Merger control in Norway: overview

A Q&A guide to merger control in Norway.

The Q&A gives a high level overview of merger control, regulatory framework and regulatory authorities, relevant triggering events and thresholds in Norway. It also covers notification requirements, procedures and timetables, publicity and confidentiality, third party rights, substantive test, remedies, penalties, appeals, joint ventures and proposals for reform.

For information on restraints of trade, monopolies and abuses of market power in Norway, visit Restraints of trade and dominance in Norway: overview.

This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Merger Control Q&As visit www.practicallaw.com/mergercontrol-guide. For a full list of jurisdictional Restraints of Trade and Dominance Q&As visit www.practicallaw.com/restraintsoftrade-guide.

For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-guide.

Jan Magne Juuhl-Langseth, Per Kristian Bryng and Anders Thue, Advokatfirmaet Simonsen Vogt Wiig
Contents

Regulatory framework

1. What (if any) merger control rules apply to mergers and acquisitions in your jurisdiction? What is the regulatory authority?

Regulatory framework

Mergers and acquisitions (concentrations) are subject to control under sections 16 to 21 of Act No. 12 of 5 March 2004 on competition between undertakings and control with concentrations, as amended by Acts No. 100 of 17 December 2004, No. 43 of 20 June 2008 and No 35 of 14 June 2013 (Competition Act).

The Competition Act sets out a pre-merger notification system for concentrations that meet certain thresholds (see Question 2).

Norway is party to the Agreement on the European Economic Area 1992 (the EEA agreement). It has implemented Regulation (EC) 139/2004 on the control of concentrations between undertakings (Merger Regulation) as part of this agreement. Therefore, mergers with an EU or EEA dimension are governed exclusively by EU or EEA merger control provisions, and are not subject to national merger control. A one-stop shop approach applies under the EEA agreement.

In competition cases, Norwegian courts can:

  • Overrule any decision made by the competition authorities.

  • Refer cases to the EFTA-court (under a procedure similar to the procedure for preliminary references under Article 267 of the Treaty on the Functioning of the European Union (TFEU) for cases involving the EEA competition rules).

Regulatory authority

The competition authorities are the:

  • King in Cabinet, as a regulatory authority.

  • The Ministry of Trade, Industry and Fisheries (Ministry), as an appellate body and regulatory authority.

  • Norwegian Competition Authority (NCA) (see box, The regulatory authority).

The NCA is the main supervisory authority. The Ministry deals with complaints against individual NCA decisions relating to concentrations. An expert group appointed by the government has recently proposed that an independent appeal body should be established. However, the white paper is still not published.

 

Triggering events/thresholds

2. What are the relevant jurisdictional triggering events/thresholds?

Triggering events

Concentrations are deemed to arise where control is obtained in a manner where either:

  • Two or more previously independent undertakings or parts of undertakings merge.

  • One or more persons that already control at least one undertaking, or several undertakings, acquire direct or indirect control on a lasting basis of the whole (or part of) one or more other undertakings.

The creation of a joint venture that performs, on a lasting basis, all the functions of an autonomous economic undertaking is a concentration.

A concentration arises where there is a change in the quality of control (for example, through a change in individual control or the creation or change in joint control over an undertaking or assets in which sufficient turnover can be attributed).

Thresholds

A concentration must be notified if:

  • The undertakings concerned have a combined annual turnover in Norway above NOK1 billion.

  • At least two of the undertakings concerned have an annual turnover in Norway of NOK100 million or more.

The NCA can also intervene on substantive grounds (see Question 7) in mergers that do not meet these thresholds and the King in Cabinet can intervene in cases of principal or major importance; but no later than 12 months following completion of the transaction.

 

Notification

3. What are the notification requirements for mergers?

Mandatory or voluntary

A concentration must be notified if it meets the relevant turnover thresholds (see Question 2).

Acquisitions of holdings that do not lead to control (that is, acquisitions that are not concentrations (see Question 2, Triggering events)) or that do not meet the turnover thresholds, are not subject to mandatory notification but can be notified voluntarily to clarify whether intervention might occur on substantive grounds (see Question 7). This would be appropriate for transactions where control is not initially obtained but options are acquired which allow the party(ies) to increase their shareholding in the undertaking concerned, leading to control at a later stage.

