Doing Business In.. 2024 Comparisons

Norway has a legal system based on division of power between the different branches of government (ie, the legislative, executive and judicial branches). The legal system is generally based on written statutes adopted by the National Assembly (Stortinget). In certain areas, case law is the predominant source of law. Norway is a member of the European Economic Area and is required to adopt EU legislation in most areas.

The court system is based on general courts covering all or most legal disputes, both legal and criminal. There are special courts in certain areas. The regular court system consists of city/district courts, appeal courts and the Supreme Court.

As a general rule, foreign investments do not require approval by the Norwegian authorities. However, the Norwegian Security Act (LOV-2018-06-21-24) contains certain provisions that may impose restrictions on foreign investments.

The Security Act does not discriminate between foreign or national investments but applies equally to all undertakings that have been brought within the scope of the Act. Under Section 1-3, Norwegian ministries are empowered to bring undertakings operating within the respective ministry’s field of responsibility under the scope of the Security Act.

A company may be brought under the scope of the Security Act if it handles:

• classified information;
• information or infrastructure of major importance for fundamental national functions; or
• activities of major importance for fundamental national functions.

This means that the law typically applies to companies in the telecommunications, defence, transport and energy sectors and companies involved in food and water supply too.

Where an undertaking or company has been brought within the scope of the Security Act, an acquirer must notify the relevant ministry if it is acquiring a “qualified ownership interest”. Under Section 10-1, a “qualified ownership interest” is achieved if the acquirer directly or indirectly obtains:

• a third of the company’s share capital, interests or votes;
• a right to become owner of a third of the share capital or interests; or
• significant influence over the company through other means.

When assessing whether the acquirer has acquired a “qualified ownership interest” under Section 10-1, shares which are owned or taken over by the acquirer’s associates have the same status as the acquirer’s own shares. Under Section 2-5 of the Securities Trading Act, this includes shares or other equity interests that are owned or procured by:

• the spouse or a person with whom the acquirer cohabits in a relationship akin to marriage;
• the acquirer’s underage children, and underage children of a person the acquirer cohabits with;
• an undertaking within the same group as the acquirer;
• an undertaking in which the acquirer themselves or a person as mentioned above or below exercises influence as stated in Section 1-3(2) of the Private Limited Companies Act, Section 1-3(2) of the Public Limited Companies Act or Section 1-2(2) of the General and Limited Partnerships Act; or
• a party with whom the acquirer must be assumed to be acting in concert in the exercise of rights accruing to the owner of a financial instrument, as well as in cases where a bid is frustrated or prevented.

There is no publicly available list of companies falling within the scope of the Security Act. However, the National Security Authority may provide guidance on whether a company has been brought within the scope of the Security Act on a case-by-case basis.

In addition, the King-in-Council (ie, the government) has an ex officio provision in Section 2-5 of the Security Act, allowing the government to intervene in activities that “may entail a risk that is not insignificant that interests of national security will be threatened”. This provision applies irrespective of the distinct provisions of ownership control. There is no time limit on the application of this provision. It therefore applies to both planned and ongoing activities.

If an undertaking or company is brought within the scope of the Security Act, notification of the acquisition of a “qualified ownership interest” to the relevant ministry is mandatory. Under the Regulation of the Security of Undertakings issued on the basis of the Security Act (FOR-2018-12-20-2053), the notification must include the following:

• the acquirer’s name, address, company register number, birth date or similar personal identification number;
• the company register number of the company that the acquisition relates to;
• the acquirer’s ownership share after the concerned acquisition is completed;
• the ownership structure of the acquirer;
• the names of the person that are members of the acquirer’s board of directors;
• the names of the persons that are members of the acquirer’s management;
• possible relations between the acquirer and other existing owners of the company that the acquisition relates to;
• the acquirer’s ownership interests in other companies that are covered by the Security Act;
• the acquirer’s ownership interests in other companies within the concerned sector;
• the acquirer’s annual turnover and annual accounts for the last five years, to the extent this information is available; and
• other circumstances that the acquirer assumes may be of relevance for the assessment of whether the acquisition will be approved.

