This country-specific Q&A provides an overview to cartels laws and regulations that may occur in Sweden.
This Q&A is part of the global guide to Cartels. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/cartels/
What is the relevant legislative framework?
The main provisions on Swedish competition law are found in the Swedish Competition Act (2008:549). Chapter 2 section 1 of the Competition Act contains a general prohibition against agreements between undertakings that have as their object or effect the restriction, distortion or prevention of competition. The prohibition mirrors Article 101 of the Treaty on the Functioning of the European Union (TFEU) and must be interpreted in light of EU case law. Furthermore, Article 101 TFEU is directly applicable to practices which may affect trade between EU Member States.
There is an exemption from the general prohibition against anti-competitive agreements under Chapter 2 section 2 of the Swedish Competition Act (corresponding to Article 101(3) TFEU), which applies where efficiencies flowing from an agreement outweigh its anticompetitive effects. However it is highly unlikely that this general exemption mechanism can benefit cartel cases. There are also specific exemptions from the prohibition that applies to categories of agreements. These exemptions correspond to and implement the so-called EU block exemption regulations. In addition, specific exemptions exist in relation to farming and taxi operations.
There are no separate provisions for investigating cartel conduct in specific industries and no sector-specific exemptions, save for the above mentioned.
Damages resulting from competition law infringements, including cartel-infringements, are governed by a separate act, namely the Swedish Competition Damages Act (2016:964)
To establish an infringement, does there need to have been an effect on the market?
If it is concluded that an agreement has an anti-competitive object, there is no need to examine its effect on the market. Cartel conduct is normally considered to restrict competition by object, therefore no effects analysis is required.
Does the law apply to conduct that occurs outside the jurisdiction?
The provision against anti-competitive agreements applies to every agreement which prevents, restricts or distorts competition on the Swedish market. Thus, there is no requirement that the conduct in question has taken place in Sweden or that the parties to the infringement are incorporated in Sweden. However, the Swedish Competition Act will be enforced in compliance with public international law.
Which authorities can investigate cartels?
The Swedish Competition Authority (SCA) is the independent governmental authority responsible for investigating cartel matters. Investigations may be initiated at the SCA’s own initiative or following a complaint or notification from a third party.
What are the key steps in a cartel investigation?
The SCA can obtain information on suspected violations of Swedish competition law upon leniency applications by one of the cartel members (acting as a whistle-blower), a third-party complaint or through investigations launched by the SCA at its own initiative. When a suspected cartel conduct comes to the SCA’s attention, the SCA will first proceed with taking a decision on whether to prioritise and proceed with an investigation or formally dismiss the matter (thereby triggering a subsidiary right for concerned companies to directly bring actions before the Patent and Market Court). The SCA’s decision-making process in relation to the prioritisation of matters for further investigation is conducted on basis of its prioritisation policy and by weighing all relevant circumstances.
Following its decision to initiate a formal investigation, the SCA can conduct on-site inspections (i.e. dawn raids) upon authorisation from the Patent and Market Court. The SCA may also question the representatives of the suspected companies and request information from the suspected companies, consumers and other relevant market actors.
Should the SCA find that it has sufficient evidence to prove the existence of a cartel, it will issue a statement of objections to the suspected companies, setting out the evidence available to it and its preliminary conclusions as to the infringement. The suspected companies will then be given an opportunity to respond to these allegations, after which the SCA may:
- order the company(ies) to cease the infringement under penalty of a fine;
- bring an action against the company(ies) before the Patent and Market Court with a request for an administrative fine; or
- issue a fine order if the company(ies) concerned does not contest the SCA’s statement of objections (see section 4.1 below).
The approximate timeframe for the SCA’s investigation depends on the complexity and scope of the matter and can range between one to several years.
What are the key investigative powers that are available to the relevant authorities?
The SCA has extensive powers to request information, documents and other materials both from companies suspected to have committed an infringement and from third parties. The SCA can also order persons to submit to an interrogation. Orders and requests by the SCA may be issued under penalty of a fine. Privilege against self-incrimination applies (reflecting the European Convention on Human Rights).
