Competition & Trade Outlook: Themes and Trends for 2023

A number of broader competition law and FDI trends will likely continue to affect M&A into 2023: a continued tightening of foreign investment review regimes across the EU, robust review of all transactions in the tech sector, and a focus on transactions below merger filing thresholds, including those that fall under the Commission’s Article 22 regime.

On the international trade side, there are signs of growing protectionism, as illustrated in the discussions surrounding the EU’s Carbon Border Adjustment Mechanism, or CBAM, and the Inflation Reduction Act, or IRA, in the US.

In this summary of themes and trends to look out for in 2023, we are highlighting some more specific developments in the competition and trade space that should be of interest to businesses operating in Norway. 

Russia sanctions: from guidance to criminal enforcement?

Since 23 February 2022, the EU has significantly expanded its sanctions on Russia. Nine packages of sanctions have been enacted. A tenth is being prepared.

From the outset, the Norwegian Government announced its intention to align with EU sanctions. With some delay and a few exceptions, the Norwegian sanctions rules mirror the EU regime.

Norwegian businesses – even those without any business in or sales to Russia – have had to introduce burdensome sanctions due diligence processes at short notice, including screening of trading partners for any links to sanctioned entities and individuals. 

Throughout 2022, the main focus of the Norwegian Government has been on the drafting of the legislation and on providing guidance to Norwegian companies on interpretation and compliance questions.

In 2023, we may see the first criminal enforcement cases as businesses have now had some time to adjust to the new reality of a far-reaching sanctions regime. A reduced workload from implementing new rules and guiding businesses on them is also likely to free up resources for the Norwegian Government to monitor potential breaches.

For businesses that still need to start working on updating their sanctions due diligence routines, now is a good time to review their routines and processes in light of their risk exposure and the latest guidance available.

Joint bidding: Norway to align with EU approach?

Norway and Denmark have for several years been outliers in Europe in taking a particularly strict and simplistic approach to bidding consortia. 

The Norwegian Competition Authority’s (NCA) approach has essentially disregarded the form of project and cooperation at issue and has simplified the assessment into one determining question: Could the involved companies submit, or easily become able to submit, their own individual bids? If so, cooperating companies (including sub-contracting arrangements) run the risk of ‘by object’ infringements.

The approach is based on an over-broad interpretation of a 2017 judgment from the Norwegian Supreme Court in which the court held that two taxi companies that had pooled their resources in a joint venture, and used the joint venture to submit joint bids, committed an infringement by object because the parent companies could have submitted their own bids.

There are some indications that the NCA could nuance its approach in 2023. In a letter from the Government sent in December 2022, the NCA was requested to consider its approach to joint bidding in the context of sustainability cooperations.

In early January 2023, the NCA did indeed express a much more nuanced approach to bidding consortia in response to a public hearing on offshore wind projects. Referring to the Commission’s horizontal guidelines, the NCA indicated that its traditionally strict approach would only be applied where the centre of gravity of the cooperation is joint sales and not to other consortia, including production consortia.  

It remains to be seen whether the NCA will (openly) recognise the adjusted course for assessment of bidding consortia. In our view, 2023 would be an appropriate year to do so.

NCA to get new market investigation powers

In a press release published on 13 January 2023, the Norwegian Government confirmed that it is moving ahead with its plans to introduce a market investigation tool. It intends to issue a consultation paper in Q1 2023.

The Norwegian Government is following in the footsteps of the UK, where the CMA already has powers to conduct market investigations and impose remedies. Several other European countries are considering implementing similar legislation.

All companies in an investigated market must be prepared for extensive fact-finding exercises, including disclosure of internal documents. Although market investigations do not have the objective of uncovering breaches of competition rules, potential infringements uncovered during a market investigation may trigger an investigation of the companies in question.

Information exchanges high on the NCA’s agenda

2023 could be the year for information exchange cases. The NCA has notified the three largest grocery retailers in Norway that it intends to issue fines totalling NOK 21 billion (approximately EUR 2 billion) for anti-competitive information exchange.

The case concerns the retailers’ use of so-called “price hunters” to collect information about shelf prices from each other’s stores. The NCA will likely conclude in 2023, but a decision with fines will almost certainly be appealed.

The case follows in the footsteps of another recently adopted information exchange decision. In November 2022, the NCA fined the four largest book publishers in Norway and a subsidiary a total of 545 million (approximately EUR 52 million), for exchanging information on future publications via their subsidiary Bokbasen. The infringers have already indicated that they intend to appeal to the Norwegian Competition Tribunal. A decision from the tribunal can be expected at the end of 2023.

The NCA’s very substantial (potential) fines, up to the cap of 10% of the companies’ turnover, are striking, as the NCA has not labelled any of the cases as cartel cases. This, together with the fact that the NCA has a pipeline of several other information exchange cases, highlights the need for businesses to tread very carefully in all projects and cooperations that involve access to information on competitors.

In a recent post on Kluwer Competition Law Blog, some of our competition law experts shared some key takeaways from the information exchange cases.  

Foreign Subsidies Regulation: a new merger filing regime

The Foreign Subsidies Regulation entered into force on 12 January 2023 and will apply from 12 July 2023.

The regulation introduces a new merger filing obligation for targets (including JVs) with an EU turnover of at least EUR 500 million if the acquirer or parent has received a foreign financial contribution of at least EUR 50 million.

As a result, for transactions involving targets meeting the EUR 500 million EU turnover threshold, the new regime requires an analysis of whether the acquirer/parent has received state aid from non-EU countries, and if so, whether the EUR 50 million thresholds may be met. The concept of foreign financial contributions will likely be given a wide interpretation, broadly in line with EU state aid rules.

The main purpose of the regulation is to address market distortion and ensure a level playing field for all companies operating in the Single Market.

The regulation also gives the Commission powers to investigate financial contributions by non-EU countries and take action to balance the negative effects of investments that distort the Single Market.

In addition, the regulation sets out a notification obligation in the context of public procurement procedures.

Companies involved in transactions where the EU turnover threshold of EUR 500 million is met, are advised to consider the potential filing obligation very carefully. Fines for failure to notify can be significant. The Commission can impose fines up to 10 % of the company’s annual aggregated turnover if a foreign financial contribution is not notified as required.

Les også