Denmark: economist perspective
In the period 2019–2020, the Danish Competition and Consumer Authority and the Competition Council (DCCA) adopted decisions on a variety of competition cases, including mergers, anticompetitive agreements and abuse of dominance.
In line with previous years, the DCCA continued its focus on economic analysis, which was applied mainly in the larger cases. Especially two Phase II merger cases stand out, of which one was approved with remedies (SEAS-NVE/Ørsted), while the other was withdrawn by the parties (Huscompagniet/Eurodan).
In this article, we focus on the most notable cases for the recent year. In addition, we discuss some observed and expected trends that we identified in a sequence of interviews with both the DCCA and the most prominent Danish competition lawyers. The interviews were conducted during June and July 2020. They included competition lawyers from the following law firms: Accura, Bech-Bruun, Bird & Bird, Bruun & Hjejle, DLA Piper, Gorrissen Federspiel, Horten, Kromann Reumert, Kammeradvokaten, Nielsen Nørager and Plesner.
Mergers: Successful creation of a merger unit, but lawyers call for further improvements
In the period 2019-2020, the DCCA adopted decisions on a total of 31 merger cases, down from 55 in the previous year. The number of decisions was 20 in 2019 and 11 in 2020 that included the covid-19 lockdown period (see Figure 1).
Of the 31 decisions, 22 were approved under the simplified procedure whereas the remaining nine were approved under the standard procedure (see Figure 1).
Figure 1: Number of mergers decided by the DCCA
Of the nine the standard procedure cases, eight were approved during Phase I and all without remedies. The only case that was decided in Phase II was SEAS-NVE/Ørsted and it was approved with remedies.
To complete the picture, it should be mentioned that in 2020 the DCCA also handled one case that was withdrawn by the parties in Phase II (Huscompagniet/Eurodan). In addition, in 2020, one case was also referred to the EU Commission (Mastercard/Nets).
In our interviews with the Danish competition lawyers, we asked them about recent and expected trends in merger control in Denmark.
Several lawyers praised the DCCA for an improved case handling. Especially the handling of small and unproblematic merger cases is perceived to be effective. These cases include cases under both the simplified and the standard procedure. The process in these cases is generally perceived as efficient and smooth. Some competition lawyers told us that the DCCA is good and has become better at asking the right question and getting the unproblematic cases identified quickly and without unnecessary detours. Some lawyers explained the improvement with more experienced case handlers. The establishment of the dedicated merger unit in 2018 was also mentioned as a successful initiative.
The interviews revealed that the duration of the pre-notification process frustrate some lawyers. They call for clearer rules. They claim that the pre-notification process is generally longer in Denmark than other jurisdictions. Their conception is that the pre-notification process is sometimes used to extend the duration of the formal merger investigation periods. The DCCA does not subscribe to this interpretation. It told us that they only do the necessary investigations and that a long pre-notification process is usually related to lack of information in the notifications received from the lawyers. As an example, in one case the DCCA has experienced that a party only filled out half of the notification form in the first notification.
Transparency and predictability of the economic analyses deployed by the DCCA in the large merger investigations was another topic raised by some lawyers. The most common analysis is a price increase analysis, such as upward price pressure and indicative price rise (IPR) analysis. Bidding analysis is another type of economic assessment that was used. During 2h2019 and 1h2020, economic analysis was primarily used in Phase II cases SEAS-NVE/Ørsted and Huscompagniet/Eurodan (withdrawn by the parties).
The lawyers call for more transparency about both the methods applied and how the DCCA assesses and interprets whether the results support the existence of a SIEC. Specifically, some of them call for some threshold values and more guidance on how to analyse when the estimated price increases are neutralised by other factors (eg, effects of entry and repositioning).
In our interview, the DCCA told us that no meaningful threshold values can be defined. It stressed that the results of the economic analysis (eg, the price increase analysis) should always be considered as part of a broad set of evidence. The DCCA also said that guidance on how to analyse other factors including entry and repositioning follows from the very elaborate previous decisions (eg, the Royal Unibrew/Cult decision from June 2019).
Concerns regarding the effectiveness of the current appeals system was also mentioned by some lawyers. Despite merger control being part of the Danish competition law since 2000, a merger decision from the DCCA has yet to be appealed. Some competition lawyers find that this indicates that the appeals system does not work. They fear the lack of appeals could have a negative impact on the quality of the decisions taken by the DCCA. The DCCA do not fully recognise this risk. It finds that the possibility of appeal is very present to the authority. As in any other decision by the DCCA, the notifying party can appeal a prohibition decision. The DCCA considers the procedure to be quite similar to the way parties can appeal prohibition decisions by the European Commission.
