3. Competition law
We support the principles of fair competition. Price fixing, market sharing and similar anti-competitive practices are prohibited.
The European Union’s competition laws, the This Policy but can also result in large financial penalties, damages and possible criminal liability and imprisonment for individuals. Competition/antitrust law violations can also result in substantial diversion of management time and effort, and adverse publicity that damages the ‘s reputation.antitrust laws and the equivalent laws of other countries are designed to preserve a competitive economy. We support such laws, which aim to ensure free markets and give everyone the opportunity to succeed on the basis of superior products. Infringement of competition laws is not only contrary to our principles and
Allemployees and business partners should be aware of and follow the requirements and the competition laws of the countries where they carry out their business operations. In addition, all employees should be mindful that the competition laws of or the as example may also apply to business operations that take place elsewhere.
Because of the complexity of this topic, whenever you have a competition law concern or question you should consult.
3.1 Fundamental Rules
All agreements between undertakings, decisions by associations of undertakings and concerted practices, that have as their object or effect the prevention, restriction or distortion of competition are normally prohibited under competition law (see Section 3.2).
A dominant position implies a position of economic strength, which enables an undertaking to prevent effective competition on the market and to behave substantially independently of the market. Certain behaviors by a dominant undertaking may amount to a prohibited abuse. Examples of abuse are unfair pricing, discrimination against certain customers and certain rebate schemes (See Section 3.3).
Structural changes of business such as mergers, acquisitions, divestments and establishments of joint ventures normally entail certain aspects relating to competition law (See Section 3.4 and Section 3.5).
3.2 Prohibited Agreements, Decisions and Concerted Practices
3.2.1 Relations with
184.108.40.206 Agreements with
Under no circumstances shouldenter into any agreement, whether written or oral, express or implied, that could be seen as having the potential to restrict competition. Examples of agreements that are particularly likely to constitute serious infringements of competition law include:
- Agreements on what prices to charge, e.g. agreements to charge the same price, apply the same discounts, adhere to a pricing formula, increase or decrease prices by the same percentage, etc.;
- Agreements allocating markets or customers, e.g. agreements not to compete with one another in a given geographic area or for a certain customer or category of customers (such as for one company to focus on direct sales and the other to focus on sales through distributors);
- Agreements on whether or not to deal with a certain supplier, customer or category of supplier/customer (e.g. agreements to collectively boycott certain suppliers seen to be charging excessive prices);
- Agreements to coordinate bids in any sale or purchasing process, e.g. in order to obtain the best prices; and
- Agreements to limit or control production, technical development or investment.
The prohibition on restrictive agreements applies to concerted practices as well as to formal agreements. This aims to prohibit situations where no formal agreement has been entered into but where a company, by direct or indirect contacts regarding business objectives, influences the market conduct of a competitor in a way that it is assumed will affect competition.
The prohibition does not only concern agreements that actually restrict competition but also agreements that are intended, by their very nature, to do so.
220.127.116.11 Sharing Information with
Competitively Sensitive Information, supply to a or receive from a , unless otherwise permitted under or by .employees must never participate in any discussions involving
“ means: ”
- Any confidential information1relating to or one or more on any market concerning its recent2, current or future competitive actions, strategies and/or plans, including :
- Pricing (including actual prices as well as price lists or indicative prices, where relevant);
- Discounts or discount policies;
- Bidding practices or strategy;
- Customers (including the identity of actual or potential customers, as well as categories of customers);
- Market territories (where the Company does/does not sell or intend to sell its products);
- Suppliers (including the identity of actual or potential suppliers, as well as categories of suppliers);
- Terms or conditions of sale;
- Policy or strategy regarding negotiations with customers;
- Revenues, profits or margins;
- Market shares;
- Sales, marketing, advertising or promotion strategy or costs;
- Data or views on the market, supply/demand, price trends, etc. (including but not limited to whether prices on the market(s) are too low, at what level prices should be, or how to achieve higher or more stable prices);
- Expansion/contraction plans;
- R&D projects, strategy or costs;
- Production capacity, output or costs;
- Quantities produced or sold, and inventories; and
- Information on the internal organization of the firm;
- Any confidential information relating to that could be used by the recipient in making decisions on the matters indicated above, or to anticipate the strategy of with respect to the matters indicated above;
- Any confidential information relating to a that could be used by in making decisions on the matters indicated above, or to anticipate the strategy of the
- Any other confidential information relating to that might be used by the recipient in a manner than could reduce competition; or
- Any other confidential information relating to a that might be used by in a manner than could reduce competition.