Upon receiving the notification, the relevant authority must issue its decision within 60 working days. If the relevant authority requests further information from the undertakings concerned within 50 working days, the deadline is suspended until this information is provided.

If the relevant authority does not consider the acquisition to be a potential threat to national security, it will clear the acquisition and notify the acquirer of the clearance. If the relevant authority identifies a potential threat, it will submit the acquisition to the Norwegian government for a final decision. The Security Act does not impose a deadline on the government to reach a final decision.

Notification to the relevant ministry does not have a suspensory effect on the transaction, and approval may be obtained both before and after closing. However, if approval is refused, the transaction will have to be reversed.

The relevant authorities may allow an acquisition on the condition that the acquirer implements measures or imposes arrangements to mitigate any concerns the relevant authority may have. These conditions may, inter alia, relate to protection of sensitive information and restrictions on the resale of shares, etc.

There is no procedure for administrative review or appeal of the government’s refusal to approve an acquisition under the Security Act. The refusal may, however, be brought before the ordinary courts under the general rules regarding judicial review of administrative decisions under Norwegian law.

Judicial review of administrative decisions is limited to reviewing:

• whether the government had a legal basis for their decision;
• whether the government complied with the procedural rules; and
• whether the refusal to approve the acquisition was based on the correct factual basis.

The court may also decide whether the decision was in accordance with certain fundamental principles of objectivity and equality in administrative law.

If the court concludes that the refusal to approve the acquisition was unlawful, the refusal will be invalidated. In so far as the grounds for invalidation are repairable, the authorities may issue a new refusal after a new processing of the case. Both the seller and the buyer may bring a refusal before the courts.

Amendments to the Security Act

In June 2023, the Norwegian Parliament adopted a set of amendments to the Security Act. These amendments included an expansion of the scope of businesses that may be the subject of a decision to be brought within the scope of the Security Act, to include businesses that are of vital importance to national security interests and businesses of significant importance to fundamental national functions or national security. The amendment came into force on 1 July 2023.

In addition, the Norwegian Parliament also adopted the following amendments that have yet to come into force.

• A mandatory notification obligation will also apply for acquisitions of a qualified ownership interest in a business holding supplier clearance for having access to information classified as confidential or higher.
• Lowering the thresholds of qualified ownership interest from one third to at least 10% of the share capital, interests or votes in the target company, with recurring filing obligations at 20%, one third, 50%, two thirds or 90%, or where significant influence over the company is acquired by other means. In addition to the prospective buyer’s filing obligation, certain transactions may also trigger a notification obligation for the seller and/or target company.
• Introducing a standstill obligation during the case handling and a prohibition against sharing information (eg, in the DD) that may be used for security-threatening activities, unless prior consent from the relevant ministry has been obtained.
• Provisions on administrative sanctions (for failure to notify) and criminal liability (violations of intervention decisions pursuant to Section 2-5 or Section 10-3 of the Security Act).

These amendments are expected to come into force in the second half of 2024. With these amendments, the Norwegian government aims to enhance the effectiveness and comprehensiveness of the Security Act, ensuring that national security interests are adequately protected.

The most common corporate vehicle in Norway is the limited liability company.

The liability of each shareholder in a limited company is restricted to its respective part of the share capital and shareholders are not personally liable for the obligations of the company. There are two forms of limited liability companies: private limited companies (Aksjeselskap, AS) and public limited companies (Allmennaksjeselskap, ASA). Only public limited companies (or a foreign equivalent) may be listed on the Oslo Stock Exchange or Euronext Expand, and there is little reason to establish a public limited company unless it is envisaged to list the company’s shares on one of these two marketplaces.

In terms of listing on Euronext Growth Oslo (a junior exchange which is a multilateral trading facility), the listed entity can also be a private limited company. Joint ventures are normally structured as private limited companies in the Norwegian market.

Private limited companies must have a share capital of at least NOK30,000, whereas a public limited company must have a minimum share capital of NOK1 million.

