Denmark

Jesper Fabricius and Asser Rung-Hansen

Accura

Main developments

There are still 35 business sectors in Denmark with significant competition problems according to Competition Report 2008 published by the Danish Competition Authority (the DCA). Although this is one sector fewer than last year, it is still above the government’s goal of 32 in 2010.
Problems can, for example, be found at retail level where consumer prices in Denmark are 8 per cent higher than in comparable EU member states. The average Danish citizen pays approximately 10,000 kroner (approximately €1,300) more for goods and services every year because of the higher price level.
The DCA points to the fact that public regulation contributes to the competition problems in most of the problematic business areas. Although Danish public regulation generally restricts competition less than the regulation of many other OECD countries, there are areas where Danish regulation is more restrictive, for example as regards retail businesses.
In its Competition Report 2008, the DCA also analyses competition problems in three selected sectors: taxi services, the administration of pension funds and the retail market for electricity. In all three sectors, the DCA has found significant competition problems.
Despite the introduction of a leniency programme into Danish competition law on 1 July 2007, the DCA still has not seen its first leniency application. But 2007/2008 has shown another interesting trend: top management members involved in infringing activities will be prosecuted and risk personal fines. Although, the level of fines is low (10,000 to 25,000 kroner, approximately €1,300 to 3,300), the psychological effect should not be underestimated.
Following recommendations in the DCA’s Competition Report 2007, a government committee is currently considering whether the thresholds for merger control in Denmark should be lowered. It is still uncertain what the outcome of this work will be.

Recent cases – agreements

Local banks: Horizontal agreements restrictive of competition
In June 2006, the DCA performed dawn raids on seven local Danish banks and proved that the banks had cooperated extensively over a number of years, for example by agreeing not to establish branches in each other’s ‘home towns’ and not to actively pursue each other’s customers. The banks had also consulted each other in detail on a number of issues relating to the determination of rates, fees and prices. The banks mainly argued that their joint market share was 2 per cent or less, and that their cooperation therefore had no appreciable effect on competition. The DCA’s analysis showed that the joint market share of the banks was between 3 and 6 per cent, depending on the method of calculation, and the DCA stated that also the nature of the offence (in this case a hard-core offence) should be taken into account when determining if the banks’ cooperation had an appreciable effect on competition. In its decision of March 2007, the DCA found that a cartel existed, and that there had been breaches of competition law from 2004 to 2006, and the DCA ordered the parties to cease their cooperation immediately and prove to the DCA that all illegal activities had in fact ceased. The DCA’s decision was brought before the Danish Competition Appeals Tribunal by the banks who argued mainly that their cooperation had had no appreciable effect on the market, given that their joint market share was insignificant. Even though the Tribunal considered the market national, and the seven banks’ market share in the national market was very small (‘at least 1 per cent’), the Tribunal stated that the special characteristics of the market should be taken into consideration, and that the seven local banks in their local areas enjoyed a special market position due to the special characteristics of the retail bank market. The Tribunal therefore upheld the DCA’s decision, although the Tribunal went to great lengths in stating that the banks’ cooperation could not be labelled as a cartel, and that the agreements between them could not be considered as genuine market sharing agreements.
The banks subsequently agreed to jointly pay a fine of 4 million kroner (approximately €536,000). The fine was set on the basis that the banks’ breaches were not very serious.

Matas: Restrictions on Internet sales by independent sales outlets
Matas A/S is a Danish retail chain specialising in the sale of perfumes, cosmetics, OTC drugs, etc. In 2007, when the equity fund CVC took over the chain, a number of outlets continued as individually owned outlets on a franchise basis. In September 2007, the owner of an independent Matas outlet complained to the DCA that Matas A/S was enforcing a general ban on sales via the websites of independent Matas outlets. The DCA decided that Matas A/S had contravened section 6 of the Danish Competition Act (equivalent to article 81) by enforcing a general ban, but the DCA accepted that, in future, Matas A/S would be entitled to enforce the following rules, among others, for the websites of individual Matas outlets:
• a new website must always be approved by Matas A/S before launch;
• messages and content must comply with the retail chain’s marketing strategy in force from time to time;
• the website must not link to www.matas.dk, the website of Matas A/S; and
• if Matas A/S decides to deliver structure and contents to a local website, such delivery may be subject to the local outlet not displaying any other contents on its website.