Any information exchanged with regard to, regardless of the context in which it was exchanged, may amount to an infringement of competition law.
18.104.22.168 Public Communications and Market Signalling
must comply with certain regulatory and stock exchange requirements in respect of public statements. We must also be aware that public statements in respect of the markets for our products could be perceived as market signalling between competitors and could raise serious antitrust issues. employees must therefore comply with the following main principles:
- Public communications on , such as current or future prices, inventories, capacity utilisation and downtime, should be cleared/discussed with in advance;
- Public communications on , such as prices, inventories, capacity utilisation and downtime, that relate to the past only, and to and not to , are normally acceptable from a competition law point of view;
- Public communications, in the form of reports, releases and announcements, of current and future prices and other terms of trades with customers (or suppliers) or downtime should only be given when required by applicable regulatory (including civil labour law) and stock exchange requirements;
- Public communications giving an overall description or assessment of general future market trends, that are necessary to make a fair market valuation of the company (forward looking statements), are normally required by regulatory and stock exchange rules and are generally acceptable. However, efforts shall be made to ensure the generality of the information, and to avoid the perception of market signalling. Thus, it is acceptable to state that, based on historical and present factors, demand and, hence, prices currently seem to be rising. To state that prices are likely (or desired to) to rise by X% or Y amount in the future is not acceptable from a competition law point of view;
- Trade Associations and on acceptable political issues only; e.g. discussions in a Trade Association about the need for higher prices or lower output in the industry are not acceptable); spokespersons should talk about only, and not for the industry in general, on market related issues or suggest what would be/not be desirable from a general industry point of view (unless within the framework of
- spokespersons should not comment on the actions or business of ; and
- should refrain from contributing to market survey publications. Such contributions may only take place when cleared by . Such clearance can be obtained if accurate data is contributed in good faith, if the publications collect data from sellers as well as buyers and if the published data is presented in an aggregated format not disclosing data from individual companies (or customers).
22.214.171.124 Buying from or Selling toof .
Buying from and selling to competitors present special antitrust risks related to information sharing and market signalling. In order to preventfrom flowing between competitors, as well as to avoid the appearance of improper information flow, special precautions must be taken whenever buys from suppliers or sells to buyers that compete with .
Selling products to, or purchasing products from, Competitor, the following principles shall apply:should only take place for legitimate business reasons. In the context of negotiating sales to or purchases from competitors, it may be necessary to exchange some . However, no information should be exchanged beyond what is necessary for the purposes of reaching a selling/purchasing agreement. When negotiating sales or purchases with a
- No information received from a should ever be exchanged with another ;
- No information should be exchanged with a
suppliers of , or about other customers or suppliers of that (including prices and volumes of other transactions);
about transactions involving other customers or
- No information should be exchanged with a about the costs of either company. If costs need to be part of a price formula, they should be obtained from a third party source, e.g. an independent transport company in the case of transport costs;
- Where possible, it is preferable to use public reference prices to set the price, in order to avoid disclosure of each company’s individual price strategies; and
- In the case of swaps of products, a unit-for-unit exchange is a way to avoid the need for sensitive price negotiations between competitors.
employees involved in selling products to will have access to , such as the price agreed. These employees must not communicate this information to any employees of involved in purchasing those products or involved in selling downstream products incorporating those products.
Likewise,employees involved in purchasing products from must not communicate any available as a result of this purchase (including the price agreed) to any employees of involved in selling those products.
Where possible, the purchasing and selling functions for given products should be separated and handled by different employees. If the sameemployee must handle both purchasing and selling activities, it is especially important to avoid price negotiations involving the disclosure of costs of either party or the pricing policy applicable to transactions with other e x t e r n a l parties or other units. Public reference prices and third party cost information should normally be used in this situation.
In some situations, such as determining internal transfer prices that comply with tax laws, some internal communications may be necessary regarding pricing information for products sold to or purchased from. In this case, employees should limit information passing between selling and purchasing employees to what is strictly necessary for that purpose. In particular, wherever possible, only information about average prices that reflect general market conditions should be exchanged.
- Public communications on , such as current or future prices, inventories, capacity utilisation and downtime, should be cleared/discussed with in advance;
- should refrain from contributing to market survey publications. Such contributions may only take place when cleared by ; and
- Whenever you have a competition law concern or question you should consult .
