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Safe harbours – Swedish Competition Authority – December 2017 OECD discussion

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This presentation by Johannes Erlandsson from the Swedish Competition Authority was made during the discussion “Safe harbours and legal presumptions in competition law” held at the 128th meeting of the OECD Competition Committee on 5 December 2017. More papers and presentations on the topic can be found out at oe.cd/21v.

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Safe harbours – Swedish Competition Authority – December 2017 OECD discussion

  1. 1. Safe Harbours and Legal presumptions Note by Sweden Johannes Erlandsson Swedish Competition Authority OECD Competition Roundtable 05.12.17
  2. 2. Safe harbours and legal presumptions in competition law »Pros: » Predictability and transparency » Lower costs of enforcement »Cons: » Risks of over-enforcement and under-enforcement (Type I and Type II errors) » Possibly inefficient allocation of investigative resources
  3. 3. Minimising risks of errors » Safe harbours and legal presumptions must be based on robust theory and experience » Risks, mainly of over-enforcement, can be further reduced by initial prioritisation filters » Limits the risk of banning conduct that is actually to the benefit of consumers » Limits the risk of inefficient use of investigative resources on over-enforcement
  4. 4. Focus of the note by Sweden » The role of legal presumptions in the SCA’s enforcement of vertical agreements » Main focus on prioritisation of cases » A number of (rebuttable) presumptions regarding vertical agreements in EU and Swedish competition rules » The SCA prioritises cases based on likelihood of harm to competition and consumers » Not prioritisation based on legal presumption » Only concerns prioritisation – not legal assessment
  5. 5. Economic theory on vertical agreements » Vertical cooperation between non-competitors is generally to the benefit for competition and consumers* » Solves principal-agent problems and optimise distribution » Limits free-riding » Limits double marginalization » Facilitates product launches and market entry etc. » Applies to all types of vertical agreements, irrespective of legal presumption » Under certain market conditions, vertical agreements can harm competition and consumers » Mainly by enabling/facilitating horizontal coordination » But could also harm through market foreclosure, softening of competition etc. * See also EU Commission’s Guidelines on Vertical Restraints
  6. 6. The SCA’s prioritisation policy* » The most important basis for prioritisation is whether a conduct is able to harm competition and consumers Regarding vertical cooperation: » Prioritises vertical cooperation which is capable of harming effective competition in product or distribution markets » Particularly considers: » Share of market affected by cooperation » Market power held by parties » Concentration of the markets » Other firms engaged in similar cooperation * Available in English here: http://www.konkurrensverket.se/globalassets/english/about- us/english_prioritisation_policy_for_enforcement.pdf
  7. 7. Case example: 13:e Protein Import* » Complaint regarding resale price maintenance (RPM) on protein powder products » After initial investigation, the SCA chose not to prioritise further investigation of the conduct » Not enough likelihood of harm to competition and consumers » Fragmented upstream market » Company had below 3 percent share of sales in protein powder products » Fragmented downstream market » Wide variety of sales channels for the products » No indication of similar conduct applied in parallel by other producers * Available in English here: http://www.konkurrensverket.se/globalassets/english/news/559-2013- besluteng-20141216.pdf
  8. 8. The SCA’s experiences of prioritisation based on market characteristics » Limits the risk of banning conduct likely to be to the benefit for competition and consumers » Limits the risk of spending investigative resources on inefficient over- enforcement » Prioritisation of conduct most likely to harm competition and consumers » More efficient use of resources » Decreases likelihood of investigating conduct that will later be rebutted in court » When a conduct is prioritised for further investigation, legal presumptions are important means to ensure efficient enforcement for the SCA

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