Denmark: economist perspective

In the past year, the Danish Competition and Consumer Authority (DCCA) and the Competition Council have issued decisions in a variety of competition cases. The clearest trends are a significant increase in the number of merger decisions and a greater focus on cases involving platform competition.

The DCCA has maintained a strong focus on economic analysis in the past year. As in recent years, larger merger cases have speared the development. For example, in a recent merger case,[1] the DCCA performed a catchment area analysis to define the relevant geographical market.

In this article, we focus on the most important cases from the past year. We also discuss some observed and expected trends 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 2021 and included competition lawyers from the following law firms: Accura, Bech-Bruun, Bruun & Hjejle, DLA Piper, Focus Advokater, Gorrissen Federspiel, Horten, Kromann Reumert, and Kammeradvokaten.

Mergers: a significant upsurge in the number of merger decisions

In the past year, the DCCA issued decisions in 63 merger cases. This is an increase of more than 100 per cent compared to the 31 decisions issued in the previous year, which included the first covid-19 lockdown period. The number of merger decisions was especially high in the first half of 2021, with 42 decisions. Of the 63 decisions from the past year, 52 were approved under the simplified procedure whereas the remaining 11 were approved under the standard procedure, see Figure 1.

Figure 1: Number of mergers decided by the DCCA

image-20211023014541-1

Note: The figure excludes cases that were dropped by the parties before a decision was issued.
Source: DCCA, Liste over fusionssager 2018, 2019, 2021 (as updated 9 August 2021).

Of the seven standard procedure cases decided in the first half of 2021, three mergers went to the Competition Council for approval. Out of these three, two[2] were approved without remedies. The only merger approval subject to remedies was the Orifarm/Takeda merger, which was cleared in March 2021. Two mergers[3] were also dropped by the parties before a decision was reached.

In our interviews with the Danish competition lawyers, we have asked them about recent and expected trends in merger control in Denmark. Most lawyers credit the DCCA for an efficient case handling of unproblematic mergers. While these processes were also considered to be efficient in previous years, many pointed out that the process has improved further during the past year. Small and unproblematic merger cases include cases under both the simplified and the standard procedure. Several lawyers repeated that with the establishment of the dedicated merger unit in 2018, case handlers have become more experienced. They have generally become better at asking the right questions and identifying unproblematic cases smoothly and quickly. 

The interviews also revealed that the duration of the approval process continues to create frustration among both companies and lawyers. The criticism is mainly concentrated on larger mergers where the DCCA identifies potential concerns. The firms claim that the DCCA works too slowly and often makes the approval of a simple transaction more complex than necessary.[4] Some lawyers also find that the DCCA spends too much time on small and economically insignificant markets. The DCCA does not agree with this perception. It stresses that it is obliged to look at all aspects of a case and that there is no de minimis threshold in the merger rules. The DCCA often perceives companies as reluctant to admit that their merger plans may give rise to competition concerns.

Further, some lawyers would welcome more transparency and predictability in the economic analyses conducted by the DCCA. The most common analysis is a price increase analysis, such as the Upward Pricing Pressure (UPP) and the Indicative Price Rise (IPR) analysis. The lawyers ask for more transparency about both the methods applied and how the DCCA assesses and interprets if the results support the existence of a significant impediment to effective competition (SIEC).

Since we conducted our interviews, the DCCA has published an article about the use of economic analysis in Danish merger investigations.[5] Here, the DCCA outlines its considerations when deciding which economic methodologies to apply in a merger investigation. It gives an overview of the current toolbox and how best to collaborate with the DCCA during the process. It also stresses that the relevant economic analysis must be decided on a case-by-case basis. Time will tell if the article can make a difference and lower the frustration among the lawyers.

Anticompetitive agreements: ‘by object’ decisions remain an area of disagreement and platforms are the new attention area

As in previous years, our interviews revealed that many lawyers find that the DCCA is taking too much of a form-based approach and focuses too much on ‘by object’ infringements. They urge the DCCA to adopt a more effects-based approach to anticompetitive agreements. The DCCA, on the other hand, has stated that the facts of the cases considered fit a mainstream interpretation of ‘by object’ infringements.

In the past year, the increasing focus on platform competition has continued. In August 2020, the Competition Council issued decisions in two such cases about the anticompetitive price agreements of two digital platforms for cleaning services after accepting commitments that removed a minimum hourly fee for the platform.

Several lawyers praise the DCCA for prioritising this new area. The cases have offered good guidance for them and their clients. However, some lawyers also call for more transparency about the specific prioritisation of new platform cases. Specifically, they ask for more guidance on why specific cases have been prioritised and others have not.

Joint bidding continues to cause frustration among the lawyers. This goes back to the famous road marking consortium case from 2016. The case 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.

The Supreme Court’s final decision prompted the DCCA to initiate an update of its guidelines for joint bidding.[6] The update was published in September 2020. However, according to many lawyers and companies, it has not solved the problem. The guidelines are still seen as too theoretical, and lawyers still report that clients are dropping opportunities for joint bidding. The DCCA stresses that its guidelines closely reflect case law and cannot – and should never – substitute the advice given to companies by lawyers in specific cases.

In July 2021, the DCCA published a short new guide for companies that are considering a joint bid for a task. The guide, which has been approved by the Competition Council, is a supplement to the somewhat longer guidelines updated in September 2020. It remains to be seen if the short new guide will reduce the companies’ frustrations.

