This country-specific Q&A provides an overview to merger control laws and regulations that may occur in Norway.
It will cover jurisdictional thresholds, the substantive test, process, remedies, penalties, appeals as well as the author’s view on planned future reforms of the merger control regime.
This Q&A is part of the global guide to Merger Control. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/merger-control
The legal basis for the Norwegian merger control regime is the Norwegian Competition Act of 5 March 2004 and the Regulation on Notification of Concentrations of 11 December 2013. The national authority is the Norwegian Competition Authority (“NCA”, Norwegian: “Konkurransetilsynet”), which acts as the enforcer of the regime. However, as from April 2017, the NCA’s decisions are subject to administrative review by the newly established Competition Appeals Tribunal (“CAT”). Prior to the CAT becoming operational, the responsible Ministry decided administrative review cases.
The Norwegian regime is a compulsory filing system, where the obligation to notify is based exclusively on turnover thresholds. The applicable turnover thresholds were significantly increased in 2014. Consequently, the number of notified transactions is now significantly lower than prior to 2014. Furthermore, the NCA may order the notification of a transaction even if the turnover thresholds are not exceeded, in the event that there is reasonable basis for suspecting that the transaction may have a negative effect upon competition. The Norwegian regime is broadly harmonized with that of the EU, although there are certain points on which the two systems differ.
In addition to applicable law and regulation, the NCA has issued guidelines on the merger filing process. Please also note that all merger decisions by the NCA are published in Norwegian on the NCA website, http://konkurransetilsynet.no/.
Is mandatory notification compulsory or voluntary?
Notification is mandatory for concentrations where the turnover thresholds are fulfilled (see question 7 below).
The NCA may order a notification even when the turnover thresholds are not met, as well as in cases relating to acquisition of non-controlling minority interest. In these cases, the NCA may order a notification no later than three months after the binding transaction agreement was concluded or control assumed (whatever occurred first).
The parties to a transaction are also allowed to notify voluntarily. This will trigger the NCA's deadlines when the turnover thresholds are not met or in a case relating to the acquisition of a minority interest, cf. question 5 below.
Please also note that certain undertakings are required, pursuant to decisions by the NCA, to notify the NCA of all of transactions which they undertake within a given market, even if they are below the notification thresholds.
Is there a prohibition on completion or closing prior to clearance by the relevant authority? Are there possibilities for derogation or carve out?
Concentrations covered by mandatory notification to the NCA are subject to a full standstill obligation until the NCA has issued a final decision. According to the NCA’s practice, the standstill obligation applies to the transfer of shares and assets, and any other “implementing steps” taken by the parties.
In cases where the NCA orders the submission of a notification despite the turnover thresholds not being exceeded, a standstill obligation will automatically be triggered from the moment the parties are informed of such decision. If at this point the transaction has been partly implemented, only further implementation during the handling of the case may be considered as a breach of the standstill obligation.
If the parties chose to submit a voluntary notification, they will be subject to the standstill obligation.
Public bids or a series of transactions in securities admitted to trading on a market such as a stock exchange, by which control is acquired, are exempted from the standstill obligation, provided that the acquisition is notified without delay to the NCA. These rules mirror the corresponding provisions in the EU Merger Regulation. The acquirer must not exercise voting rights for the acquired shares or initiate any other implementing measures.
The NCA has the power to issue derogations from the standstill obligation. The NCA has used this power on a number of occasions. Derogations are mostly granted in cases where an expedient takeover is necessary to ensure the day-to-day operation of the target business, e.g. in cases where there is an obvious risk of bankruptcy. It cannot be ruled out that the NCA may grant a partial derogation in situations where a “carve out” solution is possible provided the remaining parts (i.e. where the standstill obligation applies) can continue to operate on a stand-alone basis.
What are the conditions of the test for control?
The test for control under the Norwegian Competition Act is identical to that under the EU Merger Regulation.
What are the conditions on minority interest in your jurisdiction?
The definition of control corresponds to that under the EU Merger Regulation. Consequently, control may be achieved on the basis of a minority interest if the interest by rights, agreements or other means give, solely or in combination with other factors, the ability to exercise decisive influence over a corporation.
