Prohibition against anti-competitive cooperation
The Swedish Competition Act prohibits cooperation between undertakings with the aim of preventing, restricting or distorting competition in the market to an appreciable extent.
The prohibition in Chapter 2, Article 1 of the Swedish Competion Act, covers cooperation between two or more undertakings. The cooperation may be effected through an agreement, a decision by an association of undertakings or ‘concerted practice’.
A decision by an association of undertakings may for instance occur if the regulations of a trade association give associations the power to determine how undertakings should conduct themselves on the market.
‘Concerted practice’ refers to situations where undertakings, without having any direct agreement, apply a particular practice following mutual agreement. Concerted practice presupposes that some form of contact has taken place between the undertakings.
The restriction on competition must be appreciable
Cooperation must affect competition to an appreciable extent in order for it to be prohibited. The market share and size of the cooperating partners are important when making this assessment. Cooperation between small or medium-sized undertakings, where the products affected by the agreement comprise a small proportion of the relevant market, normally falls outside the prohibition.
The Swedish Competition Authority has defined the term ‘appreciable extent’ in General Guidelines on agreements of minor importance (bagatellavtal). According to this, cooperation is not deemed to affect competition to an appreciable extent if the undertakings have a joint market share of no more than ten per cent of the relevant market in the case of agreements between undertakings operating at the same level of production or of marketing (‘horizontal agreements’). On the other hand, the limit in terms of market share is 15 per cent for agreements between suppliers and distributors (‘vertical agreements’).
However, there are no limits in terms of market share for certain kinds of agreement (e.g. horizontal price agreements or vertical agreements on territorial protection). Undertakings with a turnover of less than SEK 30 million may conclude anti-competitive agreements provided that their total market share does not exceed 15 per cent.
Examples of prohibited cooperation
Five examples of cooperation that is deemed to be particularly anti-competitive are given in Chapter 2, Article 1 of the Competition Act. This list is not exhaustive. There may also be other anti-competitive forms of cooperation.
- Price cooperation. The provisions of the Act concerning such cooperation are particularly severe. The prohibition not only covers direct price cooperation, but also agreements that indirectly fix prices. It is irrelevant whether undertakings cooperate directly with each other or indirectly through, for example, a buying organisation or a professional association.
- Limiting output. This may be the effect of undertakings concluding, for instance, specialisation agreements, joint production agreements, exclusive agreements or patent licensing agreements.
- Market sharing. Examples of this kind of agreement include the sharing of quotas, sales territories or different categories of customers between competitors. Manufacturers and wholesalers are also prohibited from limiting output or restricting geographical sales territories or categories of customers in agreements with their distributors.
- Discrimination. One example of this is where a supplier agrees with its distributors that a customer should not receive supplies.
- Tying. One example of this is the practice of making the sale of one product conditional upon the purchase of another unwanted product or service. Tying may be permitted if there is a natural relationship between the add-on product and the main product contained in the agreement. As a rule, acceptance is only granted for tying that can be justified for good technical or qualitative reasons.