News bulletin - Competition Law Webversion
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1062 2020 08 19 20MannheimerSwartlingDel1och2 Bild 02
Spring clean your competition law compliance – changes ahead in Sweden
Major amendments to competition legislation are expected to add more bite to the bark of Sweden’s antitrust watchdog. From 1 March 2021, the Swedish Competition Authority (SCA) gains a number of new powers and will introduce some related changes to its routines. If active in Sweden, this is a good moment to take stock of your organisation’s existing competition law compliance framework: is a refresh needed to remain fit for purpose?

The main thrust of the changes is to broaden and deepen the SCA’s enforcement and sanctioning toolbox in its work against anti-competitive agreements and abuse of a dominant position in order to improve alignment throughout Europe. The merger control rules are unaffected, with transactions impacted only insofar as assessment of risk during due diligence, integration or post-acquisition audits must evolve to keep pace with these developments.

Based on a number of central themes, we set out below some of the main changes to Sweden’s competition legislation and offer our reflections on what to think about:

 1. New powers to conclude an investigation


The SCA will no longer have to go to court to impose a fine on a company for a competition law infringement and instead will be able to do so directly (with rights of appeal to the courts). This mirrors the equivalent process before the European Commission.

This fining power extends to failure to comply with the SCA’s orders or commitments agreed by the parties.

There are significant timing and process implications resulting from this change, even if these are more relevant to an ongoing investigation than in a compliance context.  

Note also that there is no longer a safe harbour against imposing fines in minor cases.

The SCA will be able to impose (proportionate) structural and behavioural remedies to bring an infringement effectively to an end, such as divestments or firewalls.

This kind of measure may be used, for example, to address distortive market concentration arising from joint ventures (potentially leading to outcomes similar to this Dutch case in the concrete sector).

Consider adjusting the list of potential investigation consequences (often found in the primary competition law compliance policy) to cover this outcome. Training materials may also need to be updated.

More generally, it is important to remember that structural ownership, for example in a joint venture context, is not a safe harbour from SCA intervention if it creates competition concerns.

 2. New powers for failure to cooperate during investigations


The SCA will gain the power to levy a new form of fine for failure to cooperate during an investigation (Sw: utredningsskadeavgift or ‘investigation fine’).

For example, the fine can be imposed for:
  • intentionally or negligently providing incorrect, incomplete or misleading information during an investigation;
  • failing to provide information requested by the SCA by the deadline stipulated; and
  • failing to appear for an interview.
See also Theme 4 below for further examples of investigation fines in the context of dawn raids.

The legal maximum for this kind of penalty is one percent of an undertaking’s turnover in the previous financial year.

Review compliance documents, internal processes and training materials to ensure that employees understand the new consequences of failure to cooperate with the SCA.
 3. Consequences for trade associations and members


The maximum fine that can be imposed on a trade association will be increased where the infringement relates to the activities of its members.

The maximum fine on the trade association will be calculated by reference to the members themselves, i.e. 10% of the combined worldwide turnover of the members operating on the market affected by the infringement.

Where a trade association is unable to pay a fine imposed by the SCA, relevant members may be required to contribute (up to the standard 10% turnover cap).

A member will not be fined in this way where it can demonstrate to the SCA that it did not implement the infringing decision of the trade association and was either unaware of it, or distanced itself from the behaviour prior to the SCA’s involvement.

Note that trade associations will also no longer be able to earn a reduction in fine in return for cooperation (i.e. leniency).

Participation in trade associations is often positive, leading to consumer benefit. However, as a forum where competitors meet it presents a risk to manage, in particular following these legislative changes. We recommend:
  • reviewing the trade associations part of your main competition law compliance policy, as well as any supporting documents and systems on interactions with competitors more generally;
  • training for participants, increasing awareness of healthy meeting discipline, sensitive information exchange and need for public distancing;
  • introducing a robust trade association vetting process to weed out any organisations failing to live up to appropriate standards. The new rules trigger a need actively to engage in this audit process and break ties with trade associations that do not provide the necessary comfort.
Note that public distancing requires rather specific actions. Remaining involved in suspicious behaviour for fear of being impolite, or failing to request that your company be removed from an invite list does not meet the standards required

 4. Consequences for dawn raids management


Subject to court approval and in addition to existing powers, the SCA will also be able to carry out a dawn raid relating to:
  • suspected violations of a decision ordering that an infringement be terminated;
  • suspected violations of a commitments decision; and
  • behaviour that might justify imposing an ‘investigation fine’ (see Theme 2 above).

Check to see if there is a section in your dawn raids guidelines detailing possible ‘reasons for raid’ and update as required.

Dawn raid training materials may also need to be broadened.