126.96.36.199 Participating in
Trade Association serve an important role in business and help to develop the industry which is in the interests of other stakeholders too. However, activities within Trade Associations need to be carefully examined since Trade Associations by their very nature represent a forum for contacts between competitors and therefore present potential competition risks.
Trade Association meetings (including both formal and informal discussions and communications) must fully comply with the rules on agreements with competitors, at Section 188.8.131.52. and on sharing information with competitors at Section 184.108.40.206.employees participating in
Best practices when attending a Trade Association meeting
- Obtain an agenda before any meeting that accurately reflects the topics to be discussed. This agenda should be closely followed during the meeting;
- Ideally, each Trade Association meeting should begin with a reminder to participants that the meeting is to be conducted in compliance with the relevant competition laws, and this should be reflected in the minutes;
- Complete minutes should be prepared of the discussions held during the Trade Association meeting. The minutes should include a complete list of attendees;
- The agenda, any other documents to be exchanged in the meeting, and the minutes of the meeting should be reviewed and finalized by counsel (e.g. of the if it has its own counsel) in order to ensure that they do not contain ambiguous or misleading wording that may incorrectly imply the existence of improper discussions;
- If topics are raised in discussions which the participant considers may be improper from a competition law perspective, he/she should object immediately and ask that such discussions be tabled in order for to confer with and to allow the other participants to seek counsel from their respective departments. The minutes should clearly indicate that an objection was raised by and that the topic, while briefly raised, was not discussed. In the event that the conversation continues despite objection, the participant should immediately leave the meeting and ask that his/her departure from the meeting be clearly noted in the minutes;
- If the has its own counsel, this person should ideally attend all meetings. If the does not have its own counsel, should request that its own counsel attend the meeting if sensitive topics are on the agenda. Before making such a request, the situation should be discussed with ;
- Ensure that you are not part of any informal discussion on sensitive topics outside the formal meeting;
- All agendas, minutes and documents exchanged in connection with meetings should be preserved for at least 5 years;
- After the meeting check that the minutes accurately reflect the discussions at the formal meeting; and
- If, after a meeting, the participant is unclear whether any discussion or meeting activity may have violated competition law, he/she should discuss this with level immediately.
Manyexchange information amongst members on various issues, such as environmental concerns, safety, industry best practices and the like. Provided that the information is not Sensitive Information, its exchange should not normally raise competition concerns.
As a general rule, discussions and information exchanged during
- Activities contributing to the progress of the industry as a whole;
- Initiation of new legislation, modification of existing legislation or reaction to proposed legislation, whether at national or supranational levels; participation in industry-wide litigation;
- Reduction of tariffs and other legal barriers to exports or imports; and
- Research into the safety or other technical aspects of materials, products or product methods.
On occasion, company-specific information3).may gather information on items such as past sales, costs or even prices of its members. Such information gathering will not necessarily be deemed to violate the competition rules if the information provided by the members is historical (typically at least one year old, if not older), if the information is compiled by an independent third party such as the itself, and if the findings are presented in an aggregated form (such that it is not possible for the recipients to identify
- Any new membership of a HERE. in which , actual or potential, are also members, must be pre-approved by . The application should be filed
220.127.116.11 Visits To Mills And Other Facilities
Visits to mills and other production facilities, also including plantations, laboratories and logistic hubs, (“) can be conducted. However certain safeguards must always be in place to avoid risks of misinterpretation. ” can have perfectly legitimate reasons which ultimately benefit consumers.
to Stora Enso’s own facilities or to and outside the sectors in which is active present no antitrust risks.
between competitors. While to or by competitors can benefit consumers they also present significant antitrust risks. Hence, should only visit competing mills or host visitors from competing mills when there are major potential benefits and where appropriate safeguards are in place.
- Proposals for to or by must be reviewed and cleared on a case by case basis by the Division Head or Business Unit Head, as applicable. Once approved by the Division Head or Business Unit Head, the proposals also need approval by ;
- Visits to competing mills by invitation from suppliers for the purpose of demonstrating supplier equipment installed at the competing mill are only allowed if the Mill Visit is part of a concrete and documented investment process;
- Stora Enso mills may only allow Competitors reasonable access to Stora Enso mills for the purpose of demonstrating supplier equipment installed at our mills if there is written confirmation from senior management at the competitor that the visit is made due to a decision on a substantial investment;
- to or by competing mills for the purpose of learning how to solve purely technical problems in respect of production similar for the participating mills are likely to be cleared;
- to or by competing mills in connection with legitimate industry or meetings and activities are likely to be cleared; and
- to or by competing mills as a tool for benchmarking of general human resources and organizational practices, health and safety issues and general environmental issues are likely to be cleared.
