The core competition provisions are contained in Articles 53, 54, 57 and 59 of the EEA Agreement and are equivalent to EU competition rules. Additional Protocols contain the general framework for implementing these provisions. ESA also has Notices and Guidelines further explaining its approach/procedures in competition investigations (see Best Practices, Notices and Guidelines).
The main provisions and examples of infringements of the EEA competition rules are set out below.
Article 53 - Anticompetitive agreements and practices
Article 53(1) prohibits agreements or concerted practices between undertakings that restrict competition, provided that the conduct in question may affect EEA trade. The prohibition applies to 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, such as those that involve:
- directly or indirectly fixing purchase or selling prices or any trading conditions
- limiting or controlling production, markets, technical development or investment
- sharing markets or sources of supply
- placing trading parties at a competitive disadvantage by applying dissimilar conditions to equivalent transactions
- other conduct excluding competitors from the market to the detriment of consumers.
An agreement or concerted practice that is incompatible with Article 53 is prohibited. Such agreements or concerted practices are considered null and void and are consequently not enforceable between the parties. ESA may also impose fines for an infringement of Article 53.
However, agreements or practices satisfying the conditions in Article 53(3) are not prohibited. For Article 53(3) to apply, the agreement/conduct at issue must satisfy the following cumulative conditions:
- it must contribute to improving the production or distribution of goods or to promoting technical or economic progress while allowing consumers a fair share of the resulting benefit
- it must not impose any restrictions that are not indispensable to the attainment of those objectives
- it must not afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products in question.
Examples of anticompetitive collusion between companies can include agreements/coordination to:
- fix prices
- restrict or limit output
- allocate markets, such as by sharing sales’ territories and/or different customer groups
- engage in bid-rigging in procurement processes
- engage in collective boycotts to exclude an actual or potential competitor.
Article 54 - Abuse of a dominant market position
Article 54 prohibits any abuse by an undertaking – or a group of undertakings – that has market dominance within the EEA, provided that the abuse may affect EEA trade. Abuse can include:
- imposing unfair prices or trading conditions
- limiting production, markets or technical development
- placing trading parties at a competitive disadvantage by applying dissimilar conditions to equivalent transactions
- other conduct excluding competitors from the market to the detriment of consumers.
ESA can impose fines for an infringement of Article 54.
Examples of abusive practices by a dominant company can include:
- refusals to supply/deal important inputs to rivals
- predatory pricing, i.e. below-cost pricing to drive out efficient competitors
- margin squeeze of wholesale customers that are also rivals of the dominant company
- exclusive agreements or loyalty-inducing rebates that lock-in customers
- tying and bundling to leverage market power over one product to other product markets
- charging customers excessive prices.
Article 57 - Merger control
Article 57 provides for the control of mergers and acquisitions. Provided certain turnover thresholds are met, a proposed merger or concentration must be notified either to the Commission or to the ESA. Failure to notify can result in fines being imposed.
The rules on jurisdiction are such that, generally, the European Commission is the competent authority to assess mergers under the EEA Agreement. However, ESA and the EFTA States remain informed and involved by virtue of EEA cooperation rules.
Protocols
The Protocols to the EEA Agreement, in particular Protocols 21 to 24, contain additional rules for the application of the EEA Agreement in the field of competition:
- Protocol 21 on the implementation of the competition rules applicable to undertakings
- Protocol 22 concerning the definition of “undertaking” and “turnover”
- Protocol 23 concerning cooperation between ESA and the European Commission under Articles 53 and 54
- Protocol 24 on cooperation between ESA and the European Commission in the field of merger control.
Secondary legislation
Pursuant to Article 7 EEA, secondary EU legislation in the competition field is legally binding once incorporated into the EEA Agreement. The relevant legislation relevant is listed in Protocol 21 and Annex XIV to the EEA Agreement, subject to a number of EEA-specific adaptations.
The procedural rules governing the application of EEA competition rules by ESA, as well as ESA’s cooperation with the national competition authorities in the EEA EFTA States, are set out in Protocol 4 to the Surveillance and Court Agreement.