There are no restrictions on the number of shareholders. Therefore, a Norwegian limited liability company can have just one shareholder. All shares carry equal rights and one vote each, unless otherwise provided for in the articles of association. The articles of association may prescribe different classes of shares – A, B and C shares – eg, with different rights to participate in the profits of the company and/or different voting rights.

Parent companies and shareholders are in general not liable for their subsidiaries’ or the company’s debts or liabilities. However, Supreme Court practice confirms that the corporate veil can be pierced in extraordinary circumstances.

Shareholders exercise their rights through general meetings. The annual general meeting is required to be held each year on or prior to June 30th, to deal with and decide upon the annual accounts and the annual report. Apart from the annual general meeting, extraordinary general meetings may be held if the board of directors considers it necessary, or if the auditor or shareholders representing at least 5% with respect to public limited companies, or 10% with respect to private limited companies of the share capital, demand this in writing.

A limited liability company is formed by one or more founders – which can be foreign companies or individuals – signing a deed of formation. Within three months of the formation, the required share capital must be deposited by the shareholder(s) and submitted for registration with the Register of Business Enterprises. The payment of share capital must be documented in the submitted registration and be confirmed by a bank, an auditor or a law firm.

The company is formally considered a legal entity upon registration.

Establishing a Norwegian company for investors not having local board directors in Norway can take between two and six weeks. If there are local board directors with existing local social security numbers, incorporation can be done in approximately one to two weeks, through a digital solution being offered by the Register of Business Enterprises.

Despite a fairly easy incorporation process, foreign companies often set up business in Norway by acquiring an already established shelf company from a law firm. The investor will in this case immediately receive the registration number and control of the shelf company. Registration of a new name, new board, etc, in a shelf company normally takes between four and six weeks if the board directors do not have a social security number in Norway and must apply for the number, and one to two weeks if the directors are based in Norway and already have a social security number.

All limited companies, regardless of size, have to maintain financial accounts. They also have a statutory book-keeping obligation. However, so-called “small enterprises” are subject to simplified requirements. Companies must prepare and file annual accounts with the Norwegian Accounting Register by July 31st each year. Penalties apply for late filing. The information must be reported in a way that complies with statutory accounting rules, and that reflects a true and fair view of the company’s assets, liabilities, results and financial position in accordance with generally accepted accounting practices in Norway (NGAAP).

Private limited companies are not required to have an auditor if they:

• have operating revenues of less than NOK7 million;
• have a balance sheet amount of less than NOK27 million; and
• have an average number of employees not exceeding ten labour years.

Norwegian law and market practice prescribes a one-tier management structure. Advisory boards are not very common but are sometimes used where the majority owner is based outside Norway.

A public limited company must have a board of directors comprising a minimum of three directors, including the chairperson of the board, while the board of directors in a private limited company may comprise only one director (who may also be the sole shareholder of the company).

Both public and private limited companies are subject to rules regarding employee representation in the board of directors. If the number of employees in the company exceeds 30, the employees will have the right to appoint one director while if the number exceeds 50, the employees will have the right to appoint one third of the directors (but in any event at least two directors). Public limited companies are required to have a general manager/CEO who is responsible for day-to-day management, but this is optional for private limited companies. However, most private limited companies do have a general manager who is registered with the Register of Business Enterprises.

At least half the board of directors plus the managing director must reside in Norway or be EEA citizens residing in an EEA country or citizens of the UK residing in the country. For both public and private limited companies, there are also certain requirements that both sexes are represented on the board of directors. Listed companies must also comply with the Norwegian Corporate Governance Code (NUES) on a comply-or-explain basis, which sets forth certain requirements for the composition of the board of directors and a number of other corporate governance principles.

The board of directors is responsible for the management of the company and should ensure a proper organisation of the business. Under Norwegian law, the board of directors of a private limited company will maintain a share register of all the company’s shares and shareholders while the shares in a public limited company must be registered in the Norwegian Central Securities Depository (VPS). Both share registers are publicly available.

Directors of the board have a fiduciary duty to the company and its shareholders. This duty requires that the board of directors acts in the best interests of the company when exercising their functions and exercise a general duty of loyalty and care towards the company. Members of the board of directors may each be held personally liable for any damage they negligently or wilfully cause the company.