Exception. To the extent that the Competitor is a customer or supplier of Stora Enso, Mill Visits in connection with ordinary commercial contacts in respect of the customer/supplier relationship, do not require previous clearance from Legal, Ethics and Compliance. Please do, however, read Section 18.104.22.168 of the BPP if you are planning to make or host such a visit.
Discussions between Section 22.214.171.124 of the BPP for further guidance.employees and employees of on during a Mill Visit are prohibited. In addition, certain meetings and contacts with Stora Enso‘s Competitors shall be reported to according to the rules on Competitor Contacts, read
- Once approved by the Division Head or Business Unit Head, proposals for HERE. to or by must be reviewed and cleared by . The application should be filed
- There is, however, one exception from this general rule:
If the is a customer or supplier of Mill Visits that are made in connection with ordinary commercial contacts in the customer/supplier relationship do not require previous clearance. If you are planning such a visit, do however inform your Division Head or Business Unit Head, and read Section 126.96.36.199 in the BPP.
188.8.131.52 Industry Benchmarking
Benchmarking can be done in many ways and is the practice of comparing cost, practices, efficiencies, organizational structure, equipment or other competitive information against other organisations. The practice has risks when competitors are involved, and certain safeguards must be in place before these activities are undertaken.
Benchmarking internally and outside the sectors in whichis active. This type of benchmarking activity presents no antitrust risks and is encouraged.
Benchmarking with. Using publicly available information such as financial reports, press releases, media information etc., presents no antitrust risks and is encouraged. However, benchmarking with must be undertaken only when there are major potential benefits and where appropriate safeguards are in place.
- Proposals for benchmarking with must be reviewed and cleared on a case by case basis by the Division Head or Business Unit Head, as applicable. Once approved by the Division Head or Business Unit Head, the proposals also need approval by .
- Benchmarking with
will only be cleared if the benchmarking is on topics generally considered as acceptable from a competition law point of view, such as:
- General human resources;
- Organizational practices;
- Health and safety issues; and
- General environmental issues.
- Further, benchmarking with on purely technical matters (e.g. on purely technical machine or production process solutions) can be cleared if the benchmarking takes place occasionally and not as a regular event.
- In case is benchmarked, the information made available to participating companies should not specifically identify individual companies or facilities or enable such information to be identified. Further, such information must be historical, at least more than six months old.
- Prospective or forward-looking data must never be used for benchmarking activities.
Exception. A benchmarking application is not required if a mill visit application is made for the relevant event whereby the benchmarking activity is disclosed. In addition, an application for benchmarking against competitor data via third party sources, e.g. databases, is not required if the data is (i) at least more than six months old, (ii) anonymous and (iii) aggregated, and where there is no direct contact with any competitors.
Discussions between Section 184.108.40.206 of the BPP for further guidance.employees and employees of on during a benchmarking event are prohibited. In addition, certain meetings and contacts with Stora Enso‘s Competitors shall be reported to according to the rules on Competitor Contacts, read
Once approved by the Division Head or Business Unit Head, proposals for benchmarking with Competitors must be reviewed and cleared by HERE., prior to the benchmarking project. Applications to perform a benchmark study shall be ﬁled
There are, however, two exception from this general rule:
• A benchmarking application is not required if a mill visit application is made for the relevant event whereby the benchmarking activity is disclosed.
• An application for benchmarking against competitor data via third party sources, e.g. databases, is not required if the data is (i) at least more than six months old, (ii) anonymous and (iii) aggregated, and where there is no direct contact with any competitors.
Eachemployee must take great care when meeting with in order to comply with the applicable competition rules. Discussions between employees and employees of on are prohibited.
must act independently on the market and must not seek to influence the future market conduct of its or to ascertain in advance the future market conduct of its .
may speculate and make forecasts. It should not for this purpose obtain business secrets from its concerning their future plans.
It should be emphasized thatis not only in competition on the markets where it sells but also on the markets where it purchases and shall comply with the same rules in relation to its whether acting as a seller or as a purchaser.