However, the DCA could not accept a general ban on the use of the Matas trademark on local websites. The DCA found, among other things, that, in principle, the requirements applicable to websites and internet sales may not be stricter than those applicable to physical sales outlets.

The Federation of Publishers’ and Booksellers’ Associations (FPBA): Practice concerning approximate prices, minimum discounts, etc
The FPBA is a federation of the Danish Booksellers’ Association and the Danish Publishers’ Association. The FPBA is responsible for the management of an industry scheme imposing an obligation on booksellers to apply fixed retail prices. Since 1956, the fixed price scheme has been covered by an exemption from competition law, but the exemption has been phased out gradually, most recently in 2006 when the DCA decided that a publisher may only apply fixed prices for 10 per cent of its new publications. In June 2008, the DCA decided to make binding a number of commitments given by the FPBA. The commitments gave rise to a number of changes to the FPBA’s trading rules. The following rules, among others, were no longer to be part of the trading rules:
• the designation of an ‘approximate price’ in relation to the part of the book sales not falling within the fixed price scheme (since booksellers could perceive the designation as if prices were only allowed to vary within a small margin);
• a required 25 per cent minimum discount (gross margin) for the booksellers;
• booksellers’ right to return 10 per cent or more of their purchases; and
• the application of an interest rate fixed by the Danish Publishers Association in the event of late payment.

The DCA found that these rules could have a coordinating effect on the trading between publishers and booksellers.

DBU/DD: Media rights for Danish league football

In 1998, the TV broadcaster MTG and the football associations Danish Football Association (Dansk Boldspil-Union, DBU) and the Division Association (Divisionsforeningen, DD) signed an agreement on the TV rights for Danish league football. The term of the agreement was 4-and-a-half years, but MTG was granted a priority right to renew the agreement. In 2006, the parties signed a letter of intent for the purpose of renewing the agreement right up to 2013. Several competing TV broadcasters complained to the DCA, as the carrying through of the letter of intent would result in the rights not being open for tender in a total period of 15 years. The DCA decided to make binding a number of commitments given by DBU and DD.
According to the commitments, a tender must be called in respect of the media rights for Danish league football. The tender must satisfy the following requirements (among others):
• the media rights must be divided into a number of packages offered separately on open, non-discriminatory and objective terms;
• the media rights must not be assigned for periods exceeding three years;
• no exclusive right must be granted to renew agreements;
• no bidder will be entitled to acquire all the packages for direct transmission of super league matches unless no more than two bidders make a qualified bid in the first tender round; and
• the award criteria must be ‘most economically advantageous tender’, and, for example, the TV channels’ penetration and marketing and programme plans for football may be taken into account.

Arealudviklingsselskabet I/S: 10 years’ exclusive right for grocery trade in new part of city

Arealudviklingsselskabet I/S (AUS) is a company established by law, of which the Municipality of Copenhagen owns 55 per cent and the Danish government 45 per cent. One of the company’s objectives is to develop areas in a new part of Copenhagen called Ørestaden. Danske Samvirkende Købmænd complained to the DCA that, on a concession basis, AUS had granted an exclusive right to sell groceries in a part of Ørestaden to one single market player. In March 2008, the DCA established that the purpose of the 10-year exclusive right was not to restrict competition, nor did the 10-year exclusive right result in restricted competition. At the same time, the DCA refused to carry out further investigations as to whether the grant of such an exclusive right constituted abuse of dominant market position. The DCA attached importance to the fact that a number of large grocery stores are already located within a range of about 2 km from Ørestaden; that more than 100 grocery stores are located within a range of 10 km (the most narrow geographical market ever defined by the European Commission); and that Ørestaden is connected with the rest of Copenhagen by train and metro. The decision created quite a stir in Denmark, and it has now been appealed to the Danish Competition Appeals Tribunal.