During 2021, the Competition Appeals Tribunal has upheld two separate decisions of the Danish Competition Council. The cases concerned HUGO BOSS and Axel Kaufmann and HUGO BOSS and Ginsborg respectively. The Appeals Tribunal confirmed that the parties’ exchange of information on prices, discounts, and quantities concerning to future sales were illegal under Section 6 of the Danish Competition Act and TFEU article 101.

In addition, the Court of Appeal of Eastern Denmark took a final decision in a case against HMN Naturgas, two of its competitors, and an industry association. The case concerned a decision of the Competition Council in 2016, which was later upheld by the Appeals Tribunal. In the final decision, HMN Naturgas was convicted of having illegally coordinated prices for the service of natural gas furnaces in the Greater Copenhagen area and Central and Northern Jutland.

Abuse of dominance: one new case

The DCCA has not issued any decisions in new abuse of dominance cases between the end of July 2020 and the end of June 2021.

The Danish Competition Appeals Tribunal, however, has issued a judgment in one abuse case. In May 2021, the Appeals Tribunal upheld a DCCA decision against FK Distribution, the largest distributor of unaddressed mail in Denmark, from June 2020. The Appeals Tribunal confirmed that FK Distribution had abused its dominant position through illegal tying. FK Distribution’s conduct implied that buyers of printed unaddressed mail were required to advertise and pay for advertising at FK Distribution’s digital platform called ‘minetilbud.dk’. FK Distribution has subsequently taken the case to the court system for further testing.

The Danish Maritime and Commercial High Court also issued a judgment in an abuse of dominance case which began in 2010. In January 2021, the Court issued a judgment that confirmed the decision of the Competition Council from 2013. The case concerns DSB, which tried to reach an agreement regarding the renovation of the IC3-train engines with Deutz and Diesel Motor Nordic. When the negotiations broke down, DSB entered into an agreement with a consortium of four smaller companies. Through their refusal to supply and the prevention of parallel trade, Deutz and Diesel Motor Nordic managed to prevent the consortium from fulfilling the agreement with DSB. The Court decided that Deutz had thereby abused its dominant position and that Deutz and Diesel Motor Nordic jointly entered into an anticompetitive agreement to prevent the import of spare parts. This case has also been brought to the court system for further testing.

Damages cases: more cases go directly to the court system

Our interviews reveal that the number of competition damage cases in Denmark is low compared to many other jurisdictions and that no large change is foreseen in the near future. Several competition damage cases are not follow-on cases but are taken directly to the court system. One such case is the dispute between Nissan Nordic Europe OY and Daugaard Biler A/S concerning a breach of contract. A judgment from the High Commercial and Maritime Court, in this case, is expected in September 2021.

Amendments to the Danish Competition Act: lawyers anticipate some impact

In March 2021, several amendments to the Danish Competition Act came into force. The amendments were designed to implement the ECN+ Directive and consequently strengthen the tools and powers of the DCCA in its practical enforcement of the competition rules. During our interviews, we asked the competition lawyers about their views on two amendments.

The first amendment is a new system with civil fines. Until now, a case involving fines would first be investigated by the DCCA, which would then refer the case to the Danish State Prosecutor for Serious Economic and International Crime. The State Prosecutor would then bring an action to have the court impose a criminal fine on the undertaking. The DCCA now has the possibility of going to the Maritime and Commercial High Court and claim the issuing of a so-called ‘civil fine’.

Our interviews reveal that many lawyers expect the new system to cause an initial upsurge in the number of cases involving fines. They expect that the response from the Maritime and Commercial High Court will decide if the initial upsurge will remain or disappear. Some lawyers expect that the civil proceedings before the Maritime and Commercial High Court will include more economic evidence from the parties to minimise the fines.

According to the DCCA, the new system will require additional resources as the DCCA will now have to fully analyse cases that were previously subject to a very short investigation before being sent to the State Prosecutor for further investigation. This will influence the DCCA’s prioritisation of cases.

The second amendment is a new possibility to bypass the Competition Appeals Tribunal. Before the amendment, a decision from the Competition Council had to go through the Competition Appeals Tribunal before it could be brought before the courts. Due to increasing criticism of the system being too slow, it is now optional to bring substantive decisions before the Appeals Tribunal. Companies can now choose to go directly to the courts and get a full judicial review of a decision.

Most lawyers expect the new option to be used going forward. Several lawyers find that the Competition Appeals Tribunal has too often failed to do a proper review of the contested decision so it will only be an advantage if the process can speed up. However, some lawyers predict that the impact depends on which line the new chairman of the Competition Appeals Tribunal (Jan Schans Christensen) will take towards the first decision from the Competition Council.

[1] The Stark/Jens Schulz merger.

[2] Polaris’s acquisition of four bus operators and Stark/Jens Schultz.

[3]Arkil/NCC Road Services and Stofa/Aalborg-Nørresundby Antenneforening.

[4] The criticism was expressed in the newspaper Fyens Stiftstidende (Fyens.dk), see for example https://fyens.dk/artikel/otte-virksomheder-kritiserer-konkurrencestyrelsen.

[5] See ‘Economic Analysis in Danish Merger Investigations’, DCCA, July 2021.

[6] See ’ Hvad skal din virksomhed overveje ved fælles bud med andre virksomheder?’, DCCA, July 2021.

Get unlimited access to all Global Competition Review content