It is especially important that the employees of Section 220.127.116.11).do not make agreements or even communicate with in relation to (see
- Members of each Division4 Leadership Team shall report all meetings and contacts with to . There are, however, two exceptions from this general rule: Group Leadership Team and members of
- To the extent that the is a customer or supplier of ordinary commercial contacts in respect of the customer/supplier relationship do not need to be reported;
- To the extent that the contact takes place at an official trade association (or similar) meeting from which official meeting minutes reflecting the discussions are produced and distributed the contact does not need to be reported; or
The report should be filed HERE.
employees shall report contacts that they have with if the contact or meeting touches upon .
18.104.22.168 Joint Purchasing
Joint purchasing includes any arrangement under which two or more parties agree to jointly source products or services. The joint purchasing can take many forms. It may be carried out by a jointly controlled company, by a company in which many other companies have non-controlling stakes, by a contractual arrangement or by even looser forms of co-operation. The products or services may be used by each party in the manufacture of other products or resold in their existing form.
Joint purchasing agreements can create significant benefits for consumers and markets. For example, they may create cost savings in the form of lower purchase prices or reduced transaction, transportation and storage costs, which can in turn be passed on to customers. They can also encourage suppliers to innovate and introduce new or improved products on the markets. Purchasing goods or services together with other companies can therefore be fully legitimate and a way for companies liketo save costs, to the benefit of both shareholders and customers.
However, joint purchasing may entail considerable competition law risks if it prevents, restricts or distorts competition in any way. For example, agreements that involve the fixing of purchase prices can be a serious restriction of competition, and joint purchasing arrangements which serve as a tool to engage in price fixing, output limitation or market allocation in a selling market can be seen as disguised cartels.
Whether joint purchasing is allowed or not depends on the circumstances of each case, and a thorough competition law analysis is often required. Extra care is required where:
- The purchasing companies are competitors in one or several selling markets;
- The purchasing companies together account for a large share of the purchasing market and/or a downstream selling market;
- There are only a limited number of suppliers of the concerned product or service, and/or the barriers to enter into the supply market are high;
- There are a low total number of competitors in the selling market, and/or few competitors outside the purchasing cooperation;
- The cooperation extends to activities other than the coordination of the conditions for purchase of the goods or service in question (i.e. to joint marketing or sales activities);
- Participating competitors reach a high commonality of costs through the joint purchasing;
- Pre-existing links exist between the participating competitors, such as other joint purchasing agreements.
If you are contemplating to engage in joint purchasing of goods and/or services with another company, please consider the information above and fill out the form. Once you have submitted the form, await instructions from Legal before proceeding
3.2.2 Relations with Customers, Distributors and Suppliers
The competition rules do not only apply in respect of the relationship between competitors (the horizontal level) but can also apply in relation to a company’s customers, distributors and suppliers (the vertical level), either because practices include anti-competitive agreements or because they constitute an abuse of dominant position.
Special attention should be paid to the following topics:
- Agreements restricting the right of a distributor or other buyer to determine its own selling prices. Setting a minimum sales price is prohibited. Setting a maximum price or making recommendations is generally permitted so long as it is not indirectly a minimum price requirement;
- Restrictions on the rights of the distributor, or other buyer, to re-sell, by reference to geographical territories or specified customers. This rule is subject to certain exceptions. As a rule, buyers should not be prohibited from selling to customers outside of their territory who contact them (i.e. “passive sales” must be allowed);
- Long-term sale or purchase agreements. Long term selling or purchasing agreements that cover all or a substantial part of the needs or output of a customer or a supplier (exclusivity arrangements) may by their very nature be an area of concern since such arrangements lock up the parties and restrict the possibilities of other suppliers or purchasers to do business on the market. However, there are certainly situations were such arrangements could be justified, e.g. when the supplier has to undertake major investments in order to supply or when sponsoring a new market entrant;
- Agreements containing exclusive supply or purchase obligations. Exclusive obligations on a customer to only buy a type of product from and not from any competing manufacturer will generally be automatically allowed if (1) market share in the product is less than 30% and the buyer’s share of the market on which it buys the product is less than 30% and (2) the agreement is no longer than five years and not tacitly renewable beyond a period of five years. Similarly, exclusive obligations on a supplier to supply only may in some cases also be allowed; and
- Where conclusion of contract is subject to acceptance of unrelated supplementary obligations. Tying is a particular concern in markets where has a significant market share. A typical example of tying would be for to only supply a product in which it has a significant market share to a customer if the customer also buys another product for which has a weaker market position, unless justifiable technical or safety related circumstances are in place.
