On 29 June, the Norwegian Competition Authority (NCA) issued a Statement of Objection (SO) against Elkjøp’s proposed acquisition of Eplehuset. On 31 July, however, the Authority informed the parties that the transaction had been approved, allowing the acquisition to proceed as planned.
Oslo Economics assisted Elkjøp and Eplehuset through their legal advisers, Kvale and Arntzen Grette, after the NCA in April of this year considered prohibiting the transaction.
The NCA’s concerns were that the acquisition would eliminate competitive pressure between the parties in the sale of Mac and iPad products to consumers, and thereby lead to a substantial lessening of competition in the form of higher prices or reduced expertise and advisory services relating to these Apple products.
Oslo Economics contributed to the process by addressing the NCA’s assessments and conducting its own analyses of the competitive effects of the transaction. One aspect that made the case particularly interesting was that the Authority’s theories of harm concerned competitive effects relating to products from a single supplier with strong market power and control over retailers. Standard economic theory suggests that such suppliers use this control to prevent retailers from exercising market power downstream, for example by increasing prices.
The NCA provided a brief explanation for why the acquisition was ultimately approved despite its earlier SO (translated from Norwegian):
“Following the notice, the Norwegian Competition Authority carried out further analyses and assessments and, based on an overall evaluation, concluded that there are insufficient grounds to prohibit the merger on the basis of horizontal non-coordinated effects. Among other factors, the Authority attached weight to a renewed assessment of the closeness of competition between the parties, competitive pressure from other market participants, and new information submitted by the parties regarding Apple’s influence on competitive parameters in the downstream market. Based on an overall assessment, the Authority concluded that the merger would not significantly impede effective competition in the Norwegian markets for the sale of computers and tablets to private consumers.”
It is worth noting that the Authority specifically refers to Apple’s influence on competitive parameters in the downstream market in its assessment. Prior to the notice, the NCA had been made aware of Apple’s unique position as a supplier of Mac and iPad products and the implications this has for so-called horizontal non-coordinated effects. Nevertheless, the Authority chose to issue a SO before ultimately reversing its position.
The Oslo Economics team consisted of Jostein Skaar, Arne Rogde Gramstad and Emil Mathias Strøm Halseth.
We congratulate Elkjøp and Eplehuset on the approval of the transaction.
Learn more about how we assist clients in merger reviews and competition law matters here.
