The ICT market
The Competition Authority has commissioned an external report on the role of the public authorities in the ICT market. In addition to this report the Authority has undertaken its own review of the competitive situation in the software markets, and on this basis the Authority has considered the need to impose further measures to strengthen competition in the ICT market.
The grocery market
The Competition Authority is keeping a close eye on developments in the grocery market. Meetings have been held with the four grocery chains and the DLF (the Norwegian Grocery Suppliers Association). The Competition Authority is also cooperating with other European competition authorities through its membership of the ECN Food Subgroup. Comments have been sent out in accordance with Section 9 e of the Competition Act on an application for the establishment of a hypermarket. Tine's gross margins in the dairy markets have been calculated and assessed. The Competition Authority has also considered the need to impose further measures to strengthen competition in the grocery market.
The TV market
In the TV market, subscription figures have been obtained from Canal Digital, Viasat and RiksTV in order to follow developments and to obtain a good basis for assessing platform competition and whether the companies are attempting to reduce competition.
Other activities:
Membership of working committee – builders’services
In 2009 the Competition Authority participated in a working committee for the services provided by builders, chaired by the Norwegian Consumer Council. The role of the Competition Authority on this committee has been to provide input when any proposals received have given rise to competition-related issues. Written input has been provided about transparency and price information in the market, as well as about expertise requirements and authorisation schemes. The Competition Authority and the working committee have advised i.a. that consumers should be aware of the fact that they can obtain quotations when purchasing the services of builders, something that is particularly important since such services are often complex.
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Competition, free software and open standards
Based on the priorities stipulated by the Ministry of Government Administration and Reform, the Competition Authority has been working for a long time on analysing the competitive situation in the software markets. The Authority has previously drawn up a report entitled"Competition and Innovation in the Software Markets." In this report the role of the public authorities in promoting innovation and competition in the software markets was discussed only briefly. For this reason Professor Nils-Henrik Mørch von der Fehr draw up another report in 2009 on behalf of the Competition Authority entitled "Free Software – Some Fundamental Observations." This report highlights the role of the public authorities as potential prime movers of competition in the software markets.
The Competition Authority believes that software markets are characterised i.a. as global and dynamic. In many cases there are network effects on the demand side, while at the same time the supply side experiences increasing returns to scale. In such markets a form of innovation competition often occurs, where the winner may be left with a high market share until the next innovation is made. A company which has a monopoly in a product market for a period will have incentives to prolong the duration of its monopoly and extend it into new markets. The competition authorities have the important task of clarifying whether or not such behaviour violates the Competition Act.
The global nature of software markets means that the authorities in a small country like Norway have limited opportunities for influencing competition in these markets. This is pointed out both in von der Fehr's report and in a report issued by the Danish Competition Authority. The imposition of separate measures in Norway will therefore, in most cases, have only a limited effect.
As regards free software - software with an open source code - there may be variations in the extent to which market failure exists. On the one hand, a person who develops free software will not share in the benefit others get when they obtain the use of such software, so the incentives to produce it will be too weak. On the other hand, free software can constitute part of a business strategy in which software is given away so that a profit can be made from consultancy services related to its use. If public authorities provide support for the development of free software, the existence of a market failure should be clarified.
Any Norwegian policy giving preference to free software can provide the parties involved with a foothold which could form the basis of a wider breakthrough in the market. This may be particularly important in areas that are dominated by proprietary software and which have high barriers to entry. However, the fact that the software markets are international will often limit the effects of Norway being, at best, a pioneering country. Von der Fehr points out that such measures would be risky, partly because it is unclear if the quality of free software is sufficiently high. The Competition Authority shares von der Fehr's view on this point and wishes to point out that if the public authorities are to do anything, then measures should be targeted directly at any market failures.
An important condition for ensuring competition in software markets is interoperability between different types of software. This ensures that the products from different suppliers will work together. It is thus important to prevent software manufacturers from designing software in such a way that software interoperability and functionality are achieved only with software from the same supplier in adjacent markets. The use of open standards helps to promote such interoperability.
As regards open document standards in particular, efficiency benefits can be achieved if the users of such services are not locked into one special, proprietary type of software. Von der Fehr has advised the Norwegian authorities to be open to both the ODF and OOXML standards in order to avoid ending up in a situation where they might have "backed the wrong horse" because they did not know which would become the dominant standard. Generally speaking, when choosing one or more standards one should compare the benefits of the network effects of having one standard against the benefits of standards competition and innovation that are available with several standards. Based on the analyses in von der Fehr's report and the report issued by the Danish Competition Authority, the Competition Authority finds no basis for currently recommending one document standard for the type of documents for which the ODF and OOXML standards are intended.
The software markets are dynamic and international. It is therefore important to monitor these markets, especially in view of the fact that the parties with periodical monopolies are abusing their dominant positions in order to prolong their monopolies and extend them to new markets. It will also be important for the competition authorities to keep up-to-date with developments in these international markets. Apart from this there is nothing contained in von der Fehr's report, the Danish Competition Authority's report or the Authority's own assessment to indicate that there is currently a need to impose special measures in these markets, especially since special measures in Norway would have little impact on the global software markets.
The TV market
The Competition Authority does not currently recommend making any adjustments that would oblige distributors to offer TV channels individually rather than in packages.