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In two of the last three major investigations for violations of the Competition Law, the Norwegian Competition Authority has imposed fines as high as it can.
Notification of a 500 million fine from the Norwegian Competition Authority to the top four publishers has been met with surprise.
Gorm Kallestad / NTB scanpix
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When the Norwegian Competition Authority recently announced fines of more than 500 million crowns to Norway’s four major publishers, the Authority beat all previous fine records.
In just two years, the Authority has issued notices and final decisions on fines totaling NOK 2.5 billion.
– The infringement of the competition law is serious. The aim is for the Authority’s ability to impose significant fees to have a preventive effect on actors within Norwegian business and industry who do not act in accordance with regulations, says department director Gjermund Nes at the Competition Authority of Norway.
– This is not just the Norwegian Competition Authority. Also within the EU / EEA, we see high fees for infringements of competition law. Consideration of the preventive effect weighs heavily, continues Nese.
The fine was awarded by the Norwegian Competition Authority to Telenor in June 2018, was record-breaking, and was presented at a separate press conference. The competition director, Lars Sørgard (center), the department director Gjermund Nese (right) and the project director Magnus Friis Reitan participated.
Terje Pedersen / NTB
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Publishers receive the largest fine that can be imposed
Publishers, alarm companies and Telenor
The most important cases of the Norwegian Competition Authority in the last two years are:
September 2020: Notification of fines totaling NOK 502 million for illegal cooperation to Gyldendal, Cappelen Damm, Vigmostad & Bjørke, Aschehoug and Little Bokbasen.
June 2019: Notification of fines totaling NOK 1.2 billion to alarm companies Verisure and Sector Alarm for illegal cooperation.
June 2018: Decision on a fine of NOK 788 million to Telenor for abuse of a dominant position.
Sigve Brekke and Telenor continue to fight in the court system against the NOK 788 million fine imposed on them by the Norwegian Competition Authority in 2017 for abuse of position in the Norwegian market.
Håkon Mosvold Larsen
Gave maximum fines
In two of these cases, publishers and alarm companies, the Authority has set the maximum limit of the large fines they can impose.
The audit follows a formula to determine the amount of the fines. It depends on:
- How high is the company’s turnover in the sub-market where the law has been violated
- Degree of severity
- Number of years the crime has occurred
If the size of the fine is greater than 10 per cent of the company’s turnover, the fine should be reduced. The maximum fine that a company can receive for violating the Competition Law is 10 percent of the group’s turnover (see table).
– It is in the type of cartel activity that the Authority believes it to be, where the fines are highest, says Professor Øystein Foros from the Norwegian School of Management.
He is an expert on competitive economics issues.
The audit accuses the publishers of having used the Bokbasen joint venture to inform each other about when their books are published and at what prices. According to the audit, the alarm companies must have avoided selling to households that were all customers of the competition.
Years of processes
– The Norwegian Competition Law is a model of the EU competition law. And then the calculation of the fees is also based on the EU regulations. We are now seeing a development in which gigantic fines are imposed on the largest international companies in the EU, says Foros.
None of these cases have been resolved. And some of the cases probably won’t be decided for many years. The top four publishers have just received their respective notices.
When the impact of having been notified of the fines corresponding to 10 percent of their billing has decreased, they have until November 24 of this year to send their contributions.
After that, the audit makes a final decision. If the fine remains, publishers can appeal to what is called the Competition Appeals Board. And if they lose there, they can take the case to court.
While Sector Alarm has accepted its giant fine, Verisure has complained about the notification of the decision from the Norwegian Competition Authority.
Stephane Mahe / Reuters
Usually ends up in court
In the case of the alarm companies, Sector Alarm accepted and paid its share of the fine. This corresponded to NOK 425 million. Verisure, owned by Sweden’s Securitas Direct, has complained about the notification of a fine of NOK 784 million. The Authority has not yet made a final decision in this case.
Telenor’s fine has been appealed to the Court of Appeal. This happens after Telenor in 2018 appealed against the Authority’s decision, but lost 2-1 in the Competition Appeals Board. The court functions as a trial court rather than a district court.
It’s a short walk from the Sehested house, where Gyldendal and Aschehoug meet, to the Borgarting Court of Appeal and the Supreme Court. There may be more trips there now for editorial leaders.
Tor G. Stenersen / Korsvold Kaja
After a fine, there will probably be a lawsuit
It can have significant consequences for a business that ends up with a fine. This is if they immediately accept the Authority’s fines or lose after years in the court system.
In addition to the fine itself, the company runs the risk of subsequent lawsuits from actors who believe they are injured.
– If Telenor’s fine stands after the Court of Appeals, then I am reasonably certain that Telenor’s competitors who suffered damages will sue, says Professor Foros at NHH, adding:
– And I want to believe that Reitan will sue the publishers in the boycott of Reitan’s book company, Interpress.
Does the Supreme Court want to say something about the levels of fines of the Norwegian Competition Authority? So the judges will probably have a chance soon.
Gorm Kallestad / NTB scanpix
The Supreme Court can provide guidance
The last example Foros mentions is about a case that was recently filed in the Court of Appeal. The top four publishers were fined a total of NOK 31 million in 2017. Then for foreclosing the Reitan Group book distributor Interpress from the market.
More than three years later, two of the editors, Gyldendal and Cappelen Damm, are still fighting. After two editors also lost at the Court of Appeal, the last stop is the Supreme Court. This is when they choose to appeal and leave their case there.
Professor Foros believes that in that case it will be interesting to see if the Supreme Court will have an opinion on the level of fines that have been imposed by the Norwegian Competition Authority and adopted by the EU.
