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Denmark: Competition and Consumer Authority
Director general of the Danish Competition and Consumer Authority
2013 will be a year to remember in the history of the Danish Competition and Consumer Authority. It was a year of solid progress made through new empowering legislation and a new high in efforts to enforce new competition rules with the goal of making the highest possible impact on the creation of well-functioning markets and higher consumer welfare.
The facts form their own significant pattern. 2013 became an all-time record year regarding the number of cases filed. The Danish Competition and Consumer Authority intervened 12 times and handed over cases of infringement of competition rules for further investigation. The Danish court system prescribes that cases are conducted by the state prosecutor for serious economic and international crime.
Furthermore, March 2013 represents a landmark where participation in cartels is sanctioned with the possibility of imprisonment for up to six years in severe cases. Along with increased levels of fines, the possibility of imprisonment is a crucial instrument in the quest to increase sustainable respect for the laws of competition.
The Danish Competition and Consumer Authority and the police have an improved framework and better opportunities to investigate violations of competition law than ever before. We await the positive effects of the legislation in the years to come; but our efforts have already begun to make an impact in 2013.
Six cases of large and small cartels were discovered and more of them are in the pipeline for a final verdict through public prosecution in 2014. The ongoing cases also represent a record for the Danish Competition and Consumer Authority measured on the number of cartels discovered in one year.
The responsible directors or employees of some companies now await the first verdicts based on the new legislation with harsher fines and risk of imprisonment.
Among the latest instances of cartels is the first charge against a comprehensive cartel within a widespread group of companies in the constructions industry in Copenhagen. Thirty-three companies have been charged for illegally fixing prices of private and public construction jobs worth up to 500 million kroner, forming one of the biggest cartel discoveries in Danish history.
Seven competition law infringement cases have already led to nine companies paying fines following verdicts in 2013. The results did not come without good reason – the 41 unannounced raids performed by our investigators were based on well-grounded suspicion of infringement of the rules of competition.
Among the latest large-scale cases terminated in 2013, the Danish Council of Competition committed the national telecommunications provider TDC to document differences in retail and wholesale prices in order to allow and secure competition on the nationwide broadband market for private consumers.
Another large scale improvement came through a case where national payment service provider Nets was obliged to lower the fees for credit card payment through e-commerce after a decision from the Danish Competition Appeal Tribunal.
In accordance with our strategy, we prioritise our resources for cases we believe have the greatest positive effect on society, measured on economic growth and consumer welfare.
But our efforts combine much more than important law enforcement and investigation. 2013 also displayed our efforts to control larger business mergers in accordance with our vision to protect and secure competitive and well-functioning markets. Larger companies gave the Competition Council binding commitments of, for instance, divestments in order to obtain approval of a merger that would have been limiting competition on the respective market.
Between the more significant cases is the recent merger between the worldwide professional services firm Ernst & Young and Danish KPMG. Here, the Danish Competition and Consumer Authority intervened and acquired a string of commitments to avert an unhealthy dominance of the market for consulting and auditing. Among the commitments, Ernst & Young and KPMG are obliged to set employees and a number of partners free if they want to leave for the newly established competitor KPMG 2014. Without the commitments, the merger would have been putting considerable pressure on effective competition in the market.
Established furniture retailer Jysk merged with competitor IDdesign in September 2013. Approval of the merger between the two big competitors was a necessary step as the furniture chains residing under IDdesign’s ownership would most likely have headed for bankruptcy unless they merged with Jysk.
Aside from mergers intervention, wider economic sanctions and the risk of imprisonment set new standards for our ambitions in the future. 2013 also became the year we conveyed several important analyses effectively by raising political and public awareness of the results and necessity of competitive markets. We strive to apply a realistic approach that seeks to ensure that consumers and companies follow our recommendations.
Among the several analyses of competition and consumer welfare was our analysis showing the many positive results of liberating the market for book selling. We were able to convey results of significantly lowered prices and improved product access for consumers through a larger range of distribution channels.
Consumers can also bear improved hopes for political action, lower prices and access to more innovative services on the markets for chiropractors and physiotherapists thanks to our efforts in market analysis. We came out strong and armed with fact-based arguments when recommending a change in the regulation of the market that obstructs effective and equal competition.
Several interesting analyses are already in the pipeline for 2014.
2013 also became a platform from which our voice was heard in forming recommendations from the Danish Productivity Commission. A range of proposals from the commission were acknowledged and included in a series of initiatives from the Danish government aimed at a deregulation of a series of markets in order to diminish barriers preventing consumer welfare through competition.
Among the initiatives is a showdown with a wider range of employees’ employment clauses and limits for the duration of solicitation clauses. An initiative providing realistic hope for more competitive markets for electricians, pilots and a long list of other professions limited by long-term clauses preventing customer and employee movement between competitors.
We expect the results of these efforts to cause valuable improvements in the years to come.
On an equally important scale, the work of the Danish Productivity Commission led to government proposals that can bring a decisive change in the framework for the Danish Competition and Consumer Authority. Replacing the current Competition Council with the authority’s own board of experts is just one of the major steps in promoting our independence from Danish businesses.
Increased efforts through strategic communication also contributed effectively to a higher level of public awareness of the forfeited possibilities of increased economic growth, innovation and consumer welfare through competition. If the public knows what we do, then our work has the right kind of impact.
The new legal framework was a welcome gift for our external communication. We seized the opportunity to improve the levels of public and company awareness surrounding the many adverse effects of the lack of competition, the rise of cartels and other unfortunate company and consumer behaviour. Our 2013–2016 strategy of ‘Clear effects in the markets’ also sets high standards for enforcing our visions and objectives through communication. In a vast number of appearances through a diverse set of media channels we successfully raised awareness of harsher penalties surrounding the infringement of competition law and risk of detection in a positive dialogue with the Danish companies.
This year, cinemas across Denmark showed the motion picture The Cartel – it became our impetus for rewarding media attention. We exploited the opportunity to attract greater publicity through several TV appearances and by launching our own nationwide media campaign on the new legislation around cartels.
By writing a high number of debates and chronicles in national and regional newspapers, magazines and directly to relevant trade organisations; giving a string of lectures; producing informative animation films; and strengthening relations to the media-industry, we helped further public understanding of effects of competition. It also increased awareness of the possibility to apply for leniency when handing over new and crucial information that can help the authorities discover and solve instances of cartels.
We have put action behind our words. Our results in 2013 represent a solid step towards well-functioning markets in Denmark. 2014 has already seen our first forceful efforts to obtain the high level of ambitions and visions in the years to come.
Director general of the Danish Competition and Consumer Authority
Next Chapter: Denmark: Overview