Nordic Merger Control in Practice

NORDIC APPROACH TO MERGER CONTROL

So similar, yet different in practice. This article addresses some practicalities, including pre-notifications and handling times, in Danish, Finnish and Swedish merger control, as well as some insights into the national competition authorities’ style of operating. In this article we will also have a sneak peek into a not so common form of enforcing merger control - the so-called below-threshold mergers – exercised in Sweden, Iceland and Norway, as well as in the European Union by the European Commission.

In terms of substantive law and calculation of relevant turnover, among others, Finnish, Danish and Swedish merger control regimes are largely similar to the European Merger Regulation and rely on the same principles.

Denmark

In Denmark, the Danish Competition and Consumer Authority (“DCCA”) and the Danish Competition Council (“DCC”) are the relevant public authorities that enforce Danish merger rules. The DCCA prepares all cases and decides less complicated cases on behalf of the DCC, while Phase II mergers are decided by the DCC.

The Danish merger regime does not include any timelines for the pre-notification phase, but based on our experience, the pre-notification phase takes at least 2-4 weeks (for simplified mergers) but may stretch to one year for complex mergers. If the transaction is already in the public domain, the pre-notification phase can even include the public hearing, granting interested parties an opportunity to comment on the intended transaction within (usually) 5-7 business days, but normally the public hearing takes place after formal notification.

In Denmark, the Phase I investigation takes up to 25 working days and it may be extended to 35 working days by the DCCA if commitments are proposed by the parties. Statistically, however, clearance often comes within 5 business days of the formal notification in simple cases (as a result of all major issues having been dealt with in the pre-notification phase). The Phase II investigations must be completed within 90 working days of the expiry of Phase I, but the time frame for a Phase II investigation will automatically be extended by up to 20 working days if commitments are proposed by the parties during the last 20 working days of Phase II.

However, the time limits are interrupted if the parties to the merger fail to supply information required by the DCCA in time. Further, the DCCA may, at any time, extend the deadline by up to 20 working days, provided that the undertakings concerned have requested or consented to the extension. If the DCCA fails to make a decision within the deadline, this results in automatic approval in favour of the parties to the transaction.

Compared to other Nordic authorities and especially Sweden, the DCCA requires a lot of information to be handed in, including on all plausible relevant markets, which may make the process appear somewhat burdensome, even in simple cases. Moreover, the DCCA relies heavily on economic analysis in more complicated merger cases, thus making the merger filing process somewhat complex relative to other jurisdictions.

However, historically, prohibition decisions have not been common in Denmark. There have, however, recently been three examples of companies withdrawing their application prior to the DCCA adopting its decision, these being:

• JP / Politikens Hus A/S’ acquisition of Børsen A/S in 2017
• Royal Unibrews acquisition of Aqua d'Or Mineral Water in 2022
• Merger between NDI Group and Euromaster in 2023

Finland

In Finland the responsible authority for merger control is the Finnish Consumer and Competition Authority (“FCCA”). At the beginning of the year 2023 the jurisdictional thresholds of the Finnish merger control regime were amended, and the requirement of the parties’ local turnover was lowered to EUR 10 million. The threshold for the parties’ combined turnover is now based on domestic turnover instead of worldwide turnover and this has been lowered to EUR 100 million. The amendment of the jurisdictional thresholds has led to an increased volume of merger notifications in 2023. Within the first three months, the FCCA received 14 notifications, which doubled the average number of notifications submitted.

The FCCA has also introduced an updated merger notification form as well as new guidance on the Finnish merger control regime. As of 1 January 2023, a merger that is anticipated to be complex will have a greater effect on the content of the notification form than was the case previously. In a simple and unproblematic merger, the information requirements in the notification form are rather limited, but in a potential complex merger the notification form is quite burdensome for the notifying parties. In addition, the new notification form requires explicitly addressing all plausible markets in the notification, which has always been the case in Denmark, thus aligning the two jurisdictions.

