Swedish Competition Policy
and Public Procurement


The market economy is based on the existence of competition among companies. Competition strengthens the ability of Swedish business to carve out a share of international markets. It stimulates better use of national resources. Various studies indicate that there is not enough competition in important segments of the Swedish economy. Competitive pressure must intensify, both in privately and publicly owned operations. Greater competitive pressure benefits consumers by keeping prices down and ensuring a larger, more varied range of goods and services. Competition should occur on a level playing field, where it is worthwhile and possible for new players to enter the market. There must consequently be rules that prevent companies from engaging in anti-competitive collusion and abuse of market power. Public procurement rules also contribute to more efficient use of national resources.

Competition policy
In recent decades, the importance of competition to economic growth has become increasingly clear. Both well-established market economies and former centrally planned economies are now moving rapidly toward a greater degree of competition and market thinking.

The continuous struggle in the marketplace forces companies to constantly rethink their strategies in order to foresee the future needs of consumers. This is a powerful force behind technological and economic innovation.

One reason behind the creation of a "single market" in the European Union (EU) is the economic advantages that greater competition can provide. These advantages are substantial. One of the fundamental concepts of European economic integration is to generate greater competition, thereby accelerating economic growth in all member countries.

In international terms, Sweden is a small economy with extensive regulation and many markets where a few large players dominate. The government's competition policy is therefore designed to open more markets to competition, while carrying out deregulation both in the the public and the private sector. It is important to have clear, firm rules for market players. On July 1, 1993, a new Competition Act went into effect.

The Competition Act
The new Competition Act (SFS 1993:20) is based primarily on the EU’s common rules on competition.

The Act prohibits anti-competitive cooperation among undertakings (in practice, mainly companies) which have as their object or effect the prevention, restriction or distortion of competition in an appreciable way. The term undertaking also refers to associations of undertakings, for example trade organizations.

The Act also prohibits the abuse by one or more companies of a dominant position in the Swedish market. It is not illegal to have a dominant position, but the abuse of this position is against the law.

Small and medium-sized companies are important to competition in the Swedish market. The new Competition Act therefore focuses largely on prohibiting behavior that is especially detrimental to small companies.

Block exemptions
The Swedish government has issued time-limited block exemptions from the ban on anti-competitive collusion. All Swedish block exemptions except one are based on corresponding block exemptions in EU law. Block exemptions have been issued for: exclusive distribution agreements, exclusive purchasing agreements, motor vehicle distribution and servicing agreements, specialization agreements, research and development agreements, dissemination of technical knowledge, franchise agreements and cooperation within chains in the retail trade.

Negative clearances and exemptions
Companies that are uncertain as to whether an agreement or practice violates any of the prohibitions in the Competition Act can apply to the Competition Authority for a negative clearance. Such a ruling means that the Authority believes that the agreement or practice in question does not violate the Competition Act. Exemptions from the prohibition against abuse of a dominant market position cannot be granted.

Cooperation among small and medium-sized undertakings may have positive effects that outweigh their negative impact on competition. If the Competition Authority believes this is the case, it may grant an exemption from the ban against such cooperation, provided that the applicant can demonstrate that the agreement

1. contributes to improving the production or distribution of goods or to promoting technical or economic progress;

2. allows consumers a fair share of the resulting benefit;

3. only imposes on the undertakings concerned restrictions which are not indispensable to the attainment of the objective referred to in point 1; and

4. does not afford such undertakings the possibility of eliminating competition in respect of a substantial proportion of the products in question.

Monitoring of acquisitions
The new Competition Act also contains rules on acquisitions and mergers of companies. If the companies involved together have sales exceeding SEK 4 billion, the Competition Authority must be notified of the acquisition. The agency may block the acquisition only if it would lead to obvious long-term negative effects. The system is flexible, since portions of acquisitions can be prohibited.

Mandatory disclosure
Companies are obligated to disclose to the Competition Authority the facts it needs for its investigations. The agency may also require municipalities and county councils to supply information on the expenditures and revenues of their financial or commercial operations.

Sanctions
The Competition Authority may impose fines on a company until it ceases to violate the provisions of the Competition Act. To effectively prevent companies from violating the prohibitions against anti- competitive cooperation and abuse of dominant market position, penalties are levied against companies that engage in anti-competitive practices. The maximum penalty is 10 percent of annual sales. Such penalties are intended as a form of punishment, i.e. they are levied for prior violations.

