Rikard Jermsten on the SCA’s new power to block mergers

Photo: Rikard Jermsten, Director General, Swedish Competition Authority

We are very grateful to Rikard Jermsten, newly appointed Director General of the Swedish Competition Authority, for taking the time to give us his thoughts on the forthcoming changes to Sweden’s merger control regime. In office since September 2017, Jermsten will now lead the SCA into the new year and a new era for companies seeking merger clearance in Sweden. He gives us some insights below.

Can you say a few words about your background and how it contributes to your new role?
My immediately preceding position was as Senior Judge of Appeal, head of Division, at the Administrative Court of Appeal in Stockholm. Before that I worked as Director General for Administrative and Legal Affairs at the Ministry of Finance. I have many years’ experience of legislative work and of providing legal advice to the government, including on the matter of management of state-owned companies. I believe that this kind of background will not be to my disadvantage in leading a competition authority.

Can you explain a bit more about the road ahead on merger reform in Sweden?
The Swedish Competition Authority will receive greater decision making powers from the beginning of next year. We will become the body of first instance in decisions on prohibiting concentrations between undertakings instead of, as is the case today, requesting a motion for such a decision in a court of law. If the parties are not satisfied with the decision, they can appeal it to the Patent and Market Court, and then to the court of last resort, which is the Patent and Market Court of Appeal. This new procedure allows for a shortening of the time between a company’s notification of a merger and its receiving an authoritative final decision, while at the same time maintaining legal certainty.

What is your personal view on what this will mean for companies notifying mergers in Sweden?
As the new Director General of the Swedish Competition Authority since September 1 this year, I feel very pleased to be able to implement this new regulation which makes things easier and better for companies that turn to us for approval of an acquisition. It is my ambition that all those who turn to the Swedish Competition Authority will have confidence and trust in it. Our activities will be carried out quickly and efficiently, with legal certainty and decision making of a high quality. This naturally applies not just to concentrations between undertakings, but also to matters concerning complaints, leniency applications or issues regarding how we work in general as a supervisory authority.

When will these changes take effect and will there be an impact on the merger review process?
The new regulations will apply from 1 January 2018 and, as mentioned, will mean that the Swedish Competition Authority is empowered to make decisions on prohibiting concentrations between undertakings.

Before a possible prohibition on a concentration between undertakings can come into question, we will investigate and analyse the prospective deal in essentially the same way as we have until now. Initially as part of what is known as Phase 1, and this will in certain cases be followed by a more in-depth investigation, Phase 2. The current time limits for these procedures will continue to apply.

We will be transparent in showing how we work on this type of review. Our working methods will be clear to all those affected. We have an established practice of making profound legal and financial reviews of a matter internally before we make a decision. This includes critical scrutiny in order to guarantee objectivity and quality, which is an element we intend to develop further. We will also make it a regular practice to offer the parties a supplementary oral procedure before making our decision.

Are you seeking stakeholder views on these changes?
On our website there is currently a proposal, available to all, on how the Swedish Competition Authority should work in dealing with concentrations between undertakings. We will be holding a seminar on these matters on 13 November 2017. We would be very grateful for any feedback on this proposal, which can be read here: http://www.konkurrensverket.se/globalassets/konkurrens/pm/beslutanderatt-foretagskoncentrationer_2017-10-30.pdf (available only in Swedish).

How do you see this reform in terms of the wider European landscape?
As a result of the greater decision making powers, Sweden will join the regulatory order that already applies for most countries in the EU. As pointed out, it will bring increased efficiency while maintaining legal certainty, and it will facilitate our international cooperation. It is good for companies, as they increasingly operate internationally, that there are similar systems in different countries with regard to company mergers.

Are there further fundamental changes on the horizon?

A state enquiry has presented a proposal that the Swedish Competition Authority should in future receive additional decision making powers in other types of decisions as well. We already have such powers in matters concerning commitments. Objections as to the appropriateness of this have been expressed, but I look forward to a continued discussion on how the Swedish Competition Authority, by gaining greater decision making powers, can make supervision more efficient without compromising the requirements for legal certainty.

On other matters, do you have any particular sectoral focus ongoing right now?
Within the scope of our general competition promoting activities we will be publishing several reports in which we focus on and analyse various competition issues. One specific government assignment is for a review of the food sector. To contribute to new and relevant knowledge in areas related to competition and public procurement is an important part of creating an understanding of the issues, while also moving towards finding solutions to them.

Ultimately our work is about creating better conditions for companies and consumers. Well-functioning competition in the markets favours all lawful companies, as well as consumers. And visible and efficient competition supervision is a prerequisite for well-functioning markets. This is an important task.

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Sarah Hoskins is a Senior Associate in Mannheimer Swartling’s EU & competition group, based in Stockholm. E-mail: sarah.hoskins@msa.se

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