The SCA can apply to the Patent and Market Court for authorisation to conduct on-site inspections (i.e. dawn raids) at the premises of suspected companies. The Patent and Market Court may in special circumstances also authorise on-site inspections at the homes of board members and employees of the company subject to investigation or the premises of companies which are not subject to investigation if there is reasonable cause to believe that relevant evidence is kept there. When carrying out dawn raids, the SCA benefits from inspection powers similar to those of the European Commission. The SCA is empowered to:
- examine books and other business records regardless of the media on which they are stored;
- make copies of or take extracts from books and business records;
- ’mirror’ digitally stored material for subsequent in-depth search at the SCA’s premises (after prior consent from the company inspected);
- ask employees for explanations of facts or documents relating to the subject matter of the inspection (however, the interviewee is not required to provide any incriminating information);
- access any premises, land, modes of transport and other areas; and
- seal business premises for the period of the inspection.
On what grounds can legal privilege be invoked to withhold the production of certain documents in the context of a request by the relevant authorities?
Legal privilege applies to communication and documentation to and from members of the Swedish Bar Association and other bar associations or law societies and their associates. Legal privilege also covers documents which have been given to a lawyer in confidence within the scope of his or her professional duties. Legal privilege does not extend to the advice of in-house counsel.
What are the conditions for a granting of full immunity? What evidence does the applicant need to provide? Is a formal admission required?
Immunity (full leniency) can be granted to the first company notifying an infringement to the SCA. The application must contain sufficient information about the infringement to enable an investigation by the SCA. In order to be granted immunity, the applicant must also:
- provide the SCA with all the information on and evidence of the infringement that the company has in its possession or control;
- continuously and actively cooperate with the SCA during the investigation;
- not destroy evidence or in any other way hinder present or future investigation of the infringement; and
- end its participation in the infringement as soon as possible after application or after information has been provided.
Immunity cannot be granted to a company that has coerced another company to participate in the infringement or that has destroyed evidence.
What level of leniency, if any, is available to subsequent applicants and what are the eligibility conditions?
Immunity (full leniency) can only apply to the first applicant that fulfils the conditions provided in section 3.1 above.
Other companies may be granted a reduction of fine if they significantly facilitate the investigation by voluntarily providing the SCA with all the information on the infringement at its disposal and by actively cooperating with the SCA. The information must have a significant value compared to the information that the SCA already has. Once the SCA has initiated an on-site inspection (i.e. dawn raid), the SCA is considered to have access to all the evidence that will be encountered during the inspection.
The first company fulfilling the conditions for reduction of fines will be granted a 30–50 per cent reduction of fine. The fines of the second company fulfilling these conditions can be reduced by 20–30 per cent. The fines of other companies subsequently fulfilling the relevant conditions can be reduced by up to 20 per cent.
In order to determine the exact reduction level within the stated intervals, the SCA takes into consideration e.g. at what point in time the evidence was submitted, the degree to which value was added and the continued cooperation by the company concerned.
Are markers available and, if so, in what circumstances?
Markers are available. The marker protects the applicant’s place in the queue for immunity or leniency and gives the applicant an extension period to collect and report relevant information regarding the infringement to the SCA.
The application for a marker must include information on the product that the infringement concerns, the other companies participating in the infringement and the purpose of the infringement (e.g. price fixing). The application must include at least enough information for the SCA to identify the infringement.
What is required of immunity/leniency applicants in terms of ongoing cooperation with the relevant authorities?
The immunity and leniency applicants must provide active and continuous cooperation throughout the investigation and any subsequent enforcement. The cooperation requirement entails an obligation to submit all information requested by the SCA, such as documents, notes, data/records and other material that can contribute to the investigation. The immunity and leniency applicants may also need to make employees available to the SCA for interrogation, including former employees if necessary.