However, the NCA shall also intervene against “an acquisition of holdings in an undertaking even if the acquisition will not lead to control”, provided the acquisition will create or strengthen a significant restriction of competition. Such acquisitions are not subject to compulsory notification, but the NCA may order the parties to notify. The NCA has made use of this power only once.
What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)?
The jurisdictional thresholds under the Norwegian regime are exclusively based on turnover. Under the applicable threshold test, all concentrations amounting to change of control are subject to mandatory notification UNLESS one of the following conditions is met:
- The parties collectively had operational revenues of less than NOK 1 billion in Norway during the preceding fiscal year; or
- Only one of the parties involved had operational revenues of more than NOK 100 million in Norway during the preceding fiscal year.
Please note that the NCA may order a notification to be filed and have full jurisdiction even if the turnover thresholds are not met.
How are turnover, assets and/or market shares valued or determined for the purposes of jurisdictional thresholds?
Turnover is defined in the Regulation on the notification of concentrations as having the same meaning as “sales” under the Norwegian Accounting Act. In its guidelines on the notification of concentrations, the NCA states that the principles established in the European Commission’s consolidated jurisdictional notice to calculate turnover will give guidance.
To the extent that the transaction has a Community dimension, it becomes subject to the exclusive jurisdiction of the European Commission also with respect to Norway (only in theory, a transaction also may have an EFTA dimension whereby by the EFTA Surveillance Authority would have jurisdiction pursuant to the rules on divisions of competence in the EEA Agreement). Transactions may be referred between the European Commission and Norway according to the rules set out in Protocol 4 to the EEA agreement.
Is there a particular exchange rate required to be used for turnover thresholds and asset values?
There are no mandatory sources of exchange rates for the purpose of merger notification. Both Norges Bank's (the Norwegian central bank) published rates and those of the ECB may be used. Norges Bank's average exchange rate from NOK to Euro was 8.9530 in 2015 and 9.2899 in 2016 (NOK/EUR). Other exchange rates can be found at Norges Bank’s website: http://www.norges-bank.no/en/.
Do merger control rules apply to joint ventures (both new joint ventures and acquisitions of joint control over an existing business?
The merger control rules apply to joint ventures and there are no separate thresholds. The jurisdictional thresholds apply to joint ventures in the same way as under the EU Merger Regulation and the assessment of full functionality is also similar to that under the EUMR.
There is a simplified procedure (short-form notification) for certain transactions relating to joint ventures. This applies in particular to: i) creation of joint ventures where the value of and the turnover related to assets transferred to the joint venture is less than NOK 100 million; and, ii) changes in control over joint ventures where one owner assumes full control over an undertaking previously controlled jointly with others.
In relation to “foreign-to-foreign” mergers, do the jurisdictional thresholds vary?
The jurisdictional thresholds are the same for “foreign-to-foreign” mergers as for mergers involving Norwegian companies. However, a guidance paper published by the NCA indicates that the NCA is of the view that foreign-to-foreign transactions without any possible effect in Norway (even if the notification threshold are fulfilled, e.g. through sales to Norway) may fall outside the territorial scope of the Norwegian Competition Act.
For voluntary filing regimes (only), are there any factors not related to competition that might influence the decision as to whether or not notify?
No. As set out in question 2 above, the parties may file a voluntary notification, but this option is rarely used.
Additional information: Jurisdictional Test
What is the substantive test applied by the relevant authority to assess whether or not to clear the merger, or to clear it subject to remedies?
The substantive test currently in force since 1 July 2016 is the SIEC test (significant impediment to effective competition) which follows the same principles as under the EU Merger Regulation.
Are non-competitive factors relevant?
No. Neither the NCA nor the Competition Appeals Tribunal (“CAT”), which became operational in April 2017, may take into account other factors than those related to effects upon competition. Note that this was not always the case. Prior to the CAT becoming operative, the previous system for administrative review by the Ministry allowed the Government (“The King in Counsel”) to intervene on public policy grounds.
Are there different tests that apply to particular sectors?
No. The test applied remains the same regardless of the types of business sector concerned. However, in certain sectors such as the financial sectors, specific agencies have regulatory powers over concentrations in order to ensure goals such as financial solidity. These powers apply in parallel to the NCA’s powers under the Norwegian Competition Act.