Norwegian employment relationships are regulated by legislation, including the Working Environment Act.

Working conditions are regulated by collective bargaining agreements to a great extent. In principle, collective bargaining agreements are not compulsory but are common in many industries in practice.

Written Employment Contracts

All employment relationships will be subject to a written employment contract according to law. This applies to both permanent and temporary types of employment. There are statutory minimum requirements for the content of the employment agreement. The contract should state factors of major significance for the employment relationship.

The Norwegian government has implemented the EU Directive on Transparent and Predictable Working Conditions (2019/1152). The changes come into force on 1 July 2024 and include additional requirements to the content of employment contracts, including, among other things:

• information about any right to absence paid by the employer;
• the procedure for termination of an employment relationship;
• the various components that make up the salary; and
• any right to competence development that the employer may offer.

Permanent Appointments Versus Temporary Appointments

As a main rule, all appointments of employees will be permanent. Temporary employment is only permitted in special instances provided under Section 14-9(2) of the Working Environment Act. The most common instances of temporary employment are:

• when the work is of a temporary nature and differs from the work that is ordinarily performed in the undertaking (typically in connection with special projects, seasonal employment, etc); and
• for work as a temporary replacement for another employee.

The regulation on temporary employment is strict in Norway. If the employment contract fails to inform about the temporary nature of the employment relationship or if the requirements for temporary employment are not met in respect of a temporarily appointed employee, the employee will be considered permanently appointed, meaning that the ordinary rules for termination, etc, will apply. The employee may also claim compensation and damages for not being employed permanently.

Zero-hour contracts (ie, contracts where the employee is not guaranteed a certain level of work) are not permitted unless the legal requirements for temporary employment are fulfilled.

Under the Working Environment Act, the normal working hours are nine hours per day and 40 hours per week. Employees are entitled to a 30-minute lunch break which is not included in the working hours. Employees in leading and/or particularly independent positions may be exempted from the working time regulations in the Working Environment Act subject to an individual assessment in each case.

Different regulations may follow from collective bargaining agreements, whereby normal working hours are usually 7.5 hours per day and 37.5 hours per week. This is also market practice in many industries. The working time is lower for shift workers, among others.

The total amount of working hours (including overtime hours) may not exceed 13 hours during 24 consecutive hours and 48 hours during seven consecutive days. The 48-hour limit may be averagely calculated over a period of eight weeks.

Additionally, employees are entitled to daily and weekly off-duty time. Under Section 10-8 of the Working Environment Act, the main rule is that an employee is entitled to have at least 11 hours continuous off-duty time per 24 hours and a 35 hour off duty period per seven days. The off-duty period will be placed between two main work periods.

There is no employment at will in Norway. Any termination initiated by the employer must be objectively justified on the basis of circumstances relating to the undertaking, the employer or the employee.

Termination due to circumstances related to the employee include for breach of contract. There is generally a high threshold for termination due to circumstances related to the employee.

A workforce reduction due to insufficient workload, scaling down of operations or restructuring will normally be accepted as sufficient and valid grounds for termination. A loss in revenue is not required. The courts will typically evaluate whether the employer has had a true and complete picture of all relevant facts when making the redundancy decision, and whether proper and mandatory procedural requirements are met. The courts will usually abstain from reviewing the employer’s commercial preference on how to run its business.

Norway has implemented the Collective Redundancies Directive (98/59/EC). If more than ten employees are to be terminated in the same process, mandatory consultations must be conducted with employee representatives and a notification must be sent to the public welfare administration. Nevertheless, discussions with the employee representatives are in any case recommended to ensure good process. Meetings with employee representatives should be documented in minutes.

If not all employees are to be made redundant, the selection of redundant employees must be based on fair and reasonable criteria determined in advance, preferably in discussions with the employee representatives. Typical selection criteria are seniority, competence and social considerations (eg, age, heavy family responsibilities and/or illness or injury).