Furthermore, the NCA may order the submission of a notification if it becomes aware of a concentration it considers to be of interest, for example, in a market that the NCA is concerned about, regardless of whether the thresholds are met. So far, the NCA has intervened in only one matter where the thresholds were not fulfilled, but the authority has signaled that it will use this possibility more frequently after the recent raise of the thresholds.

Timing

There is no deadline for notification. However, transactions that must be notified to the NCA are automatically suspended (the standstill obligation) pending the outcome of the NCA's investigation (see below, Obligation to suspend). If a notification is submitted (see below, Form of notification), the transaction is suspended until the NCA has reached its decision (see Question 4).

Pre-notification formal/informal guidance

The NCA has published guidelines setting out how they prefer such informal contacts to take place which state that there is no need for informal contact in most unproblematic filings. For notifications likely to raise competition concerns, the parties should approach the NCA no later than ten business days before a notification is submitted. The initial meeting should be followed by a written review of the concentration and the issues arising. In practice, this is usually only done in the more complicated cases.

The NCA has a general duty under the Competition Act to provide guidance to undertakings on interpreting the Act, its scope and its application to individual cases. However, the NCA will not consider theoretical transactions and there must be negotiations or draft agreements between the parties to obtain guidance in the pre-notification stage.

Responsibility for notification

Both parties to a merger are jointly responsible for notifying. In an acquisition, the buyer must notify. Usually both parties to a joint venture notify.

Relevant authority

Notifications must be submitted to the NCA.

Form of notification

Mandatory notifications must be made in writing, either by letter or by a form issued by the NCA. Voluntary notifications must satisfy the requirements for notification. Certain concentrations, that are unlikely to affect competition, may be submitted by a simplified notification.

The notification is used to:

  • Inform the NCA of the concentration.

  • Provide the NCA with sufficient information to assess whether the transaction should be subject to further investigation.

The notification must include:

  • The names and addresses of the parties to the merger or the party or parties that acquire(s) control.

  • Information on the nature of the concentration.

  • Descriptions of the undertakings concerned and of undertakings in the same corporate group, including a description of the parties' business areas.

  • A description of markets in Norway, or of which Norway is a part, in which the undertakings concerned and undertakings in the same corporate group obtain a combined market share exceeding 20% as a result of the concentration.

  • Names of the five most important competitors, customers and suppliers of the undertakings concerned and of undertakings in the same corporate group in markets in Norway, or of which Norway is a part, where the parties' activities overlap.

  • Annual reports and annual accounts of the undertakings concerned and of undertakings in the same corporate group, unless they are publicly available.

  • A statement showing that the terms for using the simplified notification procedure is fulfilled.

  • In mergers, descriptions relating to undertakings in the same corporate group must cover corporate undertakings of both parties subject to the merger. In acquisitions, descriptions must cover corporate undertakings of the acquiring party only.

  • A more detailed market description of the markets affected by the concentration (for example, providing details of horizontal overlaps, vertical links, minority shareholdings and so on).

  • A description of the structure of any affected market.

  • An explanation of any barriers to entry present in the affected markets.

  • An explanation of efficiency gains resulting from the transaction.

  • Whether the concentration is subject to the control of other competition authorities.

  • The most recent version of the agreement establishing the concentration.

    A notification must, unless an exemption is granted, be submitted in Norwegian.

    Filing fee

    No filing fee is payable.

    Obligation to suspend

    There is an obligation to suspend a transaction pending the outcome of an investigation when submitting a notification. If no notification is made but the transaction could be subject to intervention, the NCA can order a notification and the standstill obligation will then apply.

    If a notification is submitted the standstill obligation automatically applies for the entire period of the NCA's process. This means that when a compulsory or voluntary notification is submitted, the standstill obligation applies from the date that the NCA receives the notification until the NCA has processed the notification.