Are ancillary restraints covered by the authority’s clearance decision?
No. There is no material assessment of ancillary restraints under the Norwegian regime. However, the EU notice on ancillary restraints provides guidance also for Norwegian purposes.
What is the earliest time or stage in the transaction at which a notification can be made?
The applicable rules set no fixed earliest time or stage for submitting a notification. The parties may submit a notification before signing a binding agreement; however, the parties must be able to describe the contemplated concentration in requisite detail in the notification. Furthermore, a filing cannot be made so far in advance of the actual concentration that the relevant future market factors which will provide the basis for the competitive assessment are not clearly identifiable.
Please note that the NCA will issue a short brief announcement of all received notifications on its website shortly after reception. Accordingly, the parties must be prepared to go public with the transaction when notifying to the NCA.
For mandatory filing regimes, is there a statutory deadline for notification of the transaction?
There are no specific deadlines for submitting a filing. However, the standstill obligation requires that a transaction may not be implemented until the NCA has decided not to intervene.
What is the basic timetable for the authority’s review?
Following the submission of a notification, the procedure is as follows:
Within 25 working days of receiving a complete notification (including a redacted non-confidential version), the NCA must inform the parties to the transaction whether it will investigate the transaction further. The NCA must provide a brief explanation for its decision. If no such notice is given within the deadline, the transaction is cleared ipso facto. The deadline is extended to 35 business days if the notifying parties submit suggested remedies before 20 working days have passed since the notification was made. Note that such extension has no effect on the phase II deadline.
Within 70 working days following the receipt of a complete notification, the NCA must close the case by issuing a clearance decision or by accepting proposed remedies, or the NCA may issue a draft prohibition decision (comparable to a Statement of Objections). If remedies are proposed by the notifying parties after day 55, the deadline is extended accordingly, however for no longer than 85 working days after receipt of a complete notification.
After a draft prohibition decision, the parties will have 15 working days to submit their comments. Within 15 working days after the receipt of comments from the parties, the NCA must render its final decision. The latter deadline may be extended by an additional 15 working days, if remedies are proposed by the parties after the NCA issued its draft prohibition decision. The latter deadline may on request or acceptance by the notifying parties be extended by an additional 15 working days.
Note that remedies proposed by the parties may be adopted as part of a final binding decision by the NCA without any further formal notice.
Administrative review by the Competition Appeals Tribunal
The NCA’s decisions may be subject to administrative review by the CAT, in accordance with the following procedures:
- Within 15 working days after NCA rendered its decision, the parties must submit the complaint. The complaint is addressed to the CAT but sent to the NCA.
- Within 15 working days after receiving the complaint, the NCA must pass it on to the CAT, along with its comments on the complaint.
- Within 60 working days after the complaint was received by the CAT, the CAT must render its decision
Please note that CAT became operational only in April 2017, replacing the previous administrative review system under which challenges were decided by the responsible Ministry. Note that, under the old system, the Government could intervene on public policy grounds – this is no longer the case under the CAT which decides cases independently.
Under what circumstances the basic timetable may be extended, reset or frozen?
The deadlines will be suspended if the parties, after having received a written request from the NCA or the CAT to supply information within a specified deadline, have not complied with this request.
If the parties have proposed remedies, the NCA deadlines are extended as described above.
Where notifications are rendered incomplete, the clock does not start; meaning that the relevant deadline is not triggered before a complete notification is provided.
Are there any circumstances in which the review timetable can be shortened?
The NCA may at its own discretion speed up the process and clear a transaction prior to the formal time limit, which occurs often in uncomplicated cases cleared in phase I. It is unlikely that the NCA will bind itself to a more expedient process – at least not at an early stage of the process.
Which party is responsible for submitting the filing? Who is responsible for filing in cases of acquisitions of joint control and the creation of new joint ventures?
The acquirer is responsible for submitting the notification. In the event of acquisitions of joint control and the creation of new joint ventures, the ventures’ together are responsible for filing. In the event of the merger of previously independent undertakings, the parties together are responsible for filing.
