The EEA competition rules and the role of the Authority
Competition is a basic mechanism of the market economy and encourages companies to provide consumers with products that consumers want. It encourages innovation and pushes down prices. In order to be effective, competition needs suppliers who are independent of each other, each subject to the competitive pressure exerted by the others. The competition rules in the EEA Agreement are enforced by the Authority in Iceland, Liechtenstein and Norway.
The competition rules
The competition rules in the EEA Agreement are equivalent to the competition rules in the EU. The rules prohibit agreements and conduct that distort or restrict competition (Article 53). Such conduct can include price-fixing and market-sharing arrangements, which are almost always prohibited. Other types of agreements and conduct that restrict competition are not prohibited if the restrictions are necessary to create economic improvements which benefit consumers.
The competition rules also prohibit dominant firms from abusing their market power (Article 54). That is the case, for example, for certain practices aimed at eliminating competitors from the market.
In addition, the rules provide for a regime for the control of mergers and acquisitions which may impede effective competition in the EEA territory.
The role of the Authority
The EEA competition rules are enforced across the EEA by the Authority and by the European Commission. The Authority enforces the prohibitions in Iceland, Liechtenstein and Norway and undertakings active in those EFTA States must comply with the EEA competition rules. The Authority has equivalent powers and similar functions to those of the Commission. The Authority is, like the Commission, independent from the States over which it has jurisdiction.
The Authority enjoys wide powers of investigation and may impose fines of up to 10% of global turnover on undertakings that breach the competition rules. Since 20 May 2005, national competition authorities are also empowered to apply fully the two prohibitions contained in the EEA competition provisions (Articles 53 and 54 EEA) in order to ensure that competition is not distorted or restricted. National courts may also apply the two prohibitions in order to protect the individual rights conferred on citizens by the EEA Agreement.
A system for co-operation with national competition authorities and national courts has been put in place to ensure uniform interpretation of the EEA competition rules. The rules on co-operation are set out in the Authority:
- Notice on cooperation within the EFTA Network of Competition Authorities
- Notice on the co-operation between the EFTA Surveillance Authority and the courts of the EFTA States in the application of Articles 53 and 54 of the EEA Agreement
The Authority also has exclusive jurisdiction to take action against any EFTA State that enacts or maintains in force measures concerning public undertakings or undertakings with special or exclusive rights that are contrary to provisions in the EEA Agreement, including Articles 53 and 54.
More generally, the Authority seeks to develop and maintain uniform surveillance throughout the EEA and to promote homogeneous implementation, application and interpretation of the EEA competition rules. The Authority and the Commission co-operate to that effect, both formally and informally. As Articles 53 and 54 are identical in substance to the corresponding rules of the EC Treaty, the case law of the European Court of Justice and Court of First Instance is relevant for the interpretation of those Articles.
In the field of merger control, the rules on jurisdiction are such that the Commission in practice handles all cases. The Authority and the competition authorities of the EFTA States are entitled to be involved in cases that raise competition concerns in those States.
The Authority also ensures that the EEA competition rules are properly implemented into the national legal systems of the EFTA States.