    A public bid for a listed company or a series of transactions in securities listed on a stock exchange can be partly implemented regardless of the general standstill obligation. The exemption allows the acquirer to obtain formal title to the securities and to perform its obligations under the securities legislation. This right is conditional on the acquirer immediately notifying the concentration to the NCA (section 18, Competition Act), and on the acquirer not exercising the securities' voting rights.

    The NCA can also make exemptions from the standstill obligation in individual cases, at the parties' request, typically if the target is in financial difficulties.

     

    Procedure and timetable

    4. What are the applicable procedures and timetable?

    The parties to a concentration must determine whether the relevant notification thresholds are met (see Question 2) and whether EU or Norwegian law applies (see Question 1, Regulatory framework). Once notified, the following procedure and timetable applies:

    • If a compulsory or voluntary notification is submitted, the NCA conducts a first-phase investigation. Within 25 business days, it must decide to:

      • clear the transaction (this is automatic if no action is taken within 25 business days or a clearance letter is sent to the parties);

      • conduct a second-phase investigation; or

      • if remedies are offered by the parties, clear the transaction subject to remedies.

    • If the NCA conducts a second-phase investigation, it has 70 business days from receiving the notification to present a reasoned preliminary decision on intervention to the parties. If a preliminary decision is not issued within the 70-day period, the transaction is automatically cleared. If the parties submit a remedy proposal after 55 business days, the 70-day deadline is prolonged correspondingly.

    • The parties must reply to the NCA's preliminary decision within 15 business days of the date that it is issued. After this 15-day period, the NCA must decide whether to intervene. The time limit is 15 business days after receiving the parties' reply, unless the parties submit a remedy proposal, after which the NCA can extend the deadline with 15 business days.

    • If no decision is made within the applicable deadline, the transaction is automatically cleared. A clearance letter is sent to the parties to confirm the clearance.

    • If the NCA decides to intervene, it can either:

      • prohibit the transaction; or

      • approve the transaction subject to conditions.

    The NCA can stop the clock if submitted documentation is not considered complete (Question 5).

    For an overview of the notification process, see flowchart, Norway: merger notifications.

     

    Publicity and confidentiality

    5. How much information is made publicly available concerning merger inquiries? Is any information made automatically confidential and is confidentiality available on request?

    Publicity

    The NCA sometimes publishes a press release announcing its receipt of a notification or commencement of an investigation. It always publishes on its website the:

    • Receipt of a notification.

    • Names of the relevant undertakings.

    • Type of concentration.

    • Relevant markets.

    • Final decision.

    See box, The regulatory authority.

    The Ministry also publishes its decisions on its website in appeal cases (see www.regjeringen.no).

    Automatic confidentiality

    The following information is usually kept confidential:

    • The parties' market shares.

    • The details of the five most important customers, suppliers and competitors, if the information provided is based on the parties' estimates and strategies, that is not publicly known.

    • The parties' agreement.

    • Business secrets.

    The parties are expected to state reasons for confidentiality in a draft non-confidential version of the filing. The filing is not considered complete if the filing is not accompanied by such a draft.

    See Question 6.

    Confidentiality on request

    Information in a notification that is not considered automatically confidential (see above, Automatic confidentiality) is considered public knowledge. However, the parties can request that it be kept confidential. Before publication of a decision or granting access to the file, they can comment on whether the decision contains any business secrets, and the NCA will generally (but not always) agree with the parties' assessment.

     

    Rights of third parties

    6. What rights (if any) do third parties have to make representations, access documents or be heard during the course of an investigation?

    Representations

    Third parties can submit comments on a concentration to the NCA. There is no time limit for third parties to submit comments.

    In addition, the NCA contacts the customers, suppliers and competitors named in a notification. The NCA always invites third parties to comment during the first-phase investigation and will normally conduct "market testing" in all cases with potential material issues.

    Document access

    All third parties can request access to public versions of documents such as the notification and public versions of any third party comments on file.

    Be heard

    Third parties do not have a right to be heard beyond their ability to submit comments on notifications (see above, Representations). The NCA often meet with interested third parties if they can show a clear interest in the outcome of the case.

