Horizontal Restrictions on Competition
Horizontal competition restrictions are agreements or proceedings restricting competition between actual competitors or potential competitors operating on the same production or distribution level. Harmful effects of such intentional horizontal co-operation are presumed in the law. Serious restrictions of competition such as price-fixing, production limitations and market sharing cartels are always prohibited.
In particular, it is prohibited to conclude agreements, decisions and procedures that:
directly or indirectly fix purchase or sale prices or other terms and conditions of sale;
restrict or monitor production, marketing, technical development or investments;
share markets or supply sources;
set different terms and conditions to different contracting parties in respect of similar performances, putting some contracting parties in a weaker competition position; or
make the contract conditional upon the contracting party accepting additional performances which are, due to their nature or commercial practice, unrelated to the contract.
The list above is not exhaustive. Prohibited cooperation between companies may appear as actual agreements between the parties or similar mutual understandings. It may therefore even be prohibited for a company’s representatives to unofficially disclose pricing information of the company to a representative of a competing company or discuss about it.
Serious competition restrictions may never be of minor importance. Remarkable fines are typically imposed both to small and big companies. However, the party making the first notification of a cartel may fully or partially be released from the obligation to pay a fine. Also other members of a cartel that provide the authorities with significant information on the cooperation can be partially exempted from the liability to pay the fine.
Not all cooperation between the companies is prohibited. There is an exception in the legislation according to which competition restrictions that as a rule are prohibited, can be permitted if they further competition more than they restrict it. These include e.g. research and development agreements as well as production, procurement and commercialisation agreements. Co-operation between the companies is allowed if it:
contributes to improving economic efficiency or to promoting technical or economic progress;
allows consumers a fair share of the resulting benefit;
does not impose additional restrictions which are not indispensable; and
does not eliminate competition in the market.
Companies shall themselves assess whether their co-operation is allowed (so-called self-assessment). When making the assessment, companies may use guidelines given by the competition authorities as signposts. Since the exemption order system has been abolished it is not possible to get a prior evaluation from the authority on whether a form of cooperation is prohibited or not.