The FCCA has published guidance regarding the merger control process indicating that pre-notifications are an essential part of all merger control processes. There is no exact timeline for this pre-notification phase and the duration of this phase depends on the complexity of the merger at hand. During the first quarter of 2023, the median duration of the pre-notification phase in simple mergers was 5 business days which corresponds with our experience from the pre-notification phases so far (they take about 3-10 business days in a simple merger case), however, this does not consider preparatory work required by the notifying parties.

In simple cases, pre-notifications are mainly written exchanges with the FCCA and the FCCA requires that a draft version of the notification is submitted for their review and comments before submitting the notification formally to the FCCA. In complex cases pre-notifications include more thorough and extensive discussions with the FCCA and the FCCA also often initiates some preliminary investigative measures (for example customer surveys) before the formal submission of the notification but only after the merger is made public.

In Finland the Phase I investigation takes up to 23 business days. During the first quarter of 2023 the median duration of first phase investigation has been 9 business days. One reason among others for the speedy handling times seems to be the FCCA’s new electronic public hearing procedure. Based on our experience with simple merger notifications, the notifying parties have been able to get the FCCA’s approval rather quickly, but in the future, the median duration of Phase I investigations might be longer than the 9 business days referred to earlier, depending for example on the case load of the FCCA. A Phase II investigation can take up to 69 business days and this phase may be extended by a maximum of 46 business days.

In our experience, the FCCA has adopted a thorough approach in terms of Finnish merger control, requiring a diligent preparation of the merger notification even in simple cases. However, diligent preparation and the FCCA’s practical approach have enabled swift merger control review in simple cases. In more complex cases the FCCA requests very detailed information on the intended transaction and hence its operating mode seems to follow the European Commission’s approach.

Sweden

The Swedish Competition Authority (SCA) is in charge of enforcing the Swedish Competition Act, including its provisions on merger control. Decisions made by the SCA may be appealed to the Swedish Patent and Market Court. The Swedish merger control regime does not include a pre-notification phase, meaning that it is not mandatory to pre-notify the SCA on the intended merger notification in all cases. However, the parties may contact the SCA to discuss the contents of the notification to be prepared – this happens primarily for complex transactions. Indeed, if the parties deem that the transaction does not present substantive issues, it is very common to send in the formal notification without having to go through a pre-notification phase.

In Sweden, the Phase I investigation takes up to 25 working days, which may be extended to 35 working days by the SCA if commitments are proposed by the parties. The SCA must complete the Phase II investigation within 3 months, and it may be extended to up to 1 month at a time, which typically requires consent of the parties. However, the SCA may extend the deadline by up to 1 month at a time without the parties’ consent if there are extraordinary reasons for such extension.

In our experience, the SCA has adopted a very pragmatic approach to merger filings and the Swedish process is one of the most efficient and least bureaucratic in the Nordics. Clearance in uncomplicated cases is usually granted within 1-2 weeks, even where no pre-notification took place.

COMPETITION AUTHORITIES’ RIGHT TO REQUIRE NOTIFICATION (BELOW-THRESHOLD MERGERS)

Even if the turnover thresholds are not exceeded, in some Nordic countries, namely in Iceland, Norway and Sweden, the national competition authority has the right to require notification. These so-called below-threshold mergers have been the subject of debates in all Nordic countries, although not all the countries have decided to adopt them into their merger control regime.

In Sweden, if the transaction only fulfills the requirement of aggregate turnover (i.e., the combined turnover of the undertakings concerned exceeds SEK 1 billion), the SCA has the right to require a party to notify the concentration, where particular grounds exist. Under the same conditions, if the SEK 1 billion threshold is fulfilled, a party or other participant in a concentration may voluntarily notify the concentration.

