The year 2010 was marked by a surge in activity under the leniency programme with the highest number of leniency applications since the programme’s inception in 2004. At the same time, there were no new prohibition decisions in the fields of mergers, restrictive agreements and abuse of dominance from the Norwegian competition authority (NCA) in 2010. The lack of decisions can partly be attributed to a decline in merger and acquisition activity in the wake of the financial crisis, but there are indications of an increase in merger activity in the first months of 2011.
Our observations are based on interviews with 14 law firms in Norway, the NCA and professor Lars Sørgaard. The interviewed law firms are: Advokatfirmaet Haavind AS, Advokatfirmaet Hjort DA, Advokatfirmaet Schjødt DA, Advokatfirmaet Steenstrup Stordrange DA, Advokatfirmaet Thommessen AS, Advokatfirma Ræder, Arntzen de Besche Advokatfirma AS, Bugge Arentz-Hansen & Rasmussen Advokatfirma, DLA Piper Norway DA, Føyen Advokatfirma DA, Kvale & Co Advokatfirma ANS, Simonsen Advokatfirma DA, Wiersholm Mellbye & Bech Advokatfirma AS and Wikborg Rein Advokatfirma MNA.
Larger activity under the leniency programme
Following the launch of the leniency programme in 2004, the institute for leniency applications (Lempingsinstituttet) had until 2008 only received two leniency applications. In 2009, the institute received three applications and in 2010 the figure further increased to six new leniency applications. The activity under the leniency programme, and most notably the leniency application from Veidekke concerning an alleged asphalt cartel, has received ample attention and media coverage.
Behind the sharp increase lies a range of factors. The NCA has in recent years given cartel enforcement top priority, built up competence, invested in new data systems and organised information campaigns in the area. Some parties attribute the enhanced activity to increased confidence in the programme among lawyers and firms caused by the NCA’s effort in promoting the programme.
Other contributing factors mentioned in this respect are widespread publicity in the media and a pro-cooperation statement about the programme made by the unit for investigation of economic crime (Økokrim) in 2009.
However, some of the interviewees point out that the absolute number of applications is still moderate. They also argue that many of the cases would have surfaced even without the leniency programme and that the programme is merely a damage control instrument for the firms in some of these cases. In their view, the increased leniency activity reflects a more opportunistic use of the leniency programme, rather than a better functioning programme.
Either way, the parties agree that the most important issue is the outcome of the cases and how the NCA handles the process, not what triggered the leniency applications. This is yet to be fully seen, as seemingly only one decision has so far resulted from the increase in leniency applications.
Lack of abuse of dominance cases
At the same time, there have been very few prohibition decisions on abuse of dominance in Norway in the last five years. This is partly explained by NCA’s prioritisation of cartel cases (and to a lesser extent merger cases). The prioritisation arises from the view that damages and preventive effects are often highest for cartel activities.
Moreover, experience shows that it is very demanding for the NCA to conduct and finalise an abuse of dominance case. The evidence in these cases often relies on complex effects analyses rather than a ‘smoking gun’, as is often the case in cartel cases.
It is has also proven difficult for the NCA to make a case before the court, which is often the appeal body in abuse of dominance cases. This is best illustrated by the highly publicised TINE case. After several years of court dispute and contradictory decisions, the Norwegian Supreme Court cleared TINE of abuse of dominance charges in June 2011.
The difficulties of the NCA are closely tied to the fact that there are no specialised courts in Norway in competition law cases. For the judges, it is very difficult to grasp the complex assessments in competition law cases. In particular, economic assessments seem to cause problems for judges, who do not typically have economic backgrounds. This is in contrast to the NCA which is staffed with a mixture of economists and lawyers.
Thus, there is a large difference between presenting a case before the NCA and before the court. Economists should be very careful to present their findings in a simple and intuitive manner before the courts, while there is larger room for manoeuvre for more advanced economic discussions before the NCA.
In total, the threshold is quite high for the NCA (and for private parties in civil enforcement) to initiate new abuse of dominance cases. Against this background, some of the interviewees emphasise that new prohibition decisions are needed in the near future to maintain the deterrent effect of abuse of dominance enforcement.
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