3.2.3 Research and Development
R&D agreements generally go along with high investment costs, long term commitments of the parties, and high expectations that such investment in time and money will eventually pay off by successful commercial exploitation of its results. Access to such results and the valid allocation/restriction of exploitation rights are thus of key importance for companies entering into such collaboration.
The following R&D agreements are unlikely to impose any competition law concerns:
- R&D agreements that relate to cooperation at an early stage, far removed from the exploitation of possible results;
- R&D agreements between non-competitors, unless there is a possibility of a foreclosure effect and one of the parties has significant market power with respect to key technology;
- The outsourcing of R&D to research institutes and academic bodies which are not active in the exploitation of the results; and
- “Pure” R&D agreements that do not extend to joint exploitation of the results, unless they appreciably reduce effective competition in innovation.
R&D agreements which may have the effect of restricting competition are those where the parties to the co-operation have market power on the existing markets and/or competition with respect to innovation is appreciably reduced.
The following R&D provisions are likely to impose competition law concerns, unless it can be demonstrated that they are indispensable to an R&D agreement:
- A restriction of the freedom of the parties to carry out R&D in a field unconnected to the agreement;
- A limitation on output or sales. There are exceptions to this: the setting of production or sales targets in the event of joint exploitation or joint distribution; specialization in the context of exploitation; and a non-compete clause during the period of joint exploitation. Further, field-of-use restrictions will not be regarded as constituting limitations of output or sales (nor as restrictions on territories or customers);
- The fixing of prices when selling the contract products or licensing the contract technologies to third parties, with the exception of fixing the prices or royalties charged to immediate customers in the event of joint exploitation or distribution;
- A restriction of the territories to which or the customers to whom the parties may passively sell the contract product or license the contract technologies, with the exception of the requirement exclusively to license the results to another party; and
- A requirement not to make any, or to limit, active sales in territories or to customers which have not been exclusively allocated to one of the parties by way of specialization in the context of exploitation.
3.3 Abuse of Dominant Position
The term “dominant position” implies a position of considerable economic strength, which enables an undertaking to prevent effective competition on the market by the power to behave substantially independently of its competitors and customers.
Dominance is not simply a question of a company having a large market share. Several other factors have to be taken into account. Dominance can only exist in relation to a particular product and geographical market. Market definition can be a complex task, and requires both legal and economic assessment.
There is no clear legal threshold beyond which a company is considered to be dominant. However,personnel should exercise special care and consult in conducting its business in products where has a leading position or market share exceeding 25%. A company in such a position must not, without objective justification, act in a manner which constitutes an abuse.
Examples of behavior that could amount to abuse of dominant position include:
- Imposing unfair purchase or selling prices or other unfair trading conditions e.g. to charge prices that are so high that the prices have no relation to the economic value of the product supplied or so low that they are below cost, which may be assumed to be intended to drive competitors from the market;
- Limiting production, markets or technical development to the prejudice of consumers;
- Discrimination, i.e. applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, if the different prices do not reflect the differences in costs of supplying the different customers;
- Tying, i.e. making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations, which, by their nature or according to commercial usage, have no connection with the subject of such contracts;
- Discount and rebate policies if they are loyalty rebates aiming at committing the customer to buy all or most of its requirements from the supplier. Volume rebates are allowed if the rebates reflect the suppliers’ cost savings in mass production; and
- Refusing to supply if the refusal is a part of a boycott system. There should typically be objective reasons for a refusal to supply on market terms, e.g. the financial position of the customer.
3.4 Mergers and Acquisitions
Competition authorities monitor and investigate mergers and acquisitions in order to make sure that they will not harm free competition, e.g. by reinforcing or creating dominant positions.
The rules on merger control vary but usually include an obligation on the merging companies to make a filing where certain thresholds are met (based on e.g. revenue, market share and asset value). The relevant authority will based on the filing investigate if the transaction is harmful for competition or not.
Merger control issues must always be referred to. However, it is important for each employee to understand that such matters may require that the organization provides extensive information on very short notice.
Information exchanges in the due diligence process
It should be noted that information exchanges in the due diligence context have an obvious potential to raise antitrust concerns in particular where the buyer, seller or target are competitors, as exchange of confidential information may violate competition regulations (see Section 22.214.171.124).
