BY: CHRISTER WAGENIUS

Restriction of competition is a delicate subject with tough consequences. We have all seen published the exorbitant amounts that offenders have to pay.

Restriction of competition is a delicate subject with tough consequences. We have all seen published the exorbitant amounts that offenders have to pay.

The Swedish Competition Act is based on and in conformity with the EU regulations regarding competition. Some basic principles regarding prohibited restrictions on competition are laid down in Section 6 of the Act. This section i.a. states that agreements between undertakings are prohibited if they have, as their object or effect, the preservation, restriction or distortion, to an appreciable extent, of competition within the Swedish market.

This sounds quite reasonable, does it not?

However, as you know, the interpretation problems and the various decisions made by EU regarding prohibited competition restrictions surely make the situation much more complicated than one reasonably would expect. The interpretation of each word – be it “agreements”, “object”, “effect”, “appreciable” or “market” – can lead to conclusions and consequences that are very difficult to foresee and quite astonishing, especially for a client being a down to earth manufacturer or market man who is accustomed to do business.

“Agreements” do not need to be real agreements at all; they could very well be certain coordinated activities, exchange of information, etc. “Object” does not really mean that the cooperating parties actually have as their objective to restrict competition; it is quite enough that those not involved objectively would regard the cooperation as aiming at restriction. Any “effect” is not needed, it is sufficient with the objective as just said. Whether there is an “effect” or not is also very difficult to know especially when you combine it with the requirement of “appreciable extent” of restriction on competition. Also the alternative requirement of objective must be read and interpreted together with the requirement of appreciable extent. Last but not least you have to define the “market”. This definition will normally be based on an analysis of the relevant market for the products as such (Which corresponding and similar products are relevant and shall be included when you decide the market?) and of the relevant market geographically (Which area or territory shall be regarded as relevant market?). Based on these parameters, you can estimate your market and your market share.

If you come up with a market share of 10% or less, you might think that the object and effect of your activities would not reach the “appreciable extent” of restriction on competition. This might very well be the case but not always. Agreements on pricing could, for instance, very well be regarded to affect the competition to an appreciable extent irrespective of market share.

In order to avoid the risks and tough consequences of restrictions on competition, the recommendation to our clients, “Never talk to a competitor unless you have been properly advised in advance,” is well justified. Providere – sapientis est!

Christer Wagenius

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ADVOKATFIRMAN WAGENIUS & PARTNERS is dedicated to give its clients qualified legal advice and service in all areas of business law and is also prepared to assist in private legal matters. Our clients are mainly small or middle-sized domestic and foreign companies.

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