Recent cases – mergers

Broadcast Service Danmark A/S: Joint venture between DR and TV2
In 2001, DR and TV2, the two Danish public service broadcasters, established Broadcast Service Danmark A/S (BSD), a joint venture through which they service and manage 24 TV masts for terrestrial TV transmission. Some of the TV masts are owned by either DR or TV2, and others are jointly owned through BSD. In 2001, the establishment of the joint venture was not considered a full-function joint venture as its objective was mainly to service the owners. The digitalisation of terrestrial TV transmission from 1 November 2009 will make room for about 30 extra TV channels. Boxer TV A/S has been assigned the ‘gatekeeper’ function, which means that it will be responsible for the management of the digitalised terrestrial transmission network. DR and TV2 want to let BSD use its knowledge of terrestrial TV transmission to perform services for third parties, including Boxer TV A/S. This, however, will make BSD a full-function joint venture that would trigger a merger control procedure. The DCA approved the merger in June 2008, but only after receiving commitments from the parties that third parties will get access to co-use the antenna systems and other stationary equipment placed on the masts; that third parties will be allowed to install their own equipment on the masts; and that BSD will sell its services on non-discriminatory terms.

Lemvigh-Müller/Brdr. A & O Johansen: Prohibition of merger

In May 2008, for the first time since the introduction of the merger control provisions in Denmark in 2000, the DCA ruled that a merger should be prohibited. The merger concerned Lemvigh-Müller’s (LM) acquisition of Brdr. A & O Johansen (AO). The two companies are both active in the wholesale markets for HVAC and electrical articles. In the HVAC market, AO is the number two and LM the number four market leader with market shares of 20-25 per cent and 5-15 per cent, respectively. The merged company would have become the number two market leader with a 30-35 per cent market share. In the market for electrical articles, LM is the number two and AO the number three market leader, with market shares of 36-41 per cent and 2-7 per cent, respectively. If the merger had been completed, the merged company and the previous number one market leader would have had a combined market share of 88-93 per cent. The parties offered a number of commitments, for example to eliminate an existing structural link to number three in the HVAC market by buying its 42 per cent share of AO’s share capital. In addition, the parties offered to sell a number of sales outlets. In its decision, the DCA attached importance to the fact that the sales commitment merely had the form of a letter of intent, and that there was no assurance that all the sales would be completed.

Recent cases – dominant position

Biblioteksmedier A/S: Exclusive agreements with film and multimedia producers

Biblioteksmedier A/S distributes film and multimedia products to Danish public libraries for lending purposes. In 2006, the DCA established, on the basis of a complaint from Flex Medie, a competitor, that Biblioteksmedier A/S did indeed hold a dominant market position, but that the scope of the exclusive agreements entered into with rights holders was so modest that the company did not abuse its market position. Only 5 to 7 per cent of the titles of Biblioteksmedier A/S were covered by exclusive agreements, and the DCA considered it important that part of the exclusive agreements had been made at the request of the rights holders. In 2007, the Danish Competition Appeals Tribunal remitted the case for rehearing by the DCA. In June 2008, the DCA decided to make binding a number of commitments given by Biblioteksmedier A/S. In future, Biblioteksmedier A/S will only enter into exclusive agreements concerning ‘narrow titles’, namely documentary and ‘how-to’ films not produced by DR (Danish public service broadcaster) or the Danish Film Institute.

DONG Energy A/S v the DCA

In 2007, the DCA found that DONG Energy A/S (previously Elsam A/S), the leading Danish electricity producer, had abused its dominant position in the wholesale electricity market of western Denmark to obtain excessively high prices for electricity. In a 2005 decision, the DCA found that Elsam had obtained excessively high prices for electricity in the period from 1 July 2003 to 31 December 2004. In its 2007 decision, the DCA found that Elsam had also obtained excessively high prices in the period from 1 January 2005 to 31 December 2006. The DCA based its decision on an ‘abusive practices test’ consisting of seven different tests which led the DCA to its conclusion. DONG Energy brought the matter before the Danish Competition Appeals Tribunal which upheld the DCA’s decision for the period from 1 January 2005 to 30 June 2006. However, the Tribunal rescinded the DCA’s decision for the second half of 2006 which, in the view of the Tribunal, suffered from certain defects relating to the facts substantiating that abuse had taken place.

