In focus: anti-competitive agreements and dominance in Sweden
All questions
Antitrust: restrictive agreements and dominance
Chapter 2 Section 1 of the Competition Act prohibits cooperation between companies whose purpose or effect is to prevent, restrict or distort competition in the market to a appreciable extent, while Chapter 2 Section 7 of the Competition Act states a ban on abuse of a dominant position. The provisions are based on Articles 101 and 102 of the TFEU.
in Significant cases Access to infrastructure for waste collection
In February 2018, SCA issued an injunction against FTI, a waste management company, which ordered it to withdraw a termination of the contract with its competitor, TMR. FTI allows packaging manufacturers to fulfill their legal obligation by offering a service to collect and recycle packaging waste coming from their products in exchange for a weight-based fee. FTI’s waste collection is primarily based on a nationwide infrastructure of public waste containers. Since 2012, FTI had provided access to this infrastructure to TMR, which offered its services in competition with FTI. In 2016, FTI terminated the access agreement with TMR. After investigating the matter, SCA found that the infrastructure for public waste containers constituted a significant facility and that FTI had abused its dominant position by refusing to trade with TMR. PMC upheld the injunction. But in February 2020, the PMCA overturned the PMC’s decision on appeal.9 Although the PMCA agreed that FTI had a dominant position in the relevant market, it considered that SCA had not proved that it was impossible, or unreasonably difficult, for TMR to establish its own nationwide infrastructure for public waste containers. As such, the PMCA concluded that the provision of FTI services was not indispensable to TMR’s business operations. In view of this, the court held that the JTI’s termination of its previous voluntary deal with TMR did not constitute an unlawful refusal to act.
Exchange services – exclusion of competitor
SCA sued the Stockholm Stock Exchange’s operator Nasdaq for abuse of dominance and demanded a fine of SEK 28 million. The case revolved around a data center from Verizon. Nasdaq leased an area in the data center and offered its customers, as high-frequency traders, the opportunity to rent space in the same area. The co-location with Nasdaq gave customers a quick connection to Nasdaq’s trading system. The incidents were triggered when Burgundy, a Nasdaq competitor, publicly announced that it had entered into an agreement with Verizon and intended to move into the same data center as Nasdaq. In fact, Burgundy would become part of Nasdaq’s co-location service without having to create its own service. Nasdaq responded by putting pressure on Verizon and threatened to move to another data center if Burgundy was allowed into the center. SCA did not claim that access to the data center was necessary. Instead, they relied on the concept of “naked restriction”, claiming that the Nasdaq’s response to Burgundy’s announcement had no other purpose than to restrict competition. However, PMC considered that this was a normal exercise of contractual rights and competition in substance and consequently rejected SCA’s claims. On appeal, PMCA10 upheld the PMC’s judgment. According to the PMCA, the investigation showed that the extra costs for Burgundy in connection with having to establish itself in another data center did not create any obstacles to entry or expansion for Burgundy.
Labeling system for tobacco coolers
SCA sued Swedish Match, a major supplier of snus (a moist tobacco product), for abuse of dominance. SCA claimed that Swedish Match had excluded its competitors by introducing a uniform system for shelf labels in snuff coolers that had been lent to stores. Although Swedish Match allowed the sale of other suppliers in these coolers, SCA claimed that the labeling system prevented competitors from marketing their products in terms of price and brand, especially since the marketing of tobacco products is generally subject to significant legal restrictions. Swedish Match, on the other hand, had claimed, among other things, that its intention was to ensure that the labeling system complied with the strict marketing rules for tobacco products. PMC found that Swedish Match abused its dominant position and the court imposed a fine of SEK 38 million. But the PMCA turned around and ruled in favor of Swedish Match. In its judgment of June 2018,11 The PMCA considered that the labeling system could effectively foreclose competition by restricting competitors’ marketing opportunities. However, the Court further held that such exclusive conduct on the part of a dominant undertaking is objectively justified – a concept which is seldom accepted by the European Court of Justice – when the purpose is to ensure compliance with the rules on the marketing of tobacco.
Access to aviation infrastructure
SCA initiated an investigation into the abuse of dominance by AFAB, which provides infrastructure for land flights at Arlanda Airport. The inquiry also dealt with suspicions of anti-competitive cooperation between AFAB and its parent company. SCA had received information that AFAB, or its parent company in the aviation fuel sector, had actively restricted access to the aviation infrastructure at Arlanda Airport. During its investigation, SCA found no evidence to support anti-competitive cooperation between AFAB and its parent company. With regard to abuse of dominance, SCA found that restriction of access to aviation infrastructure is mainly regulated by the Act on Ground Service at Airports and that the Swedish Transport Agency is the state authority responsible for investigating violations of the Act. Thus, SCA closed the investigation without taking action.12
ii Trends, developments and strategies
SCA continues to investigate markets and sectors at risk of competition problems. Some sectors are examined more closely by SCA due to previous regulations that have created structural imbalances in the market (such as the pharmacy and telecommunications sectors). As abuse of dominance cases is difficult and resource-intensive, SCA has formed a specialized department to deal with anti-competitive behavior of this kind.
iii Outlook
In Sweden, many sectors have previously been characterized by monopolies or few companies dominating the market. Many of these markets are now being deregulated or have recently been deregulated, which has often resulted in a market with non-existent or low competition. Therefore, SCA has focused its efforts on these markets.