     

    Substantive test

    7. What is the substantive test?

    The NCA intervenes in a proposed concentration if it creates or strengthens a significant lessening of competition (SLC test) contrary to the purpose of the Competition Act.

    This analysis includes an assessment of:

    • The relevant product and geographic markets.

    • The undertakings' combined market share of the relevant markets.

    • Whether the transaction will create or increase entry barriers for potential competitors.

    • Whether the concentration's efficiency gains outweigh the reduced competition in the relevant markets.

    During its investigation, the NCA can request any information it deems necessary to assess whether a concentration is compatible with the Competition Act, and obtain and exchange information (including confidential information) with competition authorities in other jurisdictions.

    If a case involves public order principles or interests of major significance, the King in Cabinet can approve a concentration or an acquisition of shares that the NCA has previously prohibited. This has happened once, in 2006, when the Cabinet approved the merger of two poultry producers due to issues of agricultural policy (Prior and Nordgaarden), previously prohibited by the NCA. The Cabinet reached their conclusion despite the fact that Prior was dominant and further increased its dominance as a result of the merger. The King's approval can be subject to conditions.

     
    8. What, if any, arguments can be used to counter competition issues (efficiencies, customer benefits)?

    If the NCA finds that the SLC criteria may be met after its preliminary investigation, the parties can argue that the efficiencies will outweigh any detriment to competition arising from the concentration. There is no requirement that the efficiencies will benefit consumers (consumer welfare standard): it is sufficient that the parties obtain the efficiencies (total welfare standard).

    The government recently proposed a change in the wording of Article 16, which means that grounds for intervention will be harmonised with that of the EU Merger Regulation (the SIEC test). If implemented, parties must in the future also show that consumers will benefit from efficiencies.

     
    9. Is it possible for the merging parties to raise a failing/exiting firm defence?

    The merging parties can use a failing firm defence, and the principles under Norwegian law are generally the same as the failing firm defence in the Commission's case law.

     

    Remedies, penalties and appeal

    10. What remedies (commitments or undertakings) can be imposed as conditions of clearance to address competition concerns? At what stage of the procedure can they be offered and accepted?

    The NCA has wide powers of intervention if a concentration is found to create or strengthen a significant lessening of competition, including:

    • Ordering the disposal of shares or holdings acquired as part of a concentration or an acquisition.

    • Requiring the parties to meet behavioural or structural terms and conditions to alleviate the restrictions on competition.

    The remedies must be proposed by the parties (see Question 4). The NCA cannot impose remedies that are not proposed by the parties themselves. In practice, remedies proposed by the parties are often the result of informal discussions with the NCA.

    The NCA has the right to appoint a trustee (nominated by the parties) who will monitor and ensure that the remedies are duly complied with.

     
    11. What are the penalties for failing to comply with the merger control rules?

    Failure to notify correctly

    The NCA can impose administrative fines of up to 10% of the undertakings' annual worldwide turnover for failure to notify, delay in notifying or for providing insufficient information. The NCA has repeatedly fined parties for lacking or delayed notifications. Administrative fines can only be imposed on undertakings. So far, administrative fines have ranged from NOK10,000 to NOK25 million. However, the most common range is NOK150,000 to NOK300,000 for formal breaches of the duty to notify where no material concerns have arisen. When material concerns are identified, fines may be significantly higher. Lack of notification leads to an order to do so and also implies full scrutiny of the merger and potential reversal of the merger.

    Non-compliance with the Competition Act can also lead to criminal fines for individuals. There are no upper limits on such criminal fines.

    In addition, any individual who intentionally, or through gross negligence, violates the duty to notify can be imprisoned for up to three years.

    If fines are not paid, the authorities can either:

    • Use the decision issuing the fine as a basis for debt enforcement proceedings.

    • Initiate bankruptcy proceedings.

    Implementation before approval or after prohibition

    If the standstill obligation applies and the transaction is implemented before it is approved, or the transaction is implemented after it has been prohibited, the NCA can impose administrative fines on the undertakings of up to 10% of their annual worldwide turnover.