What information is required in the filing form?
The notification to the NCA shall include the following information:
a) Contact information;
b) A description of the transaction;
c) A description of the parties;
d) Name of the five most important competitors, customers and suppliers in markets in Norway or of which Norway is a part, where the parties have horizontal overlapping activity;
e) An explanation of the affected horizontal and vertical markets. A market is affected horizontally if at least two of the parties are active on the same product market and the parties’ combined market share exceeds 20%. A market is affected vertically if one party operates on a preceding or following level of the value chain to that on which another party operates, and their combined market share exceeds 30% on each of the vertically related markets. The explanation shall include a description of the market structure in the affected markets, a description of the parties’ most important competitors, customers and suppliers in the affected markets, and a description of possible barriers to enter in the affected markets;
f) A short description of vertically related markets where the concentration is between a party operating on a preceding or subsequent level of the value chain to that on which another party operates, and their individual or combined market share exceeds 30 per cent on at least one of these vertically related markets. The description of these markets shall at least include the parties’ three most important competitors, customers and suppliers;
g) A description of possible efficiency gains;
h) Information on whether the concentration is subject to inspection by other competition authorities;
Please note that where the parties' combined market share in the affected horizontal market does not exceed 20% or where the parties’ market share (either combined or individual) in the affected vertical market does not exceed 30%, the concentration is subject to simpler filing requirements.
Which supporting documents, if any, must be filed with the authority?
The transaction agreement including appendixes, as well as annual reports and accounts for the last year for all involved parties and transaction documents (including schedules and annexes) must be provided with the notification. However, such documents are not required in a simplified notification. In more complex matters, the NCA will regularly request internal decision-making documents, internal correspondence regarding the transaction, market analysis, etc. The parties must also prepare a non-confidential version of the filing that can be disclosed to third parties. The statutory deadline for the NCA’s phase 1 decision does not commence until such non-confidential version is submitted.
Is there a filing fee? If so, please specify the amount in local currency.
There is no filing fee under the Norwegian merger control regime.
Is there a public announcement that a notification has been filed?
Yes, receipt of the filing will be published on the NCAs webpage. The publication contains a brief description of the parties and the markets. This may take place the same day as notification or a few days later. The purpose is to gather responses from third parties as a form of hearing procedure. Note that third parties can request access to a copy of the non-confidential version of the notification.
Does the authority seek or invite the views of third parties?
Third parties are always invited to express their view on the transaction through the publication on the NCA’s website. Apart from this, a market test may be carried out at the NCA’s discretion, often targeted at customers, competitors and other stakeholders. The NCA may also approach such third-parties in a more informal way during early screening of received notifications. In practice, this occurs relatively frequently, even in less complex transactions.
What information may be published by the authority or made available to third parties?
Aside from the public announcement detailed in question 25 above, the NCA must respond to public information law requests from third parties for access to documents in the case file. Confidential business information will be redacted from all materials disclosed.
Public information requests may relate to all documents, emails and written correspondence with the NCA. As such, it is imperative that each document submitted to the NCA is accompanied by a non-confidential version, or an indication of which information is to be regarded as confidential.
Please note that the ultimate decision on what constitutes confidential business information rests with the NCA. However, the NCA’s reasoning must be in accordance with applicable Norwegian law on what constitutes confidential business information.
Does the authority cooperate with antitrust authorities in other jurisdictions?
Yes. In multijurisdictional merger filing processes, the NCA will usually get in touch with other national authorities involved, in particular the other Nordic competition authorities. The NCA will also cooperate with the European Commission in mergers that affect competition in Norway but where the European Commission has jurisdiction. The NCA also participates in the ECN network and cooperates with other European competition authorities in this way.
What kind of remedies are acceptable to the authority? How often are behavioural remedies accepted in comparison with major merger control jurisdictions, such as the EU or US?
Where competition concerns are identified, remedies in the form of structural measures, behavioural measures or a combination of both may be proposed to the NCA. Although pure behavioural remedies have been accepted by the NCA in the past, in recent years the NCA has only accepted behavioural remedies when offered in combination with structural remedies.
What procedure applies in the event that remedies are required in order to secure clearance?