Termination due to redundancies is only valid if the employer does not have other suitable work within the employing entity to offer the employee. The obligation to offer other suitable work only applies if there are vacancies or any manpower requirements within the undertaking that the relevant employee is qualified for. The employer’s assessment of the existence of vacant positions and the specific employee’s suitability should be documented in writing. The duty to offer vacant positions in the case of redundancies applies on a group level within Norway.

Before any final decision on the selection of redundant employees and termination of employment is made, the employer must summon each affected employee to an individual discussion meeting. The purpose of the meeting is to discuss the reasons for the possible termination of employment and allow the employee to comment on the employer’s assessment, correct or supplement the facts and present possible reasons for why the employee should not be terminated. Minutes must be taken in the discussion meeting.

A notice of termination may be given after the discussion meeting is held and after the employer’s final assessment and decision is made. The notice letter must be in writing and delivered to the employee personally or by registered mail. The notice letter must comply with mandatory formal requirements and contain information about the employee’s rights to request negotiation, instigate legal proceedings and remain in the position while contesting the validity of the termination. The agreed or mandatory notice period will start to run on the first day of the month following the month in which notice was received by the employee. There are statutory rules for notice periods depending on the employee’s age and/or seniority.

There are no statutory rules in Norway stating that employers have to pay redundant and terminated employees a severance pay. However, employers often enter into termination agreements with employees on a voluntary basis as an alternative to the employer’s formal termination. Severance pay may be included in these agreements. Many employers see this as an efficient way to reduce their workforce and eliminate any risks of disputes following the terminations.

If a termination of employment is ruled invalid by the court, the employment continues “as is” unless the court finds its continuation to be clearly unreasonable. The employee will nevertheless be entitled to compensation for invalid termination. The size of the compensation varies depending on the employee’s financial loss as well as other factors.

Employers have an extensive duty according to law and collective agreements to inform and consult with employee representatives on issues of importance for the employees’ working conditions. Although it is not mandatory, the Working Environment Act presupposes that the employees in an undertaking have an employee representative. This representative does not have to be formally elected.

Trade union representation at a company level is not mandatory by law but may be required if the employer is bound by a collective bargaining agreement.

Employees are entitled to claim board representation if the company has more than 30 employees.

Norwegian tax resident individuals are subject to income tax on their employment income, wherever earned, when received.

Individuals that are not tax resident in Norway will, as a general rule, only be liable for tax on the income from work performed in Norway. If an employee stays in Norway for more than 183 days during a 12-month period, or more than 270 days during a 36-month period, the employee will become tax resident in Norway and have to report and pay tax on global wealth and income. Any tax charge on non-resident individuals may be limited where a tax treaty applies.

Income tax is charged at progressive rates up to 47.4%, including social security contributions. The income tax rate is flat at 22%. In addition, a progressive bracket tax is levied for income exceeding NOK208,050 per year, starting at 1.7% bracket tax for the lowest step and 17.6% bracket tax for income over NOK1.35 million. Employers have to deduct income tax from payments of employment income and report it to the Norwegian tax authorities.

Employer social security contributions are charged at 7.89% through the same mechanism. In addition, employers are charged with national insurance contributions on the income. The standard rate is 14.1%, although the rate is reduced for certain geographical parts of Norway. An extra 5% employer social security contribution tax may be levied on income above NOK850,000. Non-Norwegian workers in Norway may also be part of the voluntary Pay As You Earn (PAYE) tax scheme. Under this scheme, the employee will be taxed at a fixed percentage. This amount is deducted by the employer from employment income.

Companies Subject to Taxation

Companies resident in Norway for tax purposes are subject to a flat nominal tax rate, which is currently 22% on their worldwide income. Losses are tax deductible.

If a non-Norwegian company carries out business or participates in business which is managed from Norway, the company will become taxable to Norway on all income and net wealth from the activities. However, tax treaty protection may be available. Tax losses may be set off against taxable income for later years and may be carried forward indefinitely.