    Failure to observe

    Infringements of a regulator's decision can lead to:

    • Administrative fines being imposed on the undertakings of up to 10% of their annual worldwide turnover.

    • Penalty fines being imposed on individuals.

    • Periodic penalty payments being imposed on both undertakings and individuals until the situation is remedied.

    • In theory, imprisonment for up to three years of individuals who intentionally, or through gross negligence, breach their duty to observe.

     
    12. Is there a right of appeal against the regulator's decision and what is the applicable procedure? Are rights of appeal available to third parties or only the parties to the decision?

    Rights of appeal

    Merger decisions can be appealed to the Ministry, but where a decision to clear a concentration has been made, it cannot be appealed. A procedural decision to conduct a second-phase investigation also cannot be appealed.

    Decisions by the NCA involving fines for breaches of the Competition Act can be appealed to the Oslo City Court, which has full jurisdiction to rule on all aspects of the matter.

    As with any other case brought before the courts, a judgment can be further appealed to the Appeals Court and finally to the Supreme Court. However, only parties with a legal interest (locus standi) can bring decisions before the courts.

    Procedure

    The notifying parties can appeal an NCA decision to intervene in a transaction to the Ministry, within 15 business days of the decision. The Ministry must make a decision within 60 business days of receiving the appeal. If a decision is appealed, approval cannot be granted until the appeal is complete.

    Decisions imposing fines must be brought before the Oslo City Court.

    Third party rights of appeal

    Third parties cannot appeal a decision to clear a transaction, since that decision is made under a non-opposition procedure. In theory, a third party could appeal a decision to prohibit a transaction or to approve it subject to conditions, but this is not (so far) done in practice.

     

    Automatic clearance of restrictive provisions

    13. If a merger is cleared, are any restrictive provisions in the agreements automatically cleared? If they are not automatically cleared, how are they regulated?

    Any restrictive provisions in the agreements (such as non-compete covenants) can be ancillary to the concentration. If such provisions are considered to be directly related to, and necessary for, the transaction, and they do not breach section 10 or 11 of the Competition Act, they can be implemented with the concentration.

    If a provision is not deemed justified and necessary for the concentration, the NCA can make the approval of the concentration subject to the removal or amendment of that restrictive provision.

    The principles in the Notice on restrictions directly related and necessary to concentrations (OJ 2005 C56/24) (Notice on Ancillary Restraints) apply.

     

    Regulation of specific industries

    14. What industries (if any) are specifically regulated?

    The Competition Act does not specifically regulate any industry. However, there are regulations that exempt certain sectors or industries from the Competition Act, such as physicians, physiotherapists, psychologists, veterinaries, distributors of books (co-operating on fixed prices or literature subscriptions) and primary producers in the agriculture and fishery sectors.

     
    15. Has the regulatory authority in your jurisdiction issued guidelines or policy on its approach in analysing mergers in a specific industry?

    The NCA has not issued specific guidelines or policy on its approach to analysing mergers in specific industries. However, the NCA has issued guidance on how to assess filing requirements for acquisitions of real estate property.

     

    Joint ventures

    16. How are joint ventures analysed under competition law?

    Joint ventures (JVs) are governed by the Competition Act in much the same manner as in the EU.

    Full function JVs will therefore fall under the merger control rules, while co-operative JV's will be assessed under the behavioural rules.

    A "full-function" JV is deemed to arise where the JV can perform all the activities of an autonomous undertaking on the market, while a "co-operative" JV is deemed to exist where it is simply a vehicle of co-operation for its parent undertakings (for example, in the form of a joint selling arrangement).

    JVs based on agreements set up for specific projects may be subject to stricter scrutiny than under the EU guidelines, due to a rather strict interpretation of the exemption for project related co-operation by the NCA (project guidelines).

     

    Inter-agency co-operation

    17. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to merger investigations? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information, remedies/settlements)?

    The NCA co-operates with the competition agencies in Denmark, Iceland and Sweden through a co-operation agreement entered in 2001. The agreement provides (among other things) guidelines on how the agencies may exchange information.

