Quick reactions prevented paint industry from being stained – The SCA investigated possible anti-competitive conduct in trade association

By Morten Nissen, Alexander Brøchner

08-2021

A recent investigation by the Swedish Competition Authority (“SCA”) into discussions in a trade forum demonstrates that it is crucial that participants react quickly if any information that may potentially be considered as anti-competitive is exchanged.

The SCA investigated whether companies within the manufacture and retail sale of paint and construction products had infringed the prohibition of anti-competitive cooperation by agreeing or coordinating a collective boycott of certain evaluation systems or by exchanging strategic information.

The investigation was initiated on the basis of email correspondences, which was started by Jotun Sverige AB (“Jotun”) and directed to members of the Professional Plasterboard Treatment board (brancherådet Yrkesmässig Behandling av Gipsskivor, “YBG”).

The investigation concerned the companies’ future use of various evaluation systems and whether the companies had illegally exchanged strategic information in these emails. The relevant evaluation systems were the three main evaluation systems in Sweden (Basta, Byggvarubedömningen and SundaHus), which assess the products from an environmental and sustainability perspective when a product is registered. Registration of the product is usually required by the customers and may entail that a supplier has to register its products in different systems in order to be able to bid in tenders. 

The emails concerned contained a reference to a recommendation from the trade association Sveriges Färg och Lim företagare (“SVEFF”) in favour of the Basta system. The recommendation stated that SVEFF considered Basta to be the evaluation system which best met the criteria for an evaluation system on the Swedish market. This recommendation was, by at least one company perceived as a decision by SVEFF’s members. 

Further, the emails contained Jotun’s decision to only use Basta in the future, Jotun’s internal policy on the matter and Jotun’s future conduct towards customers. The SCA considered that Jotun’s decision could be interpreted as advocating that the companies should agree on a common approach in relation to choosing which evaluation system to use in the industry. The same interpretation could be made in relation to indications from some of the other companies, as their views on the different evaluation systems were discussed, and since they initially supported the idea of reaching a consensus regarding the registrations of products and treatment of customers in relation to evaluation systems.

Flügger AB (“Flügger”) (a member of YBG) quickly disassociated itself from the message of the email, which Flügger perceived as a call for coordination of the companies’ behaviour. This was quickly followed by other companies who rejected the message of the email and declined further common discussions on this issue.

Inter alia due to the quick reaction by Flügger, and the following reactions by other members, the SCA concluded that the conduct did not appear to have led to any unlawful coordination, even though the exchanged information could potentially be considered as strategic information that had the possibility of removing  uncertainty concerning the conduct of competitors.  

The conclusion by the SCA was based on the facts that:

  1. Flügger AB quickly disassociated itself from the conduct and clearly stated that the company considered the conduct as an infringement of competition law. Following this several other large companies and the chairman of YBG also disassociated themselves from the conduct. 

  2. The investigation did not reveal any changes in the companies’ behaviour regarding the product registrations in the various evaluation systems based on the correspondence, 

  3. The disassociation that was actually made was assumed to have reduced the risk of any anti-competitive coordinating conduct.

Because of this the SCA found that there was no reason to continue the investigation of this matter.

The decision demonstrates how decisive a quick and clear disassociation from possible anti-competitive conducts can be in relation to significantly reducing the risk of infringing competition law when meeting with competitors. Absent this initial reaction and the precedence, it constituted for the other companies, it is likely that several of the companies would have been found to infringe competition law.

Moreover, the decision demonstrates that the exchange of this information only constituted a potential restriction by effect, as the lack of a documented effect entailed that this did not constitute an infringement.

For more information, please refer to the decision of 8 July 2021 from the SCA in Swedish here.

For more information please contact Morten Nissen or Alexander Brøchner

 

 
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