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Enforcing EEA Competition Law in Iceland: Fines, Articles 53 and 54, and Further Actions

This article discusses the appropriate level of fines in competition cases, the enforcement of Articles 53 and 54 of the EEA Agreement in Iceland, and the further actions that can be taken by ESA in Iceland. It provides examples and illustrations of these topics.

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Enforcing EEA Competition Law in Iceland: Fines, Articles 53 and 54, and Further Actions

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  1. @eftasurv Some thoughts on enforcing EEA competition law in Iceland 17 February 2016 Gjermund Mathisen Director for Competition and State aid

  2. Today’stopics • Fines in competition cases – finding the appropriatelevel • EnforcingArticles 53 and 54 ofthe EEA Agreement in Iceland – ICA and ESA • Further action thatESA cantakein Iceland– againstIcelandiccompanies, againstIcelandicauthorities, in Icelandiccourts • Examples and illustrations

  3. Today’stopics • Fines in competition cases – finding the appropriatelevel • EnforcingArticles 53 and 54 ofthe EEA Agreement in Iceland – ICA and ESA • Further action thatESA cantakein Iceland– againstIcelandiccompanies, againstIcelandicauthorities, in Icelandiccourts • Examples and illustrations

  4. Fines in competition cases • Three examples • Fines must be commensuratewith the gravityof the infringement, and reflectitsduration • Fines must be highenough to have a deterrenteffect • Fining Guidelines – methodology in setting fines

  5. Example 1: Norway Post • ESA’s case against the Norwegian postal incumbent, Posten Norge AS, re exclusivity • InfringementofArticle 54 EEA (for 5.5 years) • ESA Decisionof 14 July 2010, imposing a fine of 12.89 million EUR (≈ 1.78 billion ISK), reduced from 13.89 million EUR (≈ 1.92 billion ISK) • EFTA Court upheldDecision, furtherreducing fine to 11.112 million EUR (≈ 1.53 billion ISK)

  6. Example 2: Color Line • ESA’s case against Norwegian ferry undertaking Color Line, onits Sandefjord-Strömstad route • InfringementofArticles 53 and 54 EEA concerningexclusivity (for 7 years) • ESA Decisionof 14 December 2011, imposing a fine of 18.811 million EUR (≈ 2.60 billion ISK) • Color Line paid the fine, and did not appeal to the EFTA Court

  7. Example 3: NCC • Norwegian CompetitionAuthority (NCA) DecisionagainstconstructionfirmNCC • Infringementof Norwegian competitionlaw and Article 53 EEA for bid-rigging (4 years) • NCA Decisionof 4 March 2013, imposing a fine of 140 million NOK (≈ 2.01 billion ISK) • Final judgmenton appeal increased fine to 150 million NOK (≈ 2.15 billion ISK)

  8. Fining Guidelines • http://www.eftasurv.int/competition/notices-and-guidelines/ • ESA Guidelines = COM Guidelines • ESA Guidelines availablealso in Icelandic • Norwegian Regulation, FOR-2013-12-11-1465: https://lovdata.no/dokument/SF/forskrift/2013-12-11-1465 (forskrift om overtredelsesgebyr)

  9. ESA’s Fining Guidelines • Wide margin ofdiscretion • Gravityof the infringement • Durationof the infringement • Deterrenteffect: • «Deter» / «deterrence» / «deterrenteffect» mentioned 10 times in the Guidelines

  10. ESA’s Fining Guidelines • Two-stepmethodology: first, a basicamount is determined, thenadjusted up/downwards • Basic amountset by reference to valueof sales; up to 30% dependingongravity (highest for grave infringements, e.g. price-fixing); this is in turn multiplied by numberofyears • Aggravating/mitigatingcircumstances… • Possiblespecificincrease for deterrence • Legal maximum: 10% ofannual global turnover

  11. Today’stopics • Fines in competition cases – finding the appropriatelevel • EnforcingArticles 53 and 54 ofthe EEA Agreement in Iceland – ICA and ESA • Further action thatESA cantakein Iceland– againstIcelandiccompanies, againstIcelandicauthorities, in Icelandiccourts • Examples and illustrations

  12. EnforcingArticles 53 and 54 EEA • ICA obliged to apply Article 53/54 EEA whenever there is an effect on trade • The same is the case in other EU and EFTA States: national competition authorities (NCAs) are the «first line» in enforcing the rules • NCAs must thus be independent and have the toolbox they need to be effective • In addition, cooperation with Brussels is key

  13. Effecton trade • Wheneverthere is an effect on trade, Article 53/54 EEA shallbe applied when ICA acts • Lowthreshold, whichmaybe met alsowhere the relevant market is national or regional • It is sufficientthattrademaybeeffected; there is norequirementthat it actually is affected; required is merely a «direct or indirect, actual or potentialinfluenceon the patternof trade» • Also an increase in trade fulfils the criteria!

  14. StrengtheningtheNCAs • As the ”first line” in theenforcementofthe EU/EEA competitionrules, theNCAsmayneed to be strengthened in theirindependence and in thetoolboxthey have at theirdisposal • The Commission has launched an initiativeon «Empowering the national competition authorities to be more effective enforcers» • http://ec.europa.eu/competition/consultations/2015_effective_enforcers/index_en.html

  15. Cooperation with Brussels • ICA, as all otherNCAs in EU/EFTA, is obliged to cooperatewith Brussels, and indeeddoes so • There is considerableinformalcooperation in the form ofconsultations ICA-ESA • And thereare formal stepsofICA’sprocesses at which ESA must be consulted (e.g. Decision) • ESA mayinducechanges to ICA’sapproach to cases, and sometimesdoes

  16. Today’stopics • Fines in competition cases – finding the appropriatelevel • EnforcingArticles 53 and 54 ofthe EEA Agreement in Iceland – ICA and ESA • Further action thatESA cantakein Iceland– againstIcelandic undertakings, againstIcelandicauthorities, in Icelandiccourts • Examples and illustrations

  17. ESA action againstIcelandicfirms? • ESA cantake over ICA’senforcementofArticle 53/54 EEA in any given case; investigating and ultimately fining Icelandic undertakings • This is what ESA has done (and is doing) in Norway, in cooperationwith the NCA • Any «dawn raid» would be carriedout in cooperationwith ICA • Any appeal wouldgo to the EFTA Court

  18. ESA and the Government • ESA is alsoenforcingIceland’sobligations under the EEA Agreement vis-à-vis the IcelandicGovernment (ministries). Currentexamples: • Letters of Formal Notice for failure to incorporateRegulations in Icelandiclaw (mergers, air transport, technology transfer) • Request for Information concerningderogationclauses in the Agricultural Act No 99/1993; cream and yogurtaresubject to EEA law (skyr?)

  19. ESA in Icelandiccourts • In cases conceringArticle 53/54 EEA, ESA canalsointervenedirectlybeforeIcelandiccourts • It can be expectedthat ESA will do so • Since ESA startedmakinguseofthistool (amicuscuriaeobservations) in 2014, ESA has intervened in two cases before Norwegian courts: NCC and Bastø Fosen v Color Line • http://www.eftasurv.int/competition/national/co-operation-with-national-courts/

  20. www.eftasurv.int • Public Access to Documents • Document Register • College Decisions • Press Releases facebook.com/eftasurv ESA @eftasurv EFTA Surveillance Authority

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