Post Danmark A/S: price discrimination and exclusionary rebates

In 2004, the DCA decided that Post Danmark A/S, the Danish postal operator, had abused its dominant position within the market for distribution of non-addressed mail and local and regional newspapers in Denmark. Post Danmark A/S had abused its dominance by offering loyalty rebates and primary line and secondary line price discrimination. The DCA also considered whether Post Danmark A/S had applied predatory pricing, but the DCA did not find that this could be proved with a sufficient degree of certainty. The Danish Competition Appeals Tribunal upheld the decision in July 2005. Post Danmark A/S then appealed the part of the decision relating to primary line price discrimination. However, in December 2007 the High Court also upheld this part of the DCA’s decision. Post Danmark A/S had offered higher rebates to the former customers of its only real competitor than those offered to its existing customers without any cost-related justifications. In relation to the rebates offered to one of the former customers of the competitor, the High Court stated that Post Danmark A/S had not been able to justify that the distribution of five different printed commercials for one customer implies significantly lower costs than the distribution of the same commercial for five different customers.
The pricing policy of Post Danmark A/S was also scrutinised by the DCA in 2007 – this time in the market for distribution of magazine post. Thus, in June 2007 the DCA decided that Post Denmark A/S had abused its dominance by exclusionary and discriminatory pricing.

Recent cases – procedure, sanctions and other matters

No damages due to dawn raid

In February 2008, the Danish Supreme Court upheld a High Court judgment according to which the DCA should not pay any damages or compensation in relation to a dawn raid performed by the DCA at the premises of Telia Telecom A/S, a telephone company. The DCA suspected that Telia had engaged in the maintenance of illegal resale prices. The court order allowing the dawn raid specified Telia’s registered address, but when the DCA arrived there, they were informed that the activities they wanted to investigate were carried out from a nearby building at a different address. They then proceeded to this address and performed the dawn raid there. The dawn raid did not reveal any illegal activities, and Telia sued the DCA for its costs in connection with legal assistance, etc. The High Court ruled that the DCA must be allowed wide discretion in deciding when there is sufficient basis for a dawn raid, and that the decision to perform a dawn raid on Telia should be upheld. Noting that the address where the dawn raid had been performed was near the address mentioned in the court order, and that Telia had registered its address as the address mentioned in the court order, even though the activities were actually carried out from the nearby building, the High Court also accepted that the court order gave sufficient basis for performing the dawn raid in this building. This was affirmed by the Danish Supreme Court which upheld the High Court judgment.

Fine on business association Danske Kroer & Hoteller

In October 2007, the Court of Horsens fined the business association Danske Kroer & Hoteller (the DKH), an organisation for Danish inns and hotels, 400,000 kroner (approximately €53,600) for having in its articles of association certain provisions aiming at ensuring resale price maintenance among the association’s members. In the same judgment, the DKH’s managing director and the chairman of the board of directors were each fined 10,000 kroner (approximately €1,340) for having participated in fixing prices and enforcing the provisions aiming at resale price maintenance.

Fines on telephone retail dealers

In November 2007, the Court of Roskilde fined Telemobilia ApS, a mobile phone retail dealer, 125,000 kroner (approximately €16,800) for its participation in a cartel agreement with two other retail dealers, Jokerprice ApS and Aircom Erhverv A/S.
Telemobilia, Jokerprice and Aircom Erhverv were independent dealers selling mobile phones on the internet, and, in the autumn of 2005, they had exchanged numerous e-mails on the subject of price coordination. Before the conviction of Telemobilia, Jokerprice had also accepted a fine of 125,000 kroner.
In a judgment delivered by the Court of Roskilde, Telemobilia’s managing director, the person actually participating in the e-mail correspondence with the other retail dealers, was fined 10,000 kroner personally. Before the judgment, the managing directors of Jokerprice and Aircom Erhverv had each agreed to a personal fine of 25,000 kroner (approximately €3,350) for their involvement in the cartel agreement.

