Insights | October 16, 2020

The SCA’s second failed attempt to extend its powers?

On Wednesday 14 October, the Swedish Council on Legislation (Sw. Lagrådet) opined on the legislative proposal in the long-running saga of the Swedish Competition Authority's (SCA) attempts to obtain the power to impose fines for antitrust infringements. Based on the opinion, which generated some heat to what has been a lukewarm process so far, it looks like the SCA is going to fail for a second time.

For several years, the SCA has called for extended decision-making powers. Only four years ago, the Swedish Government instructed a committee with a special investigator to review whether the SCA should be granted extended powers, particularly the powers to block mergers and to impose fines for antitrust infringements, rather than having to ask the court to do so. During the inquiry’s consultation period, the majority of the key stakeholders opposed the proposal, in particular the proposed power to impose fines. In the end, the legislator only granted the SCA the power to block mergers.

In February 2020, the Swedish Government once again launched an inquiry into whether the SCA’s powers should be extended, which was met by divided opinions from stakeholders. The proposal issued on 1 October 2020 contains the implementation of the EU’s so-called “ECN+ Directive” (Directive 2019/1, aimed at empowering national competition authorities to be more effective and more harmonized enforcers), but also, independent of the directive, a proposal (again) to grant the SCA the power to impose fines for antitrust infringements. In the opinion published on Wednesday, the Council on Legislation advised against granting the SCA extended powers to impose fines, based on the proposal’s lack of evidence that harmonization with other Member States is necessary in that respect. The Council on Legislation points out that the inquiry has not found that the absence of such powers today has resulted in difficulties cooperating with other Member States. Moreover, the proposal contains no concrete indications that the proposed order will lead to fewer decisions being appealed or that the SCA’s process will be shorter. On the contrary, it seems reasonable that the process at the SCA would be longer if the SCA is granted extended powers, since the SCA would examine each case on the merits in a similar manner as the Patent and Market Court does today. The Council on Legislation also considers that the appeal process at the courts will be longer and expresses scathing criticism of the non-existent assessment of the procedural consequences of switching from the Code of Judicial Procedure (1998:605) to the Court Matters Act (1996:242), as suggested in the proposal. Overall, the Council on Legislation considers that the suggested measures in the proposal cannot be assumed to meet the objective stated in the proposal.

In addition to the above, the Council on Legislation also concluded that, in order for the SCA to be fit to be granted the power to impose antitrust fines, it would need to review and change its organization and decision-making process. The SCA has submitted a report to the Swedish Government describing different measures that will be taken to achieve a separation of the investigative function and the decision-making function. However, the Council of Legislation points out that no decision has yet been taken to actually implement such measures and, therefore, it is not possible to determine whether the measures can fulfill the stated purpose.

The Swedish Government’s attempts to extend the SCA’s powers have shown that this is a challenge. The current proposal has received a range of different mild reactions, the loudest being the SCA in one corner applauding the proposal, and the Swedish Bar Association and the Council on Legislation in the other giving it the thumbs down. It should be noted that the Council on Legislation’s opinions are not binding on the legislator, but it would be surprising if the opinion was ignored.

The Council on Legislation had no concerns over the other main suggestions from the proposal, i.e. those implementing the ECN+ Directive. In brief:

  • A company obstructing the SCA’s investigation will be liable to pay fines, and the SCA will be responsible for imposing such fines for the obstruction of an investigation.
  • It will be possible to conduct dawn raids as part of investigations regarding the obstruction of the SCA’s investigation.
  • The SCA will no longer need to obtain the company’s consent to review all copied material at the SCA’s premises.
  • Companies will not be compensated for legal costs incurred before the appeal process.

The proposal, if enacted, will enter into force on 4 February 2021.