The SCA’s Guidelines and the preparatory works for the Competition Act provide examples of what constitutes particular grounds. The examples mention for instance situations where: the parties have large combined market shares or are both active on a concentrated market; or the target company supplies important input goods or is an important customer, among others. The SCA has used its right to require notification in several cases and, for example, in Visma and Fortnox the SCA opened an inquiry into the transaction. Its preliminary view was that the transaction would have led to significant impediment of effective competition.

Similarly, in Iceland the competition authority may require a notification if they see a significant probability that a merger has already taken place but failed to meet the Icelandic jurisdiction thresholds. In such cases, the Authority may require the merging parties to submit a notification of the merger. The notification can only be required where the combined annual turnover of the undertakings concerned exceeds ISK 1,5 billion (approximately EUR 10,5 million). The deadline for requesting a notification is 15 working days after the implementation of the transaction.

Likewise, the Norwegian Competition Authority (“NCA”) has the power to intervene against concentrations below the Norwegian jurisdictional thresholds and against acquisitions of non-controlling minority shareholdings. The NCA may order a notification from an undertaking that is not obliged to notify a concentration if there are reasonable grounds to assume that competition will be affected, or if particular considerations indicate that the NCA should investigate the merger further. The NCA’s authority to intervene expires if they have not requested a notification in three months after the final agreement was entered into or control was obtained, whichever occurred first. Furthermore, if the thresholds are not exceeded, the merger can be notified voluntarily.

In Norway, there are several examples of cases where the NCA has been able to exercise so-called below-threshold mergers. In 2020, for example, the NCA used the right to require a notification to investigate a corporate transaction between two used car brokerage services. In the transaction, Schibsted, which owns a service called Netbil, acquired Finn, a competitor to the Netbil website, which had grown rapidly in the car brokerage market in recent years. The NCA proposed to prohibit the transaction.

Adopting below-threshold merger control rules has been debated by the Finnish and Danish authorities too. In the latest reform of the Finnish Competition Act in 2022, the FCCA proposed rules on below-threshold mergers. However, after being greatly opposed by the stakeholder groups in the public consultation phase, it decided to give up the proposal. Currently, a similar legislative process is pending in Denmark. The Danish Competition Act does not include explicit rules for below-threshold mergers, but it is included in the legislative programme of the Danish government to propose such rules.

MERGER FILING FEES

In the Nordics, Sweden, Finland and Norway have not adopted any merger filing fees, while in Iceland a fee for notifying a merger is ISK 200,000 for simplified notification, (available for transactions with no overlap of activities) and ISK 500,000 for full notification. Similarly, in Denmark the fee for a simplified notification is 50,000 Danish kroner and the fee for a full-form notification is 0.015 per cent of the combined turnover in Denmark of the undertakings concerned, subject to a cap of 1.5 million Danish kroner.

CONCLUSIONS

Although Denmark, Finland and Sweden rely on the same principles in their merger control, there are differences in terms of merger control in practice. Finland and Denmark seem to have adopted a more thorough approach resembling the European Commission’s merger control practice. In addition, the pre-notification phase in Denmark can be rather lengthy compared to Finland and Sweden. Based on our experience, the Swedish authority seems to be very pragmatic in simple merger cases. Also, in Finland the notifying parties have been able to get approvals swiftly in simple cases, but this requires diligent preparation of the merger notification.

Differences in Nordic merger control can also be found in the Nordic authorities’ rights to require notification in cases where turnover thresholds are not exceeded. Swedish, Norwegian and Icelandic competition authorities have adopted additional thresholds, allowing the authorities to tackle potentially problematic acquisitions even if the turnover thresholds are not exceeded. Finland and Denmark on the other hand have so far been in favour of not leaving the authorities any latitude for the sake of legal certainty, grounding their authority solely in exceeding the jurisdictional thresholds.

Differences can be found also in charging policies of Nordic merger controls: Denmark, Norway and Iceland have set a governmental fee for notifying mergers to the authorities, while Finland, Norway and Sweden have granted the merger filing process without such fees.

For more information, please contact Petteri Metsä-Tokila, Morten Nissen or Maria Karpathakis.

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