Some lawyers and the DCCA talked about the Court’s recent ruling against the EU Commission in the Three/O2 merger case. Both said that it is still too early to draw conclusions, but that it could influence the assessment of future mergers. If upheld, both lawyers and – to some extent – the DCCA find that the judgment could potentially change the assessment of mergers where the merged firm would not be dominant, and the theory of harm is elimination of a close competitor and an important competitive force in the market. Currently, the European Commission is appealing the judgment.
Anticompetitive agreements: more “by object” decisions and controversial guidelines for joint bidding
With the keywords being “by object” and joint bidding, anticompetitive agreements continues to draw attention in Denmark.
Our interviews revealed that some lawyers find that the DCCA is focusing too much on “by object” infringements. They find the DCCA should decide more anticompetitive agreement cases based on an assessment of their effects on competition.
In recent years the DCCA has handled and decided several cases involving anticompetitive agreements as “by object” infringement. The most cited case is the road marking consortium case from 2016. It was finally decided in August 2019 when the Danish Supreme Court upheld that the two undertakings, LKF Vejmarkering (now GVCO) and Eurostar Danmark, infringed competition rules in 2014 when they submitted joint bids for a project for the Danish Road Directorate. Another high-profile case is a case from 2017 regarding the Danish roofing felt market. In September 2018, the Appeals Tribunal remitted the case to the Danish Competition Council. In June 2020, the DCCA announced that it has dropped the case.
During the recent year the DCCA has decided three new “by object” infringements. In June 2020, the DCCA adopted two separate decisions concerning exchange of information between HUGO BOSS the international manufacturer, supplier and retailer of clothing and two Danish retailers. In June 2020, the DCCA also decided that the digital platform Ageras A/S (Ageras) had infringed the competition rules. Ageras’s digital platform allows users of professional services such as accounting, bookkeeping and legal services to connect its partners (accountants, bookkeepers and lawyers). The DCCA found that Ageras infringed article 101 by systematically informing the partners of a “estimated market price”. It was provided via a pop-up prompt provided to the partners if they are about to submit bids that are deemed too low by Ageras.
The guidelines for joint bidding remain a hot topic in Denmark. Following the Danish Supreme Court’s final decision in the above-mentioned road marking consortium case, the DCCA has initiated an update of these guidelines. A draft was published on 7 May 2020, and a public hearing was closed 20 May 2020. The DCCA is currently reviewing the responses. According to the DCCA, the final version can be expected in November 2020.
During our interviews, several of the lawyers told us that they found the draft guidelines somewhat unclear. They are not optimistic about the final guidelines. Some lawyers fear that clients are dropping too many opportunities for joint bidding. The DCCA, on the other hand, states that the guidelines are very comprehensive compared to guidelines from other authorities and that they reflect the current case law by, for example, the Danish Supreme Court.
Abuse of dominance: one new case
The DCCA has decided one new abuse of dominance case in the year running from end June 2019 to end of June 2020.
In June 2020, the DCCA found that the largest distributor of unaddressed mail in Denmark, FK Distribution, has abused its dominant position through illegal tying. FK Distribution’s conduct implied that buyers of printed unaddressed mail were required also to advertise and pay for advertising at FK Distribution’s digital platform called “minetilbud.dk”.
The Maritime and Commercial Court also decided one case. In March 2020, the court found that CD Pharma had abused its dominant position by charging unfair prices for the drug Syntocinon. The Court found that it constituted an abuse of dominance when CD Pharma increased the price on Syntocinon from approximately €6 to €127 between 28 April 2014 and 27 October 2014. The court thereby upheld the decisions from the DCCA from January 2018 and the Appeals Tribunal from November 2018.
Damages cases: more cases go directly to the court system
Our interviews revealed that the number of competition damage cases is slowly growing. However, it is still below the level expected by the lawyers before the new damage directive came into force.
Some lawyers pointed to a trend that the Danish damage cases are not follow-on cases but are taken directly to the court system. They said several such cases are expected to appear in the court system in the coming years. One case that is pending in the court system is a dispute between Nissan Nordic Europe OY and Daugaard Biler A/S concerning breach of contract.