Fine on boat equipment dealer

In February 2008, Nautisk Udstyr ApS, a boat equipment dealer, agreed to a fine of 400,000 kroner for retail price fixing. The company’s managing director and the chairman of the company’s board of directors each accepted a personal fine of 25,000 kroner for their involvement.

Access to files

In 2007/2008, the Danish Competition Appeals Tribunal delivered four decisions concerning the right of ‘access to files’ for complainants in competition law cases.
In three decisions of August/September 2007 (Forbruger-Kontakt Distribution A/S v the DCA of 15 August 2007, CityMail Denmark A/S v the DCA of 16 August 2007 and Copenhagen Malmö Port AB v the DCA of 14 September 2007), the Tribunal started by stating that only a person who may be considered a ‘party’ to a case handled by the DCA has a right of access to DCA’s files. The Tribunal went on to say that according to the legislative material for the Competition Act, the concept of a party to a competition case must be construed narrowly to the effect that normally it only includes the addressee of the decision to be made by the DCA. In exceptional circumstances, another person may be considered as a party if such person has a material and individual interest in the case and its outcome. In all three cases, the Tribunal then briefly stated that the fact that a person makes a complaint giving rise to a DCA case, does not in itself give such person status as a party. The Tribunal then concluded that having regard to the case at hand, the competition and market relations and the nature of the alleged breach of competition law, the complainant could not be considered a party in neither of the three cases. However, the Tribunal also stated that a complainant has a right to ‘own access’, that is, access to those parts of the DCA’s files that specifically mention the complainant.
In DSK v the DCA of 3 March 2008, the Tribunal followed the practice of its 2007 decisions and decided that the DSK could not be considered a party to a case prompted by its complaint, but that it had a right to ‘own access’.
In FC Nordsjælland A/S v the DCA of 6 September 2007, the Tribunal upheld a decision by the DCA according to which FC Nordsjælland should not be granted access to certain documents which were either the DCA’s internal working papers or which included confidential information on FC Nordsjælland’s competitors, the dissemination of which could be harmful for the said competitors. FC Nordsjælland was a party to a case pending before the DCA concerning illegal public aid and received access to the DCA’s files with the exception of the above documents.

Publication of confidential information

In Møns Bank et al v the DCA of 15 August 2007, the Tribunal was asked to rule on the question of confidentiality of information when the decisions of the DCA are made public. On 28 March 2007, the DCA decided that a number of small, local Danish banks had engaged in an illegal horizontal cooperation in breach of the Danish Competition Act. The decision concerned the banks’ cooperation in 2004-2007 as their cooperation before to 2004 fell outside the prohibition of the Competition Act due to the de minimis threshold applicable at that time. Nevertheless, the DCA’s decision referred to the fact that the banks had also cooperated in 2003 and previous years, and that the banks had requested that this information be deleted from the public version of the DCA’s decision. The DCA refused, and the matter was then brought before the Tribunal. The Tribunal stated that according to the Competition Act all decisions delivered by the DCA must be made public, and that when such decisions are made public, only information about trade secrets or confidential commercial matters may be left out. As the information that the banks wanted to have deleted could not be said to be confidential, the DCA’s decision not to delete the information in relation to the years before 2004 was upheld.

Publication of market share information by the National IT and Telecom Agency

In 2007, the DCA’s Competition Report contained a chapter on the exchange of information in trade organisations. One of the conclusions of the report was that the publication of historic sales information does not conflict with competition law if the information is sufficiently old and aggregated. In October 2007, the DCA considered a complaint demonstrating that also the information activities undertaken by governmental bodies may give rise to concern from a competition law perspective. In connection with its telecom statistics, the National IT and Telecom Agency publishes a spreadsheet containing market s
hare information on all companies in the telecoms sector. The complainant found it problematic that the spreadsheet revealed the market shares of small regional market players, as it would give a competitive advantage to big companies that would only have their market shares revealed on a country-wide level. As a result, the big companies, knowing their own regional market shares, would get a better insight in the regional markets than the regional companies. After consultations with the DCA, the National IT and Telecom Agency decided to exclude such spreadsheets from future statistical publications. Against that background, the DCA decided to take no further action.

An extract from The European Antitrust Review 2009