    The NCA is part of the ICN (International Competition Network and the Director General attends meetings in ECA (European Competition Agencies), although Norway is not an EU member state.

    Moreover, the NCA assists the Commission and the EFTA Surveillance Authority in dawn raids in Norway.

     

    Recent mergers

    18. What notable recent mergers or proposed mergers have been reviewed by the regulatory authority in your jurisdiction and why is it notable?

    The most recent and notable mergers reviewed by the NCA was the TeliaSonera AB's acquisition of Tele2 and Network Norway. This case is notable because it involved a 3 to 2 merger with regard to mobile networks in Norway. The case was solved with remedies paving the way for a new third network operator.

    Furthermore, the NCA recently accepted COOP's acquisition of ICA in the market for food/groceries retailing, which led to retail chains being reduced from 4 to 3. The case was solved with remedies in which COOP must divest about 100 retail shops. This case also includes an assessment of the failing firm defence.

     

    Proposals for reform

    19. Are there any proposals for reform concerning merger control?

    On 11 November 2014, a preparatory document was issued. This document suggested introducing an independent Competition Complaints Board (cf. NOU 2014:11). The reform is likely to enter into force in 2016. Moreover, the Government is currently proposing to change the test for intervention from SLC to SIEC, in order to harmonise with the EU Merger Regulation.

     

    Online resources

    Lovdata

    W www.lovdata.no

    Description. Original language text of Norwegian legislation (up-to-date), including the Competition Act and regulations passed under the Competition Act.

    Competition Act

    W www.konkurransetilsynet.no/en/legislation/The-Competition-Act-of-2004

    Description. English-language translation of the Competition Act, and other related regulations. English translations are non-binding and meant for guidance only. Unfortunately, the texts are currently not updated.



    The regulatory authority

    Norwegian Competition Authority (Konkurransetilsynet) (NCA)

    Head. Christine Meyer
    Contact details. PO Box 439 Sentrum, 5805 Bergen, Norway
    T +47 55 59 75 00
    F +47 55 59 75 99
    E post@konkurransetilsynet.no
    W www.konkurransetilsynet.no

    Outline structure. The market monitoring departments are responsible for supervising markets and evaluating and implementing measures to combat competitive restrictions.

    The Market Monitoring Departments are divided into:

    • Section M1: Finance and Communications.
    • Section M2: Construction, Industry and Energy.
    • Section M3: Food, Trade and Health.

    The Corporate Investigation Department operates dawn raids and other investigations. The NCA has its main office in Bergen and a satellite office in Oslo.

    Responsibilities. The NCA investigates all cases under the Competition Act and handles all merger notifications.

    Procedure for obtaining documents. Requests for documents are made in writing to the NCA. Decisions, legislation, general information, the submission of notifications and press releases are published on the NCA's website (see above).



    Contributor profiles

    Jan Magne Juuhl-Langseth

    Advokatfirmaet Simonsen Vogt Wiig

    T +47 21 95 55 11
    F +47 21 95 55 01
    E jmjl@svw.no
    W www.svw.no

    Professional qualifications. Norway, 1998

    Areas of practice. Competition law; EU/EEA regulatory compliance.

    Per Kristian Bryng

    Advokatfirmaet Simonsen Vogt Wiig

    T +47 21 95 57 31
    F +47 21 95 55 01
    E pkb@svw.no
    W www.svw.no

    Professional qualifications. Norway, 2005

    Areas of practice. Competition law; state aid law.

    Anders Thue

    Advokatfirmaet Simonsen Vogt Wiig

    T +47 21 95 57 04
    F +47 21 95 55 01
    E ant@svw.no
    W www.svw.no

    Professional qualifications. Norway, 2003

    Areas of practice. Competition law; State aid law, public procurement law.

    Recent transactions

    • TeliaSonera's acquisition of Tele 2 in Norway.
    • Leif Hübert's acquisition of Norsk Stål.
    • Consolis Group's acquisition of Betong AS.
    • SOS International AS' takeover of NAF's road assistance business in Norway.

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