It will no longer be necessary for the SCA to secure the consent of a raided company to continue an inspection off-site, for example, back at the SCA’s own premises.

A company retains the right to have legal counsel present to oversee the off-site review process.  

It is already common for the SCA to take a mirror copy of certain digital data and review it for relevance at its own premises. However, going forward consent will no longer be required, irrespective of the form of the data (physical, digital, original, storage medium).

Dawn raids guidelines should be updated to avoid employees inadvertently obstructing an SCA inspection, e.g. by attempting to refuse consent that is no longer required.

The SCA will also have extended powers to:
  • access any information accessible from the company subject to the inspection, irrespective of its form;
  • carry out an inspection at the home of a board member, or other employee of a company (currently allowed only in relation to ‘serious’ infringements);
  • seal business premises, accounting and business documents where necessary;
  • access trade secrets of a technical nature (assuming relevant to the scope of the inspection). Currently a company can refuse to disclose such information but that protection will be removed.

Some of this is clarification rather than revolution but Sweden-centric dawn raids guidelines may soon be misleading and require some edits to track the greater freedom now afforded to the SCA.

Now more than ever, it is important for companies to have a clear understanding of their digital environment and IT infrastructure – what information is stored where, who has access, what devices are employees using (in particular in a working from home context), what communication methods are used etc? A mapping process, distilled into an internal guidance document, could significantly improve dawn raid management in the event of an inspection, as well as reduce risk that can arise in an IT context (e.g. policies on multiparty chatrooms with competitors).

The increased scope to raid private homes, coupled with the marked rise in working from home, means that companies need to check that their dawn raid guidelines cover how to manage this very specific and stressful event.

The right against self-incrimination is now codified and clarified, which means a party cannot be required by the SCA, as part of a duty to provide information, to admit to an infringement.

This follows European Commission practice and case-law and is a typical benchmark in most dawn raids guidelines.

The distinction between the obligation to provide factual explanations when asked by the SCA (and corresponding risk of being accused of obstruction for failing to do so), and the protection offered by the right against self-incrimination is important to make clear in guidance. When in doubt, employees should be trained to seek input from legal counsel.

The SCA will be able to impose ‘investigation fines’ (see Theme 2 above) for:
  • obstructing a dawn raid;
  • breaking a seal affixed during a dawn raid;
  • failure to provide an answer – or providing incorrect or misleading information – in response to an appropriately scoped SCA request for a factual explanation during a dawn raid.

These changes put the SCA’s powers more on a par with those of the European Commission. An inspection by the SCA should be managed by a company with the same care and respect as a visit from the European Commission. Dawn raid guidelines should be reviewed for consistency.
Based on best practice, Mannheimer Swartling’s standard compliance templates and surrounding package of training materials already emphasise the importance of avoiding obstructive behaviour.

 5. Consequences for leniency


Changes have been made to the Swedish system to improve alignment with the EC leniency programme.

Immunity (no fine) will now only be available to the first company to meet the relevant standard – either by providing information allowing the SCA to intervene, or helping to show an infringement has occurred in cases where the SCA is already generally aware. This means that immunity is no longer
available for other significant contributions, albeit lesser reductions in fines remain possible.

There will be new protections introduced in relation to how leniency and settlement submissions will be treated by the SCA and restrictions on their use in related proceedings, in Sweden and the rest of the EU.

It would be unusual for a compliance policy to contain granular detail on the various forms of leniency available to a company – essentially, a reduction in fines in return for cooperation – but this topic may be touched upon in related contexts, such as dilemma training, or document management guidelines, in which updates may now be necessary.

Awareness of these new rules is less relevant to compliance but important for strategy as it concerns leniency and private damages actions.
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What has triggered these changes?

Most of these amendments are necessary to implement the so-called ECN+ Directive, which is aimed at increasing harmonisation of enforcement between competition authorities throughout Europe. Depending on the existing baseline in other EU Member States, some of these changes will recently have been introduced in other parts of Europe too. Keep this in mind when reviewing your compliance readiness.

While in spring cleaning mode, it makes sense also to reflect on whether your compliance framework is robust enough to manage the extra challenges posed by remote working practices, triggered by the Covid-19 pandemic but to some extent here to stay. Reduced staff interaction and the resulting impact on transparency are factors in our new reality and systems need to develop to reflect that.

Who to contact?
Many organisations already strive to have uniform compliance policies applicable across their geographic footprints. The more high-level and less Sweden- or even EU-specific your organisation’s compliance policy documents are, the fewer changes are likely to be necessary as a result of the changes detailed in this bulletin. That said, there are a number of important shifts on the near horizon about which it is important to be aware, not least in terms of compliance training for employees.

Please contact our experts in the EU & Competition practice group for more information and support to guide your organisation through the review process.

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