The parties have no duty to offer remedies, but the NCA shall prohibit the transaction if it considers that the substantive test is fulfilled and the notifying parties do not propose adequate remedies.
Remedies may be proposed in either phase of the NCA's case handling. In phase I, remedies must be proposed no later than 20 working days from notification. In phase II, there is no deadline, but when remedies are proposed later than 55 working days from notification, the NCA's deadline is extended accordingly. When remedies are proposed after the NCA has issued a draft prohibition decision, the deadline for a final decision by the NCA is extended by 15 working days, with the possibility of a further extension by an additional 15 working days.
The NCA will normally perform a market test of whether the suggested remedies are considered adequate, but it is not required to do so. Remedies suggested by the notifying parties can be accepted by the NCA and form part of a binding decision without any further formal notice to the parties.
The remedies proposal must also be set forth and described in a non-confidential document for publication, due to the NCA’s need to consult third parties as to the effectiveness of the proposal.
What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?
The following penalties may be imposed for breaching the standstill obligation:
- Administrative fine of up to 10% of the infringing party’s annual aggregate turnover, provided that the infringement of the obligations was grossly negligent or intentional. Several companies have been fined for violations of this prohibition, with fines in the later years ranging from NOK 250,000-700,000. However, fines can be significantly higher as was demonstrated in a case relating to the Norwegian groceries sector where the NCA issued a fine of NOK 25 million on Norway’s largest grocery chain for carrying out the acquisition of several leases for shop spaces from a competitor without filing a formal notification and thereby breaching the standstill obligation.
- Individuals can be subject to criminal fines and/or imprisonment for up to 3 years, provided that other conditions set out in criminal law are fulfilled. The likelihood that criminal proceedings will be brought is low and this faculty has, so far, never been used.
There is no specific penalty for failure to notify.
What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?
The following penalties may be imposed on the party responsible for providing incomplete or misleading information or anyone acting on its behalf:
- Administrative fine of up to 1% of the infringing party’s annual aggregate turnover, provided that the infringement of the obligations was grossly negligent or intentional. Since the current Norwegian Competition Act entered into force in 2004, one company has been fined NOK 50,000 for providing incomplete information in a notification. In cases where relevant information is intentionally held back or is false, significantly higher fines must be expected.
- Individuals can be subject to criminal fines and/or imprisonment for up to 3 years , provided that other conditions set out in criminal law are fulfilled. This faculty has, so far, never been used.
Can the authority’s decision be appealed to a court? In particular, can third parties who are not involved in the transaction appeal the decision?
As a main rule; prior to appealing the NCA’s decision to the courts, the parties must have exhausted their right to administrative review the CAT (see further description on the procedures under question 18). After the CAT has reached its decision, the parties have three months to appeal to the Gulating Court of Appeal.
Third parties are not in principle cut off the right to appeal a CAT-decision. However, whether a third party may appeal a decision will depend on Norwegian civil procedure rules on locus standi. So far, no merger decision has been subject to judicial review.
What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?
The NCA has shown a consistent tendency to clear non-complex transactions in a swift manner. More than 90% of all notifications are closed during Phase 1. On average, the NCA prohibits (including conditional clearances) 2-4 concentrations each year.
As regards the merger procedure, use of pre-notification contacts is increasing, although still developing. As a consequence, the NCA has not yet cleared a transaction subject to remedies in phase 1. We expect that pre-notification contacts will be increasingly employed by the NCA in the immediate future, and that this may increase the use of remedies also in phase 1 clearance decisions.
With respect to analytical approaches, the NCA has increasingly focused on the closeness of competition between the parties to the transaction, including price pressure analysis, at the expense of the traditional focus on market definitions as basis for the competition assessment in markets with differentiated products/goods. Consequently, competition economists representing the parties are more common than just a few years ago. Furthermore, in more complex matters, the NCA will regularly request internal decision-making documents, internal correspondence regarding the transaction, market analysis, etc.
Are there any future developments or planned reforms of the merger control regime in your jurisdiction?
No, the Norwegian merger control regime has undergone some significant changes over the past three years and we are not aware of any planned developments to the regime, nor do we expect any changes in the near future.