximum fine under the Act. However, if the conduct may be imputed to the infringing entity’s parent company, the turnover of this company should also be included in the calculation. The gravity and duration of the infringement are taken into account when determining the fine. Furthermore, previous violations of the competition rules may also be taken into account.
The SCA may not enter into a plea bargain or a binding resolution to resolve liability and a penalty for alleged cartel activity. However, the SCA may issue a binding settlement with alleged cartel members (a fining order). This rule is of a non-mandatory nature, which means that the SCA may suggest settlements in suitable cases. According to the relevant preparatory works, settlements should not be issued in cases where the facts are uncertain.13 The settlement will have the same effect as a judgment provided that the participant of the cartel confirms the settlement in writing, within a period determined by the SCA. To obtain legal effect, the settlement must be approved in accordance with the Act, and may be appealed to the Patent and Market Court within a year of the written confirmation. There is no reduction in fine for accepting a fine order, simply an expedited process.
For persons who have participated in a cartel, an injunction against trading may be imposed in addition to fines, provided such an injunction is necessitated by the public interest according to the Trading Prohibitions Act.
When assessing if an injunction is necessitated by the public interest, special consideration shall be given as to whether:
- a the infringement was systematic or aimed at producing significant personal gain;
- b such conduct caused or was intended to cause significant harm;
- c the person in question has previously been convicted of criminal acts in respect of business activities; and
- d the conduct was intended seriously to prevent, restrict or distort competition.
Hence, an infringement must have been of a serious nature and of a relatively long duration for an injunction to be imposed. However, an injunction shall not be considered necessitated by the public interest if the person against whom an injunction is considered has provided significant assistance to the SCA in its investigation. This applies in particular to employees of undertakings that are the first to report an infringement.
An injunction against trading may be issued against members and alternate members of the board of directors, the managing director and the deputy managing director, provided that such individuals participated in a cartel in respect of business activities or were serving in such a post at the time of the infringement of the competition rules. An injunction against trading can further be imposed against persons who, in another capacity, have in fact conducted the management of a business, or who have held themselves out to third parties as responsible for a business. Negligence in appointing, instructing and supervising staff is normally insufficient for an injunction against trading to be imposed. The board of directors and the management are, however, obliged to take corrective actions if they learn that persons within the company are engaged in cartels with competitors. If such actions are not taken immediately, infringements that are committed thereafter may be relevant when assessing whether an injunction should be imposed. The SCA may apply for an injunction against trading either in conjunction with an action for administrative fines or in separate proceedings in a district court.
VI ‘DAY ONE’ RESPONSE
The investigative powers of the SCA are broad and the authority may send evidentiary requests to undertakings or require company representatives to attend a hearing. Furthermore, upon application by the authority, the Patent and Market Court may decide that the SCA can carry out an inspection on the premises of an undertaking (on-the-spot investigation or dawn raid). The inspection may also encompass the home and other premises of board members and employees of the undertaking.
During an inspection, the SCA is empowered to examine and take copies of the books and other business records, ask for oral explanations on the spot and gain access to any premises, land, means of transport and other areas. In practice, the SCA requires assistance from the Enforcement Service in carrying out these measures. Provided that the SCA receives the consent of the company under investigation, it may also copy digitally stored material and examine this on its own premises. During this examination, the company under investigation or its legal representatives may observe the work on the premises of the SCA.
The undertaking subject to an inspection has the right to summon a legal representative. The SCA may nonetheless commence the inspection before the arrival of the representative. It is therefore very helpful for in-house counsel and management to have a prepared list of action points. This should include the appointment of a compliance officer whom all the employees should refer to regarding the raid. Furthermore, the list should include orders to:
- a review the decision permitting the SCA to carry out the investigation;
- b examine the IDs of the inspectors;
- c ask the SCA to await the arrival of counsel before the commencement of the investigation;
- d not destroy or tamper with documents or electronic data, or remove such from the premises; and
- e provide short, true and accurate answers to questions from the investigating officers, but refrain from self-incrimination.
As there is a significant risk that other companies are subject to the same investigation and thus may apply for leniency, such considerations should be taken into account immediately after the commencement of the inspection. The company should therefore consider initiating an internal investigation as a priority.
VII PRIVATE ENFORCEMENT
A claimant injured by the activities of a cartel may bring damages proceedings before a general court. An undertaking that intentionally or negligently infringes the antitrust provisions shall compensate the damage caused. If no action is brought, the right to damages lapses 10 years from the date when the damage was caused. Administrative fines imposed for the same infringement are not taken into account when determining damages.