Does the grant of immunity/leniency extend to immunity from criminal prosecution (if any) for current/former employees and directors?
The Swedish Competition Act does not provide for criminal sanctions. However, an immunity or leniency application is automatically extended to trading prohibition that can be imposed on representatives of the companies involved (see section 6.1). It is also possible for employees and directors to individually apply separately for such leniency.
Is there an ‘amnesty plus’ programme?
There is no ‘amnesty plus‘ program under Swedish law.
Does the investigating authority have the ability to enter into a settlement agreement or plea bargain and, if so, what is the process for doing so?
The SCA has the authority to issue a fine order corresponding to a binding settlement in cases where the facts are uncontested and there is a sufficiently clear infringement, allowing for a simplified and expedited procedure. The system of fine orders is voluntary but does not entail any element of plea bargain or negotiated solution. The fine order can be appealed to the Patent and Market Court within one year of written confirmation.
What are the key pros and cons for a party that is considering entering into settlement?
Accepting a fine order can generate time and money savings in cases of undeniable infringements. There may also be reputational advantages in avoiding court proceedings. There is however no reward given, such as for example a fine reduction.
Accepting a fine order renders the order legally binding in follow-on damages proceedings by third parties under the Swedish Competition Damages Act (2016:964) and is accordingly equivalent to an admission of infringement.
What is the nature and extent of any cooperation with other investigating authorities, including from other jurisdictions?
The SCA cooperates closely with the European Commission and the national competition authorities (NCA) of other EU Member States within the European Competition Network (the ECN).
In addition, the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) have entered into a separate cooperation agreement, which enables them to assist each other with cases and exchange information.
There is no previous practice on the weight attached by the SCA to settlement agreements in other jurisdictions.
Moreover, immunity or leniency applications submitted to another NCA within the EU are not considered as an application for leniency to the SCA. An immunity or leniency applicant would therefore have to apply for immunity or leniency in all relevant Member States. However, the ECN has established a Model Leniency Programme to ensure that potential applicants are not discouraged from applying as a result of discrepancies between existing leniency programmes within the EU. Furthermore, companies having applied for immunity or leniency before the European Commission may make a summary application to the SCA instead of a full immunity or leniency application. Information may be disclosed within the ECN in accordance with the provisions of the ECN’s Notice.
What are the potential civil and criminal sanctions if cartel activity is established?
There are no criminal sanctions under Swedish competition law. When an infringement has been established, any anti-competitive agreement is considered null and void, and the participating companies may be imposed an administrative fine.
In cases of serious infringements, natural person in the participating companies (e.g. the CEO or the board members) may be subject to a trading prohibition, meaning that they can be prohibited from conducting business operations or hold senior positions at a company for a certain period of time.
What factors are taken into account when the fine is set? In practice, what is the maximum level of fines that has been imposed in the case of recent domestic and international cartels?
The maximum fine is ten percent of a company’s turnover during the preceding financial year. The fine shall be set in accordance with the gravity and duration of the infringement, with consideration taken to the nature of the infringement, the importance of the relevant market and the actual or potential effects of the infringement on the market. Aggravating or mitigating circumstances are also taken into consideration.
In practice, the highest fine imposed on a company by the SCA concerns the asphalt cartel case (SEK 200 million, as amended by the Patent and Market Court in 2009).
Are parent companies presumed to be jointly and severally liable with an infringing subsidiary?
A parent company can be held jointly and severally liable with an infringing subsidiary if the subsidiary does not behave independently on the market when taking economic, organisational and legal links into account. With regard to wholly-owned subsidiaries, there is a rebuttable presumption that a parent company exercises decisive influence over the subsidiary and is thus liable for the conduct of its subsidiary.
Are private actions and/or class actions available for infringement of the cartel rules?