The European Commissionhas stated that the exchange of market information may lead to restriction of competition in particular in situations where it is liable to enable companies to be aware of market strategies of their competitor. To this end, confidentiality agreements normally offer important assurance that the exchange of information in due diligence will not normally have an anti-competitive object or effect. Provisions that may prove particularly relevant from an antitrust perspective include (i) the prohibition against using confidential information except to evaluate the transaction, (ii) the prohibition against disclosing such information to anyone other than the parties’ representatives engaged in such evaluation, and (iii) the obligation to return or destroy such information if the transaction does not proceed.
Where the parties are competitors, disclosure of Competitively Sensitive Information may violate competition law, especially if the team responsible for reviewing the information includes individuals responsible for the receiving party’s commercial policy. Compromises to satisfy the receiving party’s legitimate interest in evaluating the risks of the transaction, while mitigating antitrust risks, include (i) disclosing such information only in aggregated or historical form, and/or (ii) disclosing such information only to counsel, accountants or business consultants who agree (with their client’s consent) not to disclose such information to the receiving party. These representatives; sometimes referred to as “clean teams”, may also sign supplementary confidentiality agreements restricting the use of the information exchanged for the limited purposes of assessing the suitability of the transaction, negotiating the transaction price etc. An internal form of clean team would be a team on the receiving party’s side where no one is responsible for the receiving party’s commercial policy in relation to the relevant competing goods or services.
- Merger control issues must always be referred to .
3.5 Joint Ventures
There are many situations in which a company, looking at possible developments of its future commercial activities, will decide that it needs a partner (or more than one) to share in a particular project. The task of choosing a partner will involve careful consideration of the known abilities and resources of the companies in question. Such companies may be actual competitors already or merely potential competitors.
The degree of co-operation proposed may be quite limited, e.g. the operation of joint purchasing arrangements or shared laboratory work, or alternatively may be very extensive, e.g. a proposed merger of the parties’ entire interests in a particular field with a consequential need to give up their individual business in that market in favour of a new enterprise.
For purposes of competition law, certain joint ventures are treated as a merger or acquisition and thus subject to relevant merger control rules. Other joint ventures fall outside of the merger control rules and are instead subject to the competition rules relating to agreements.
Particular guidelines can be found in relation to the following specific types of agreements:
- Agreements on research and development (see Section 3.2.3) research
- Purchasing agreements (see Section 126.96.36.199)
When establishing a joint venture, it should be considered if there is a – theoretical – risk that the parents utilize the joint venture to co-ordinate their behavior on any market where the parents are competitors and in particular on any markets related to the business of the joint venture. Certain guidelines shall normally be implemented if this would be the case.
Handling enquiries from the competition authorities
policy is to cooperate fully with investigations of competition authorities.
To ensure that any investigation is conducted legally, properly and on time, and to take into account the experiences of the entire Group, any investigation or request for information should be referred to immediately, and any reply should be given via .
Competition authorities have far reaching rights to request information when investigating anti-competitive behaviour or assessing various kinds of mergers.
Handling dawn raid inspections at company premises
An unannounced inspection by a competition authority is normally referred to as a “dawn raid” inspection.
Each this list. If an office or production facility fails to appoint its shall make the appointment. Under no circumstances should Stora Enso‘s staff provide any false or misleading information to investigators, tamper with or destroy documents during an investigation, break a seal affixed by investigators or endeavor to hinder the investigation in any way.office and production facility shall have one person to represent in case of a dawn raid inspection (a “ “). In addition, at least two deputies shall be appointed by the . The shall ascertain that the identities of the and the deputies are kept up to date on
Under EU legislation, inspectors from the European Commission have the right to:
- Enter any company premises and seal them as necessary. The European Commission can also conduct an inspection in any other premises, land or means of transport, including the private homes of directors, managers and other members of staff, if a reasonable suspicion exists that books or other records related to the business and to the subject matter of the inspection, which may be relevant to prove a serious violation of EU competition legislation, are being kept there;
- Examine and take copies of all books and other records related to the business, irrespective of the medium on which they are stored. The inspectors are, however, only entitled to obtain materials on matters that fall within the scope of the investigation;
- If becomes subject to a dawn raid inspection, notes shall be made of all files and documents examined by the inspectors, whether or not the inspectors want copies to be taken; and
- each document photocopied shall be copied in three copies: one for the inspectors, one for and one for . Ascertain that each document is restored in its initial position after it has been copied.
- Ask any representative or member of staff for explanations on facts or documents, relating to the scope of the investigation, and to record the answers;
- If becomes subject to a dawn raid investigation and the inspectors ask questions, it is normally the company (not the inspectors) that is entitled to decide who should provide the explanation. However, if the inspectors demand to speak to a specific person who logically could easily provide an explanation, such as the author of a document, the person should be made available to the inspectors.