VAT

The standard rate of VAT in Norway is 25%. However, a lower rate of 15% is levied on food and an even lower rate of 12% is levied on public transportation and hotel accommodation, etc. The rules on VAT apply to businesses selling goods or services that exceed NOK50,000 within a 12-month period. If so, the business in question must register for VAT in Norway and add VAT on the invoices to clients and customers.

Dividends and Capital Gains

Receipt of dividends and capitals gains on shares is in principle exempt from Norwegian taxation for Norwegian limited liability companies under the participation exemption, provided that:

• the distributing company is genuinely established in an EU/EEA state;
• if outside the EU/EEA, a minimum 10% of the shares must be owned by the Norwegian company for at least two years so long as the distributing company is not resident in a low tax jurisdiction; and
• the distributing company is not receiving a tax deduction for the distribution.

If the receiving company is tax resident in Norway and holds less than 90% of the shares in the distributing company, 3% of the dividends will be regarded as taxable income. As this income is taxed at the general rate of 22%, the effective tax rate of the dividends is 0.66%. This tax does not apply to capital gains.

Dividends distributed from Norwegian tax resident limited liability companies to shareholders resident outside Norway are, in general, subject to withholding tax at a flat rate of 25%. The withholding tax rate is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. Dividends distributed to non-resident limited liability companies resident within the EU/EEA for tax purposes are exempt from Norwegian withholding tax under the participation exemption, provided that the company is the beneficial owner of the shares and can be proved to be genuinely established in an EU/EEA state.

There is no income tax or withholding tax on capital gains on shares in limited liability companies that are resident in Norway realised by a Norwegian corporate shareholder or a non-Norwegian shareholder, provided that the non-Norwegian shareholder does not hold the shares in connection with a trade or business carried out in Norway. Norway does not impose stamp duty on the transfer of shares.

Research and Development Regime

Norway has a tax initiative called SkatteFUNN research and development (R&D). This is a tax scheme designed to stimulate R&D in Norwegian trade and industry. All businesses and enterprises subject to taxation in Norway are eligible to apply for tax relief through the R&D scheme. The Norwegian companies and branches of foreign companies with R&D projects can apply for a deduction of 19% of incurred costs, up to NOK25 million. Even though there are no requirements as to type of business, the projects must:

• be aimed at developing new or better goods, services or production processes;
• be aimed at acquiring new knowledge or new skills;
• benefit the company; and
• be goal-oriented and limited to achieving these goals.

Group companies remain separately taxable entities for Norwegian corporation tax purposes. However, Norwegian companies that are part of the same tax group may consolidate their taxable profits and losses through group contributions. The contributing company can claim a deduction for the contribution in its taxable income, provided certain requirements are met while the recipient can increase its taxable income by the same amount.

The ownership requirement for a Norwegian tax group is more than 90%. The parent company must directly or indirectly hold more than 90% of the shares and the voting rights of the subsidiary at the end of the year in order to be in a position to contribute or receive group contributions.

Group contributions are also available for Norwegian branches of foreign companies that are resident within the EU/EEA.

Interest on loans is generally deductible for Norwegian tax purposes. However, interest may be denied if Norwegian interest limitation rules apply or if the loan arrangement is not in accordance with the arm’s length principle.

There are no general thin capitalisation rules in Norwegian tax law. However, there are regulations that allow for reclassification of income and deductions between affiliated companies. If a Norwegian entity is regarded as being thinly capitalised, a part of the entity’s interest and debts may be reclassified as dividend and equity.

Norway has also implemented interest limitation rules. The applicable rules are dependent on whether the company is part of a consolidated group for accounting purposes. For these group companies, the interest limitation rules apply for interests above NOK25 million for the Norwegian part of the group. For non-group companies, the threshold limit is NOK5 million. Where the threshold amount is exceeded, deductions are limited to 25% of the company’s taxable EBITDA, subject to certain exceptions based on equity comparisons between the Norwegian part of the group and the worldwide group.

The arm’s length principle for related-party transactions is part of the Norwegian Tax Act, implying that the Norwegian tax authorities may increase a taxpayer’s taxable income if the pricing is not in accordance with the arm’s length principle. Both Norwegian and foreign tax authorities monitor multinational companies’ internal pricing, and they demand an increasingly analytical and transparent approach in accordance with the arm’s length principle.