The Competition Act also contains provisions for civil sanctions aimed at preventing companies from violating its prohibitions. Agreements that fall within the prohibition against anti-competitive cooperation are legally void. A company may also be liable for payment of damages to those who have been harmed by its violation of the law.

The Competition Authority
The Competition Authority (Konkurrensverket) is the central government agency for competition matters. Its task is to promote effective competition in private and public sector operations for the benefit of consumers. The work of the Competition Authority focuses on the following branches of activity:

International activities
Another key element of the Competition Authority’s work is its international tasks. It is the national government agency authorized to work with the European Commission to enforce EU competition rules. Cooperation with the antitrust agencies of other countries is important in cases where multinational corporations and market conditions are involved. The Competition Authority also participates actively in such international agencies as the Organization for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD).

Enforcement and appeal system
The Competition Authority is the main government agency responsible for enforcing the Competition Act. Two courts of law, the Stockholm City Court and the Market Court, adjudicate cases involving this Act. The Competition Authority's decisions on exemptions, its negative clearance and its injunctions ordering a company to desist from a certain practice may be appealed to the Stockholm City Court. The Competition Authority pleads its case at the Stockholm City Court when it wishes to impose a penalty on a company or prohibit an acquisition or merger. The Competition Authority therefore has the role of prosecutor in antitrust cases, both in the Stockholm City Court and in the Market Court.

Stockholm City Court
Competition cases are heard by one department of the Stockholm City Court (Stockholms tingsrätt). In such cases, the City Court consists of a specially convened panel including experts in economics. During the main hearing, the court normally consists of four members, of whom two must be lawyers with experience as judges and two must be experts in economics. When the two sides concur and the case is of a simple nature, the main hearing may take place in "simplified form" with oral arguments before a single lawyer with experience as a judge. The latter may also issue a ruling following the main hearing. An economic expert may also participate in such cases. Rulings by the Stockholm City Court on competition cases may be appealed to the Market Court, which is the final court of appeal on such matters.

The Market Court
The Market Court (Marknadsdomstolen) is a specialized court that handles cases related to the Competition Act as well as cases involving the Marketing Act and other consumer and marketing legislation.

In cases related to these laws, the Market Court is the second and highest court of appeal. The Market Court consists of a chairman and a vice chairman plus five special members. The chairman, the vice chairman and one of the special members must be lawyers with experience as judges. The other special members are experts in economics. There are a number of deputies for the regular members of the Court. The members and their deputies are appointed by the government. All seven members normally participate in hearings. The chairman is a full-time employee of the Market Court, whereas for the other six, membership is an extra assignment. Young lawyers serve as secretaries to the Court, which has its own administrative office.

Public procurement
In Sweden the EU Council directives on public procurement have been implemented by means of the Public Procurement Act. Contracting authorities must procure goods and services in a businesslike, competitive and non-discriminatory (objective) way. The Act consists of seven sections:

Who must observe the Act?
The Act applies to economic bodies that award public works contracts: central government agencies, municipalities, county councils and ecclesiastic bodies. Also covered by the Act are certain publicly owned companies, associations and foundations established to perform tasks for the benefit of the public and not for industrial or commercial purposes. In the fields of water, energy, transport and telecommunications ("utilities sectors") the Act applies to companies in which the central government, municipalities or county councils exercise direct or indirect influence, as well as to private companies that conduct operations with special permission from a central or local government agency.

The above-described organizations must decide whether they are covered by the Act. If a procurement is appealed and damages are sought, however, a court will ultimately determine whether the organization is within the jurisdiction of the Act.

Threshold values
The Act applies to large as well as small procurements. In the case of procurements over certain threshold values, the EU directive's rules on advertising, time limits etc. must be applied. The threshold values are denominated in European Currency Units. For goods and services they are ECU 200,000 and for works contracts ECU 5,000,000.

Procurements under the threshold values must follow the same basic principles as procurements over these values, but the tender procedure is not regulated in as much detail.

The Board for Public Procurement
The National Board for Public Procurement (Nämnden för offentlig upphandling) was established in March 1993 and consists of the board itself and a secretariat. The secretariat, headed by an Administrative Director, handles day-to-day operations and is responsible for contacts with public agencies, organizations and the public.

The tasks of the Public Procurement Board are

SEK 1 (Swedish krona) = USD 0.15 or GBP 0.10 (June 1996)


This fact sheet is part of SI’s information service. It can be used as background information on condition that the source is acknowledged.

September 1996
Classification: FS 80 b Qadb
ISSN 1101-6124



Fact Sheets on Sweden