- If the best qualified person or the information necessary to answer a question is not available, this shall be explained to the inspectors with an offer to provide the answer later in writing.
- If questions are answered, they should be answered as to facts but without any assessments. If the answerer is uncertain, this should be mentioned.
- Detailed notes shall be made of all oral explanations given to the inspectors a copy of the notes taken by the inspectors shall be requested.
- When possible a lawyer shall always be present during any form of interview with employees.
Search a company’s IT environment (servers, desktop computers, laptops, tablets and other mobile devices) and all storage media (CD-ROMs, DVDs, USB-keys) using both the European Commission’s own hardware and software and the search tools built into the company’s media. This covers also private devices used for business purposes (BYOD), external hard drives, backup tapes and cloud-computing services. The inspectors may make an integral copy of a digital storage medium; and
- If the inspection is not finished during an on-site inspection, the European Commission can copy the data set, secure it in a sealed envelope and invite company representatives to be present when the sealed envelope is later opened at the European Commission’s premises. Alternatively, the European Commission may decide to return the sealed envelope to the company for safekeeping until further notice. The company will receive a data carrier (e.g. a DVD) on which all final data selected by the inspectors are stored and it will be requested to sign printed lists of data items selected. Personal data, e.g. names, telephone numbers and e-mail addresses of employees, although not being the targets of the inspection, may be copied and obtained by the officials if included in business documents.
On the other hand, inspectors from the European Commission do not have the right to review and take copies of documents:
- That contain communication between and external lawyers. Documents to or from external lawyers (i.e. not in-house lawyers) are often protected by attorney-client privilege. Any such documents should be clearly marked as containing attorney-client communication;
- That contain commercial secrets of a technical nature; or
- That fall outside the scope of the inspection.
Any disagreements betweenand the inspectors in a potential dawn raid investigation regarding whether e.g. a document is covered by legal privilege shall be written down in a detailed note.
The powers of national authorities are at least broadly similar to the powers of the European Commission.
In order to protect the legal interests ofand make sure that a dawn raid inspection is conducted legally and properly, the following shall be noted:
- When inspectors arrive at companypremises, they normally go to the reception desk, identify themselves and ask to see a senior manager. The receptionists or security personnel at the reception should immediately contact the or, in his or her absence, one of the deputies; and
- The inspectors should remain in the reception until the and when possible, a member of come to meet them. If the inspectors believe that they are being unreasonably delayed at reception, it may result in the company being fined for failure to cooperate. Therefore the inspectors should be dealt with promptly and courteously at reception.
Under no circumstances shouldstaff provide any false or misleading information to investigators, tamper with or destroy documents during an investigation, break a seal affixed by investigators or endeavor to hinder the investigation in any way.
Detailed instructions for HERE.and other company functions on how to behave in case of a dawn raid inspection are available
All documents (in the widest sense of the word; including letters, memos, notes, e-mails etc.) produced in the course ofGroup’s business can be a target for competition authorities’ review. Sometimes documents may convey the false impression that there have been contacts with on anti-competitive matters. It is therefore of great importance that all documents are written clearly and carefully in order to avoid this misinterpretation.
Guidelines for document creation:
- Ask yourself whether anyone could interpret what you are saying as meaning something you do not intend;
- Make clear references to the source of business intelligence material. For example information on ‘ prices received from a customer will look extremely suspicious unless the source is clearly stated (i.e. name of customer, name of individual, date etc.);
- Do not use language that falsely suggests collusive conduct such as “this pricing is in accordance with industry policy”;
- Do not overstate the significance of competitive position or market power or product and market strategy by using such phrases as “dominant position”, “this will cripple the competition” or “price leader”;
- Do not understate the competitive position of by using such phrases as “enormous barriers to entry/expansion”;
- Do not use words suggestive of illegal or questionable behaviour such as “please destroy after reading”;
- Do not speculate or comment on legality or potential illegality of any particular business conduct; and
- Do not describe as undesirable or objectionable competitive activities of or customers (e.g. customers are lost not stolen, price-cutting is not “disruptive” or “against the interests of the industry”).
Documents lacking references of the source or containing careless and/or inappropriate language may make lawful conduct look suspicious, which may lead to unnecessary investigations by the competition authorities, and thereby generate significant legal costs forand damage public reputation. The time spent in writing clearly and following these guidelines is an important part of .