On 1 January 2021, fundamental amendments to section 15 of the Competition Act and the procedure for exemptions from the prohibition provisions of sections 10 and 12 of the Act came into force, as provided for in Act No. 103/2020 on amendments to the Competition Act.
Instead of a system where an exemption is subject to the prior approval of the Competition Authority, a so-called self-assessment system has now been introduced. This means that companies intending to cooperate must now assess for themselves whether such cooperation complies with competition law. Likewise, business associations must assess whether their activities comply with the requirements of competition law. The Competition Authority's power to grant exemptions from the prohibition on illegal collusion and anti-competitive practices to companies and business associations has therefore been abolished.
The Competition Authority has, in parallel with these changes, published guidance on the application of Article 15 of the Competition Act. They address the key considerations that companies should bear in mind when assessing whether their restrictive cooperation meets the conditions of Article 15 of the Act. They are part of an effort to make it easier for companies to comply with the law.
Further guidance from ESA
Guidelines of the Competition Authority take into account the relevant guidelines issued by the EFTA Surveillance Authority („ESA“) on the self-assessment of undertakings and on the application of competition rules to horizontal and vertical cooperation between undertakings. The Competition Authority's guidelines supplement these ESA guidelines:
The precedent value of older exemption decisions
In preparing the guidelines, account was taken of rulings from Icelandic and European case law. To a certain extent, companies can take into account the previous decisions of the Competition Authority and, where applicable, rulings from the Competition Appeals Board and the courts when assessing whether a collaboration fulfils the conditions of Article 15 of the Competition Act. However, it should be borne in mind that the guidance value of older decisions may be affected by the fact that they were taken under a different legal framework to that which came into force on 1 January 2021. Thus, older decisions may have limited guidance value in a self-assessment system with regard to the burden of proof. This is discussed in the Competition Authority's guidelines, see paragraphs 59-61 and 94.
Exemptions granted on the basis of an older provision – Grace period granted until 1 July 2021
The amendments to Article 15 of the Competition Act, which came into force on 1 January, have resulted in the exemptions previously granted by the Competition Authority under the old provision no longer having the same effect.
With the implementation of the self-assessment system, the role of the Competition Authority is limited to “ex post“ supervision to ensure that the competition law ban on concerted practice is not breached. This also means that after 1 January 2021, the legal basis for exemptions previously granted by decisions of the Competition Authority ceased to exist. After 1 January 2021, the relevant parties that benefited from an exemption under the old system were therefore required to conduct a self-assessment in accordance with Act No. 103/2020.
The Competition Authority, however, considered it reasonable to give companies that had received an exemption which expired at the turn of the year a grace period to assume their responsibilities in the new legal environment. It was therefore considered that cooperation for which a exemption had been granted met the exception conditions of Article 15 of the Competition Act, without further review, until 1 July 2021. That deadline has now passed.
Great importance regarding proof
The Competition Authority recommends that companies immediately assume the responsibility that arises from the legislative changes, namely to assess for themselves whether the conditions for an exemption under Articles 10 and 12 of the Competition Act are met for the relevant co-operation. It should be emphasised that following the legislative changes, the Competition Authority cannot provide companies with a binding opinion in advance as to whether a particular course of conduct fulfils the statutory conditions.
It is important to draw special attention to the fact that this change in procedure and in the responsibilities of companies and company associations has significant implications for the burden of proof. The burden of proof that a company's self-assessment has been adequate and that the conditions of Article 15 of the Act are met will rest with the companies concerned. Companies must be able to demonstrate that the collaboration has, from the outset and throughout its existence, fulfilled all the conditions of Article 15 of the Competition Act, and they must do so on the basis of written evidence, cf. further discussion in the Competition Authority's guidelines on the application of Article 15. The Competition Authority's role will then be solely to assess whether the partners have succeeded in proving the foregoing, should a investigation be launched.
It is therefore important to bear in mind that exemptions granted by the Competition Authority under the former provision of Article 15 of the Competition Act cannot relieve the company concerned of the obligation to assess for itself whether the conditions of Article 15 are met, even where it concerns ongoing and continuous cooperation that the Authority has previously assessed under the former section 15 of the Competition Act. Particular attention must be paid to whether the Competition Authority imposed specific conditions on the granting of an exemption, which were aimed at modifying the cooperation in question or its framework in order to ensure that it fell under Article 15(1) of the Competition Act. Collaborating companies cannot assume that the same conditions set by the Competition Authority in the previous system will ensure that a collaboration meets the conditions of Article 15 of the Competition Act after 1 January 2021. Companies in a self-assessment regime must assess, based on the circumstances at any given time, whether changes to the framework of the collaboration mean that it can benefit from an exemption from the prohibition in Articles 10 and 12 of the Competition Act.
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