Taking a competitive stance

Helge Stemshaug’s team and the client did not cave in when the Norwegian Competition Authority wanted to block the merger between Sport 1 and the Gresvig bankruptcy estate. They got a yes in the end, and Norway’s largest sports equipment retailer came into being.

Solving complex competition law issues requires a multidisciplinary approach. Major mergers present Stemshaug, his team – comprising an economist in addition to the lawyers – and our clients with challenges within law, economics, politics, lobbying, communications and media relations. Gresvig bankruptcy estate in 2020. The Norwegian Competition Authority at first wanted to block the merger, but relented a few days before the deadline expired.

- We pulled out all the stops upon receiving the first negative notice from the Authority.

- When I first joined BAHR, Norwegian politicians were discussing how many banks and oil companies we should have and whether foreign companies should be permitted to invest in Norway. All that is behind us now. At present, government involvement is limited to examination of mergers’ effect on market competition, as well as national security considerations.

Stemshaug and his team were advising when Bjørn Rune Gjelsten of Sport 1 and Olav Nils Sunde, who for many years owned

Gresvig, wanted to acquire the BAHR and its clients will in merger control cases typically engage in pre-notification contact with the Norwegian Competition Authority. Thereafter, following notification, the Authority will have 25 working days to issue a notice of potential intervention, without having to provide any thorough explanation.

- 45 days later you receive the formal 100-page notice, setting out arguments against the merger and presenting the reasoning behind the decision contemplated by the Norwegian Competition Authority. When that happens, you need to have your strategy and - not least - your documentation ready, and put

The three partners in BAHR’s Competition & EU Law group; Helge Stemshaug, Arne Torsten Andersen and Beret Sundet

We pulled out all the stops upon receiving the first negative notice from the Authority

together a line of argument that stands up to the closest scrutiny. There were only a very few examples of the Norwegian Competition Authority having changed its position after giving a formal notice.

Thought there would be more buyers

A key element of the Norwegian Competition Authority’s arguments against the merger was that the Authority believed there were a number of other potential buyers of the Gresvig estate. The Authority also believed that Olav Nils Sunde was planning a buyback of Gresvig after the bankruptcy.

- The main question we posed was whether it would in fact represent any impediment to

Newspaper cutting from DN, 23 September 2020

competition for Gresvig and Sport 1 to join forces as one large retail chain, that would be larger than XXL. There was nothing

difference between a combined Gresvig and Sport 1 chain and a Gresvig chain and a Sport 1 chain that operated independently of each other. The actual competition situation, now and in the future, is critically dependent on developments in online shopping. - The Norwegian Competition Authority argued in its reasoning that many Norwegians are uncomfortable about shopping online. That is not correct. I think we can safely conclude in 2021 that online shopping is here to stay, in all parts of Norway, and is growing fast.

Major consequences

Merger control cases have fairly brutal outcomes. If the Norwegian Competition Authority puts its foot down, the merger is typically shelved. The parties may bring the matter before the Norwegian Competition Appeals Tribunal, but it is a very rare occurrence for them to take it all the way to the Court of Appeal.

- Only once has such a case been brought before the Court of Appeal, which was in connection with Schibsted’s acquisition of Nettbil. The reason for this is that it simply takes too long. If you do not get a thumbs up for the merger from the Norwegian Competition Authority or the Norwegian Competition Appeals Tribunal, that is unfortunately the end of the matter in most cases.

After an extensive documentation and argumentation effort on the part of the clients and BAHR, the Norwegian Competition Authority nonetheless did a U-turn and approved the merger between Gresvig and Sport 1. Norway’s largest sports retailer came into being.

- Cases like this illustrate that the most challenging parts of practising law cannot be replaced by robots, says Stemshaug.

- We are faced with a highly professional opponent and are intellectually challenged at every turn. This is certainly demanding, but we have the resources and experience to do what it takes, leave no stone unturned and add that extra touch to meet the stringent quality expectations of us and our clients. That improves the odds of a successful outcome, he concludes.