The European Free Trade Association’s (EFTA) compliance authority has told Norway it believes there may have been widespread breaches of European Economic Area (EEA) public procurement law by municipalities failing to put their pension provision out to tender.

Norwegian financial services group Storebrand – which competes with dominant municipal pension provider KLP for such business – has welcomed the preliminary view, which stems from a complaint Storebrand lodged in autumn 2022.

Jon Hippe, head of public sector at Storebrand told IPE: “This is of course not the end of this process.

“It does, however, more than indicate that the rules on public procurement have been violated, and that one should expect a normalisation of this market.”

Storebrand, which re-entered the market for public-sector pensions business around 2020, made the complaint amid reluctance by many local authorities to put their pension schemes out to tender, and asked the EFTA Surveillance Authority (ESA) to clarify that there was an obligation to tender when procuring occupational pensions for municipalities and state health organisations.

Municipalities in Norway bought almost NOK60bn (€5.2bn) of occupational pensions services a year, Storebrand said back in 2022.

IPE has seen a “Pre-Article 31” letter sent by ESA to the Norwegian Ministry of Local Government and Regional Development, in which the Brussels-based authority –which monitors compliance with EEA rules in Iceland, Liechtenstein and Norway – sets out its preliminary view regarding the procurement complaint.

“Having considered the issues raised and Norway’s letter of 24 March 2023, the Directorate’s preliminary view is that it seems that numerous contracts for the provision of pension services may have been unlawfully awarded and/or amended in breach of EEA public procurement law, leading to a widespread lack of competition in the insured public sector occupational pension services market,” ESA wrote in the letter, dated 29 February 2024.

“This seems to be a general and consistent practice,” the authority said in the letter.

Hippe said Norwegian authorities could choose to enter into a constructive dialogue with ESA on how they could comply with the EEA-agreement, “solving this issue once and for all.”

“On the other hand, Norwegian authorities can of course seek conflict starting on a road that could lead to the EFTA Court,” he said.

The political risk for the government was, he said, the uncertainty that it created in the public procurement system and policies for the whole business community.

“Therefore, these complaints are followed closely also by the NHO (Confederation of Norwegian Enterprise),” said Hippe.

Asked by IPE to comment on the development, a spokeswoman for KLP said: “ESA is still in a preparatory phase where they are gathering information, and has invited Norway to provide input.”

“As we understand it, it will take time before they decide whether they want to file a case,” she said.

“Since this is a matter between Norway and ESA, it is not natural for KLP to comment, assess or elaborate on the content of the letter from ESA to the Ministry of Local Government,” the KLP spokeswoman said.

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