The procedure for damages suffered as a result of an anticompetitive agreement is the same as the procedure in other civil damages actions. As regards cartels, joint and several liability may be applicable when a claimant has proven causality between its loss and the anticompetitive activities.
A private antitrust action may be brought under the general Swedish procedural rules. In private antitrust actions, the general courts are competent according to the forum rules set out in Chapter 10 of the Code of Judicial Procedure. It is primarily the district court where the defendant resides or has its seat that is competent. Alternatively, an action for damages may be brought where the infringement took place or where the injury occurred. In addition, the Patent and Market Court is always competent to rule on claims for damages in antitrust matters pursuant to the Act.
Finally, the Arbitration Act (1999:116) stipulates that the civil law consequences of competition law violations may be the subject of arbitration.
VIII CURRENT DEVELOPMENTS
During recent years, the SCA has carried out a number of on-the-spot investigations, primarily as part of its own investigations, but also acting on behalf of the European Commission or other competition authorities of the EU Member States.
Following an amendment as of 1 January 2016, the Act now expressly states that the SCA may carry out indexing and searching of digital material on its own premises. These measures may only be carried out subject to the consent of the investigated company. The new amendment to the Act is implemented in Chapter 5 Section 6 Subparagraph 2 of the Act. Indexing and searching on the SCA’s premises with the consent of the company under investigation was already common practice prior to the amendment.14
With the object to achieve efficiencies and improve the administration of justice, specialised courts for cases relating to intellectual property law, competition law and marketing law came into being on 1 September 2016. The reform moved the court of first instance in competition law cases from the Stockholm District Court to the Patent and Market Court and replaced the former appeals court, the Market Court, with the Patent and Market Court of Appeal.15
To fulfil the requirements of the EU Damages Directive,16 the Swedish government proposed new legislation, the Competition Damages Act, which entered into force on 27 December 2016.17 The Competition Damages Act governs actions for damages for infringements of competition law, including provisions and clarifications on liability, limitation periods, compensation, recourse, passing on of overcharges, disclosure and procedures.
In June 2016, an inquiry, appointed by the government, suggested that the SCA should be given greater decision-making powers, including the means to impose fines for cartel activity without filing an application to the Patent and Market Court. According to the proposal of the inquiry, the legislative amendments should enter into force on 1 January 2018.18
1 Tommy Pettersson, Johan Carle and Stefan Perván Lindeborg are partners at Mannheimer Swartling.
2 Understandably, the Swedish provision does not refer to the EU internal market, but simply to the market. In addition, it does not require that intra-state trade be affected for its application, but merely that competition is affected to an appreciable extent.
3 The provision also applies to decisions by associations of companies and concerted practices according to Chapter 1 Section 6 of the Act.
4 The Swedish Competition Authority (SCA) has published a Notice on Agreements of Minor Importance (KKVFS 2009:1) (Notice), which refers to equivalent EU guidance. According to the Notice, agreements between actual or potential competitors where the parties’ combined market share does not exceed 10 per cent, and agreements between non-competitors where none of the parties have a market share exceeding 15 per cent, normally fall outside the prohibition against restrictive agreements. Where the individual turnover of each of the parties does not exceed 30 million Swedish kronor, the 15 per cent threshold applies irrespective of the type of agreement. However, according to the Notice, the de minimis principles do not apply to agreements that contain certain hard-core restrictions.
5 SCA, dnr 394/2009.
6 SCA Regulation KKVFS 2015:1.
7 SCA Regulation KKVFS 2009:1.
8 SCA Regulation KKVFS 2015:2.
9 Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty.
10 See joined cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85 Ahlström Osakeyhtiö and Others v. Commission (Wood pulp II) ECLI:EU:C:1993:120, Paragraph 16.
11 Cf Government Bill 2007/08:135.
12 SCA Regulation KKVFS 2015:1.
13 Government Bill 2007/08:135 p. 261.
14 The amendment to the Act seems to at least partly address the concerns expressed by the Patent and Market Court of Appeal in a judgment of 28 October 2015. In its reasoning, the court declared that an on-the-spot investigation constitutes a significant intervention that entails risks for the investigated company in terms of legal certainty, and that an investigation must therefore be justified by reference to a clear and precise legal basis. Referring to the specific circumstances of that case, the court concluded that the wording of the Act did not allow the SCA to extend an ongoing digital search on its own premises by asking the court for authorisation to search previously seized materials for other suspected infringements that were not covered by the SCA’s original mandate to conduct an on-the-spot investigation.
15 Cf Government Bill 2015/16:57 and the Act on Patent and Market Courts (2016:188).
16 Directive 2014/104/EU.
17 Swedish Government Ministry Reports (Ds) 2015:15.
18 Swedish Government Official Reports (SOU) 2016:49.