More specifically, foreign companies and other businesses are required to provide information and disclosures for transactions and intercompany balances between affiliated companies. This mainly applies to foreign companies and other businesses that have:

• controlled transactions with a total fair value of NOK10 million or more in the income year; or
• receivables and liabilities with a total value of NOK25 million or more at the end of the income year.

The documentation rules only apply to companies that provide Norwegian tax returns. An exception has also been made from the obligation to prepare special documentation for companies that have less than 250 employees and either have:

• a total sales revenue of not more than NOK400 million; or
• a total balance sheet that is not more than NOK350 million.

However, this exception does not apply to companies, etc, which have transactions with companies resident in a state where Norway is not entitled to receive tax information.

There is a general Norwegian anti-avoidance standard that has been developed by the courts and was incorporated into the Norwegian Tax Act in 2020. Under this standard, transactions that have been made with a main purpose of avoiding taxation may be disregarded by the tax authorities.

There are also specific anti-avoidance provisions regarding discontinuation of tax positions (carried-forward tax loss, etc) in connection with transactions or reorganisations if it is likely that the primary motive was to make use of the tax position.

The Norwegian rules on merger control are set out in Chapter 4 of the Norwegian Competition Act (LOV-2004-03-05-12) and regulations adopted pursuant to it, in particular the Regulation on Notification of Concentrations (FOR-2013-12-11-1466).

Section 18 of the Competition Act stipulates an obligation to notify certain concentrations to the Norwegian Competition Authority (NCA), notably any merger or acquisition of control where:

• more than two of the undertakings concerned have turnover in Norway of more than NOK100 million; and
• the aggregated turnover of the undertakings concerned exceeds NOK1 billion.

The Norwegian merger regulation is modelled after, and to a large extent mirrors, the EU Merger Regulation (EUMR) and will normally follow the guidance and case law of the European Commission and ECJ. Consequently, concepts such as a “concentration”, “undertakings concerned” and “control” echo those of the EUMR.

Joint ventures are subject to merger control if the joint venture is jointly controlled and is “full-function”. “Full-function” entails that the joint venture has the necessary functions to operate as an autonomous economic entity on a lasting basis.

In addition, the NCA may impose a filing obligation on acquisitions of non-controlling minority shareholdings and concentrations falling below the jurisdictional thresholds (within three months of a change of control or conclusion of the agreement). There are examples of interventions by the NCA on these types of transactions in recent years.

Finally, pursuant to the one-stop-shop principle, a concentration that is notifiable to the European Commission is not notifiable to the NCA. This does not apply to products not covered by the EEA Agreement.

There is no deadline for filing a notification of a planned concentration, but the concentration cannot be implemented prior to the NCA clearing the transaction (standstill obligation under Section 19 of the Competition Act).

The Norwegian merger control procedure consists of a Phase I and a Phase II. In addition, the parties may engage in a voluntary pre-notification dialogue with the NCA. The pre-notification process is informal and has no set timeframe. Pre-notification dialogue is recommended in complex cases.

In Phase I, the NCA has 25 working days to assess whether it may want to intervene against the proposed concentration, or alternatively to approve the concentration. Where the NCA notifies the parties that intervention might take place, the NCA must demonstrate that there are reasonable grounds to assume that the concentration will create or strengthen a significant restriction of competition, contrary to the purpose of the Act. If remedies are proposed within 20 working days, Phase I may be extended by ten working days.

The majority of notified concentrations are approved in Phase I.

During Phase II, the NCA must – within 70 working days counted from the day the notification was filed – adopt a commitment decision or issue a statement of objections. If remedies are proposed by the parties after 55 working days, the deadline may be extended by a maximum of 15 working days.

Following a statement of objections, the parties are given 15 working days to comment on the statement. The NCA is then given 15 working days to conclude its final decision. However, if the parties suggest remedies after having received the statement of objections, the NCA deadline may be extended by 15 working days. Finally, the parties may request an additional extension of 15 working days if necessary. With all possible extensions, the entire period of review may amount to 145 working days.