Private action can be brought against companies that have intentionally or negligently violated the prohibition against anti-competitive agreements. Private action has been available since the Swedish Competition Act of 1993 entered into force under general civil procedural rules. Private actions in Sweden are governed since December 2016 by the Swedish Competition Damages Act which implements The EU Damages Directive. Class actions are available under the Swedish Competition Damages Act, in which case the Swedish Group Proceedings Act (2002:599) is applicable.
Under the Swedish Competition Damages Act, an injured party must bring its claims within five years from the time they became aware or could have reasonably been expected to become aware of i) the infringement, ii) that the infringement caused them harm and of iii) the identity of the infringer. If a competition authority has commenced an investigation, the limitation period of five years will instead start from the date of the final decision by the authority.
A final infringement decision by the SCA or a Swedish court decision will constitute full proof that the infringement has occurred.
What type of damages can be recovered by claimants and how are they quantified?
The damages that can be recovered include compensation for actual loss and for loss of profit, including interest until compensation is paid. The infringer may also have to compensate the injured party for its legal expenses.
The quantification of an injured party’s actual loss and loss of profit will be subject to court review. The compensation may be reduced if the infringer can prove that the injured party has passed on the damages suffered from the infringement to indirect purchasers or suppliers.
On what grounds can a decision of the relevant authority be appealed?
The SCA does not have authority to impose fines other than ‘fine order’ (see section 4). In all other cases, the SCA must bring action against the company(ies) before the Patent and Market Court for the cartel conduct to be adjudicated and penalised. Such action triggers a civil litigation under the procedural framework for civil litigation. The Patent and Market Court will examine the case on its merits. The Patent and Market Court’s decision may in turn be appealed to the Patent and Market Court of Appeal. Leave to appeal is required and can be granted under any of the following circumstances:
- there are reasons to doubt that the Patent and Market Court’s judgement is correct;
- the Patent and Market Court of Appeal cannot determine the correctness of the Patent and Market Court’s judgement without thoroughly reviewing the case;
- it is important for the application of the law that the case is reviewed by Patent and Market Court of Appeal; or
- an extraordinary reason exists.
Judgments and decisions by the Patent and Market Court of Appeal can, upon approval by the Patent and Market Court of Appeal and leave to appeal, be further appealed to the Supreme Court. Leave to appeal to the Supreme Court is granted only to cases which are considered important for setting a precedent. Therefore, the Patent and Market Court of Appeal is in practice the final instance for most cases.
A fine order imposed by the SCA (see section 4), may be revoked upon complaint to the Patent and Market Court only if the company’s acceptance of the fine order cannot be considered a valid declaration of intent, if there has been substantial procedural errors or if the fine order for any other reason is not in accordance with the law.
What is the process for filing an appeal?
Judgements and decisions of the Patent and Market Court are appealed to the Patent and Market Court of Appeal. A case is considered lodged before the Patent and Market Court of Appeal when an application is sent to the registry.
The Swedish Supreme Court is the court of final instance. However, a leave to appeal to the Supreme Court is granted only in rare cases, namely where the case is considered important for setting a precedent.
What are some recent notable cartel cases (limited to one or two key examples, with a very short summary of the facts, decision and sanctions/level of fine)?
The SCA lost two major cartel cases, that it brought before the Patent and Market Court of Appeal in 2017 and early 2018 respectively. Both cases concerned alleged bid-rigging in public procurements.
What are the key recent trends (e.g. in terms of fines, sectors under investigation, applications for leniency, approach to settlement, number of appeals, etc.)?
The SCA closed four investigations that concerned anti-competitive agreements during 2018. None of the investigations resulted in action from the SCA. There was also a decrease in the number of complaints made to the SCA during 2018 with regard to anti-competitive agreements.
The SCA is currently carrying out a number of investigations relating to inter alia bid-rigging in the insurance sector and anti-competitive agreements involving distributors and vendors of music instruments.
What are the key expected developments over the next 12 months (e.g. imminent statutory changes, procedural changes, upcoming decisions, etc.)?
The Swedish legislator will start the process of implementing the provisions of the new ECN Plus Directive that do not already exist under Swedish law.