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Demokratiskolan
The Competition & monopolies card from MethodKit for Society and Politics
Card 51 of 128 · MethodKit for Society & Politics
  • AreaEconomy & work
  • Centre of gravityCentral government
  • Points of influence2 on the journey
  • Decisive electionThe general election
Economy & work

Competition & monopolies

Controlling regulated & open markets

That no one can set prices in collusion or buy up all the competition is one of the central government's oldest market tasks. Konkurrensverket (the Swedish Competition Authority) scrutinises companies, the EU scrutinises the giants, and some monopolies Sweden has chosen on purpose: Systembolaget (the alcohol retail monopoly) exists for public health reasons, not by accident.

Where does the power lie?1

  • Municipality · own companies & procurement · approx 5 %
  • State · competition law & oversight · approx 50 %
  • EU · the treaty's competition rules · approx 45 %

Competition law is to a large extent European: the EU and the central government share the power. The general election steers Swedish law, the European Parliament election the union's rules.

How it works: the breakdown

The municipalityPlayer & buyer
The regionOn the sidelines
Central governmentThe watchdog · centre of gravity
Who decides?
The municipal council (kommunfullmäktige) and the boards of the municipally owned companies.
No formal role in competition oversight.
The Riksdag, Konkurrensverket (the Swedish Competition Authority) and the Patent and Market Court.
What do they decide?
Municipal companies that operate in markets, and procurements where competition decides the price.
No formal role, but the region's procurements of healthcare and transport are large markets.
The Competition Act, fighting cartels, the examination of company acquisitions and oversight of procurements. Systembolaget's monopoly is an active choice.
Where are decisions made?
In the council and company boards. Procurements are advertised openly.
Not applicable.
At Konkurrensverket and in court. Larger cases become public.
Who pays?
The municipal tax. Poor competition in procurements becomes expensive for everyone.
No part of the bill.
The central government budget. Cartels pay a competition damages fine to the central government.
Fastest way in?
Municipal election Scrutinise the municipality's companies, ask questions about the procurements.
Regional election The regional election has its effect mostly through procurement.
General election Tip off Konkurrensverket about cartels and unhealthy competition.
EUThe EU's competition rules apply directly in Sweden, and the Commission can fine global giants and stop large mergers. Influence it in the European Parliament election.

Read the table by column to understand one level, or by row to compare the levels. The green level is the area's centre of gravity.

How it works: follow the decision

The case A cartel is exposed
  1. EU

    The ban is European

    Cartels and abuse of a dominant position are banned in the EU's treaty, and the rules apply directly in Swedish law. The Commission takes the largest cases, Sweden the rest.

  2. State

    The Competition Act gives the tools

    The Riksdag (Sweden's parliament) has given Konkurrensverket the right to investigate suspicions, carry out unannounced site inspections and decide on a competition damages fine.

    Point of influence

    The general election steers competition policy and the agency's resources.

  3. State

    A tip starts the investigation

    One of the cartel companies confesses to avoid the fine, or an employee or customer tips off. Konkurrensverket carries out dawn raids and secures evidence.

    Point of influence

    Anyone can tip off Konkurrensverket, and the company that confesses first can get leniency.

  4. State

    The fine is examined in court

    The competition damages fine can be substantial and is ultimately examined by the Patent and Market Court. Affected customers can also claim damages.

  5. Municipality

    The procurements get new prices

    Municipalities and regions that bought at cartel prices see the bids fall when competition is restored. The tax money stretches further.

  6. Your everyday life

    The price tag in the shop

    As a consumer you rarely notice the cartel, only the prices. When competition works, it is your wallet that wins, without you doing anything at all.

The journey looks the same in reverse: what has been built came the same way, through the same decisions. Whoever knows where the decisions are made also knows where they can be changed.

Questions to discuss

  1. Which markets in your everyday life feel as though they lack real competition?

  2. Systembolaget is a deliberate monopoly for public health reasons. Which monopolies do you think are justified?

  3. When municipal companies compete with private firms, who wins and who loses?

  4. Global tech giants dominate their markets. Who should rein them in: Sweden, the EU or no one?

  5. What is competition good for, and where does it come at a price?

Glossary

Monopol
When a single actor controls a whole market, sometimes banned and sometimes decided by the state.
Kartell
Illegal cooperation on prices or the division of markets between companies that should be competing.
Gryningsräd
Konkurrensverket's unannounced inspection at a company to secure evidence.
Eftergift
That the cartel company which confesses and cooperates first can avoid the fine.
Konkurrensskadeavgift
The fine companies have to pay to the state for breaking the competition rules.

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Footnotes

1) This is an estimate of how decision-making power over the issue is split between the municipality, the region, central government and the EU, based on how responsibility is divided in legislation. A teaching guide, not an exact measurement.