A decision by the NCA to intervene may be appealed to the Competition Appeals Board.

Many mergers are filed with the NCA through a simplified merger procedure (approximately 70% in 2022), which allows for a lower degree of detail and often a swift process. Simplified merger notifications are normally cleared well within the limit of 25 working days. In order to file a simplified notification, certain alternative criteria must be met, as set out in Section 3 of the Regulation on Notification of Concentrations – for example, concentrations where the parties have no overlapping activities, and a combined market share below 20% in markets with horizontal overlap and below 30% in markets where the parties have a vertical overlap. In addition, certain joint ventures with sufficient limited activities in Norway may also qualify for a simplified merger procedure.

Under Section 29 of the Competition Act, breaches of the obligation to notify a concentration or the standstill obligation may trigger an administrative fine amounting to up to 1% and 10%, respectively, of the total turnover of the undertaking.

Section 10 of the Competition Act prohibits anti-competitive agreements and practices. The provision mirrors Article 53 of the Agreement on the European Economic Area (EEA) and Article 101 of the Treaty on the Functioning of the European Union (TFEU).

In addition to Norwegian case law and preparatory works, the provisions of the Competition Act are interpreted in light of case law from the European Court of Justice, the General Court, the European Commission, the EFTA Court and the EFTA Surveillance Authority (ESA).

Section 10 prohibits any agreements between undertakings, decisions by associations of undertakings, informal collaborations and practices which have as their object or effect the prevention, restriction or distortion of competition.

Exceptions from the cartel prohibition are enshrined in Section 10(3) of the Competition Act (which mirrors Article 53(3) of the EEA and Article 101(3) of the TFEU), targeting, in particular, co-operations where any restrictions of competition are outweighed by efficiency benefits.

Under Section 29 of the Competition Act, infringements of Section 10 may be sanctioned with administrative fines and imprisonment. However, no individual has been punished for offences to date. These fines may amount to up to 10% of the total turnover of the undertakings involved.

Abuse of dominance is prohibited under Section 11 of the Competition Act and corresponds to Article 54 of the EEA and Article 102 of the TFEU.

To establish dominance, the undertaking must have an economic strength which allows it to prevent effective competition in the relevant market by enabling it to act, to a significant extent, independently of its competitors, customers and, ultimately, consumers. The assessment of dominance largely resembles that of EU law and will take into account various measures of economic strength, such as market share, the underlying market structure and the number and positions of other competitors.

Behaviour by an undertaking with a dominant position that restricts actual or potential competition, including competitor’s opportunities for growth and market entry, may amount to abusive behaviour. Examples of such behaviour that may be covered by the prohibition in Section 11 include:

• loyalty-inducing discounts;
• exclusive agreements with customers; and
• margin squeezing or other foreclosing behaviour such as predatory pricing and refusal to supply.

A dominant undertaking is nevertheless entitled to provide a justification for behaviour that otherwise could be deemed abusive – ie, if its behaviour is objectively necessary and proportional or if the behaviour is efficiency-enhancing and generally benefits consumers. The benefits afforded to consumers must be sufficiently probable and impossible to achieve in a less restrictive manner. Further, the behaviour cannot eliminate competition from the market.

Under Section 29 of the Competition Act, infringements of Section 11 may be sanctioned with administrative fines. These fines may amount to up to 10% of the total turnover of the dominant undertaking.

New Market Investigation Tool

The ministry of trade and fisheries has announced that it intends to send a proposition for a new market investigation tool to the Norwegian Parliament before the summer of 2024. The initial proposition from the ministry was subject to public hearing in 2023. The proposed market investigation tool will provide the NCA with the competence to initiate investigations into conduct, which is not prohibited by the competition rules, but which the NCA still considers problematic for competition. Subsequent to these investigations, the ministry proposes to provide the NCA with broad powers to intervene by imposing requirements upon the relevant undertakings, hereunder structural divestment requirements if needed. The ultimate content and details of the market investigation tool are still unknown, subject to the final proposition from the ministry and the subsequent legislative process.