Swedish Market Court allows municipalities standing, but denies motion for interlocutory injunction against failure to supply electric street lights

26 March 2007

Henrik Nilsson, Maria Mannberg

The Swedish Market Court, on November 15th 2006, decided that while the claimants, two municipalities did have standing under the Swedish Competition Act under the circumstances, the Court did not grant an interlocutory injunction requiring an electric utility company to continue to supply municipal street lighting services.

The case was brought against the Ekfors company group (Ekfors), a conglomerate which, inter alia, owned the local electric power production and distribution companies as well as the networks of street lights in question. The concerned municipalities, Haparanda and övertorneå, are both located on the Finnish border in the far north of Sweden (enjoying daylight between circa 8.30 AM and 1.30 PM during November). The background of the matter was an ongoing conflict between the municipalities and Ekfors concerning prices and terms. As a result of this conflict, Ekfors had failed to continue providing the street lighting service, encompassing 2496 street lights, which it otherwise by agreement should have recommenced providing on 15 August.

Ekfors contested the municipalities’ claims, and demanded that the action be dismissed, arguing that the municipalities lacked standing according to the Swedish Competition Act. When the Competition Authority decides not to issue an injunction following a complaint, the matter may be pursued before the Market Court by “an undertaking”. Ekfors maintained that as the municipalities did not provide street light as an economical or commercial service and thus, when providing light in their jurisdictions, the municipalities were not undertakings and hence lacked standing before the Market Court. Furthermore, the initial action brought before the court had only been against one of the Ekfors companies, and that company was not the one directly concerned in this matter. This should also be grounds for dismissal. As to the contested networks of street lights, Ekfors maintained that they did not constitute an “essential facility” and that nothing prevented the municipalities from providing street lighting by other means.

The municipalities responded that they supplied streetlights in accordance with commercial agreements with the National Road Administration and that light was also supplied in places where people are obliged to pay to use the available services, e.g. parking lots and bus stations.

After an oral hearing, the Court found that the municipalities were not acting solely as authorities when supplying streetlight, since there were, at least partially, commercial aspects to this activity, and thus found they should be awarded standing. The court also decided to regard the Ekfors group of companies as one economic unit.

However, the majority of the court (two members, including the President with the casting vote) found on the facts that had been presented before the court did not constitute sufficient basis for any interlocutory injunction against the companies.

The other members of the court dissented. Like the others, they found that there were no grounds for dismissal, albeit on a somewhat different basis. However, they did find that the refusal to supply electricity did constitute an abuse of a dominant position, whereby an interlocutory injunction should be issued against Ekfors to immediately cease with that infringement of the Competition Act under penalty of a monetary fine.

Source: Swedish Market Court decision 15 November, 2006 in case A 4/06, available here.