Protocol from Board of Trade Association with discussion of pricing not found to intend price fixing

07 February 2008

Henrik Nilsson, Sanna Berg

In a decision on 1 November 2007, the Swedish Market Court upheld a ruling by the District Court declining an action for administrative fines brought by the Swedish Competition Authority against a Trade Association.

The Association of Car-Towers, MRF-Bärgarna (”MRF”) is a non-profit trade organisation, which owns Assistancekåren Sweden AB (“Assistancekåren”). Members of the MRF are companies practicing vehicle recovery services, typically towing of incapacitated vehicles, under the trade mark Assistancekåren. The members of MRF are committed to sign cooperation agreements with Assistancekåren to establish a nationwide net of recovery services. Assistancekåren also provides administrative help to members when making agreements with customers by receiving agreement proposals from the customers and sending it on to the member companies.

Until the end of 1997 Assistancekåren had an exemption under the competition rules for a cooperation agreement, which allowed it to enter into central price agreements with certain clients. In March 1998 Assistancekåren was again granted an exemption for its cooperation agreement, although the right to enter into central price agreements was removed.

After 1998 the agreements between the member companies and certain customers, especially the insurance companies, have remained unchanged. The agreements have been adjusted with an annual price adjustment corresponding to the transport price index (“TPI”), calculated and provided by the Central Bureau of Statistics (“CBS”).

On 22 and 23 November 2000 a board meeting was held within the MRF. In the meeting protocol it was noted that the chairman, who had been in contact with the insurance industry regarding new prices, addressed the question of TPI and the agreements. Further it was noted that it was desirable to adjust prices above the TPI increase because of higher diesel and wage costs.

In 2002 the Swedish Competition Authority received complaints about alleged price fixing, and in 2003 the Authority launched an investigation including a dawn raid. The Competition Authorities applied to the District Court for summons and called for administrative fines to be imposed on the grounds of price fixing.

In 2006 the District Court dismissed the charge on the grounds that it had not been proved that the members would be informed about the board’s decision. The Competition Authority appealed the ruling to the Market Court.

The Market Court found that the statement in the protocol had not been communicated with the members of the association, nor with anyone else, and no such intention had been proven. The Court referred to the articles of association of the MRF, and established that in the articles there was no provision that authorised the Board or the MRF itself to coordinate or regulate their member’s behaviour on the market. According to the investigation it could not be shown that the statement in the protocol could be related to any of the purposes in the articles.

The judgment illustrates the fact that the burden of proof is relatively high for the Competition Authorities to prove a violation of antitrust rules. The Director General of the Competition Authority, Claes Norgren, says in a comment that:

“The ruling will have consequences for the possibilities to intervene against cartels, and it does also raise important questions concerning evidence.”

(The Market Court delivered its decision on the 1 November 2007 in case no. MD 2007:23, Dnr A 5/06)

Sources: The Market Courts’ decision 2007:23, available at: http://www.marknadsdomstolen.se/avgoranden2007/Dom07-23.pdf (in Swedish only)

Comment by Director General Claes Norgren, available at: http://www.kkv.se/t/NewsPage____2740.aspx(in Swedish only)