Denmark: economist perspective
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In Denmark, the use of economics continues to be most prevalent in the context of merger inquiries. In this article, we discuss some of the most prominent cases and recent and expected trends in the area of competition enforcement. First, we describe how the Danish Competition and Consumer Authority (DCCA) handled 63 merger cases during the past year, none of which, however, required remedies by the involved parties. Second, we discuss the use of advanced economic modelling employed by the DCCA when assessing the counterfactual scenario, drawing insights from Volvo Danmark’s acquisition of Titan Lastvogne. Third, we provide an overview of the seminal decision by the Court of Appeal of Eastern Denmark to remit a 10-year-old case back for renewed assessment by the Competition Council. Fourth, we discuss the role of economics and economic advisors in merger cases and practitioners’ wish for greater transparency concerning economic analyses conducted by the DCCA. Finally, we touch upon the recent amendment to the Danish Competition Act, allowing the DCCA to issue civil fines for breaches of competition law. To date, no cases have been brought to court and some practitioners expect that it could make room for more economic analysis if this happens.
To write this article, we consulted leading professionals from some of the most experienced law firms in Denmark: Accura, Bech-Bruun, Bruun & Hjejle, DLA Piper, Gorrissen Federspiel, Horten, Poul Schmidt/Kammeradvokaten, Kromann Reumert and Plesner. We also interviewed the DCCA. The interviews took place between April and May 2023.
The number of mergers cleared by the dcca and the Competition Council continues to be high
In the past year, the second half of 2022 and the first half of 2023, the DCCA has issued decisions in 63 merger cases. Most of the merger decisions were approved under the simplified procedure, while six were approved under the ordinary procedure and required more thorough analysis; see Figure 1.
Of the seven cases approved under the ordinary procedure, three were approved by the Competition Council in Phase II, namely Atea/KMD, Volvo Danmark/Titan Lastvogne and Semler Mobility Retail /Car Holding.,  However, all were cleared by the Competition Council without remedies.
Figure 1 - Mergers cleared by the DCCA and the Competition Council
Note: The figure excludes cases that were abandoned by the parties before a decision was issued. The categorisation of cases depends on how the merger is notified. The small deviations from the previously published articles in the number of cases in 2019, 2020 and 2021 are due to an updated list from the DCCA.
Source: The DCCA, ‘Liste over fusionssager’ (as updated 30 July 2023).
When the interviews were conducted and at the time of writing this article, the DCCA and the Competition Council had cleared one merger following the ordinary procedure in 2023. However, according to the DCCA, the number of ongoing, complex mergers has never been higher.
The DCCA employed economic modelling to assess the counterfactual scenario in Volvo Danmark /Titan Lastvogne
One of the mergers that stood out amongst practitioners was Volvo Danmark's acquisition of Titan Lastvogne, an authorised dealership and repairer of Volvo and Renault trucks, which directly would affect the aftermarkets for repair, maintenance, and sale of spare parts. The acquisition was announced to the DCCA in May 2021 and cleared in September 2022. The approval followed a thorough Phase II review by the DCCA but was eventually cleared without remedies “even though the merger clearly strengthens Volvo Danmark’s position as a dealer and repairer of trucks”. In some markets, Volvo Danmark would have market shares in the range of 60–70 per cent after the merger.
The DCCA’s main reason for the clearance was that Titan stood to lose its authorisation under Volvo Denmark. Before the notification, Volvo Denmark had terminated its agreement with Titan Lastvogne as dealer and repairer of the two brands. The DCCA specifically assessed whether the termination was part of the merger strategy. The parties, however, documented that Titan Lastvogne would lose their authorisation irrespective of the merger and that the termination was therefore not specific to the merger.
The special situation where Titan Lastvogne would cease to be authorised meant that the DCCA did not consider the contrafactual scenario to be the status quo. In its evaluation of the competitive effects of the merger, the DCCA put weight on the fact that Volvo Danmark’s market shares would have increased in any event, both in the factual scenario and the counterfactual scenario without the proposed merger. Thereby, the DCCA concluded that Volvo Denmark would strengthen its position regardless and that the merger would not in itself limit competition significantly.
In its analysis, the DCCA employed complex economic modelling to do the indicative price rise analysis. In the model, the DCCA considered both a scenario where Titan Lastvogne would stay active in the market and continue as an independent workshop after the merger and a scenario where Titan Lastvogne would leave the market. Additionally, a central element of the DCCA’s quantitative assessment of the acquisition was the effects on the aftermarkets for repair, maintenance, and sale of spare parts.
While the current merger decision contains limited information about the specifics of the model, the DCCA indicated that it would produce a series of articles about the model. According to the DCCA, the further developments of the modelling framework could also be relevant for future mergers, for instance, to analyse input foreclosure and bundling.
The Court of Appeal of Eastern Denmark remitted a case back for renewed assessment by the Competition Council
In February 2023, the Court of Appeal of Eastern Denmark (the Court of Appeal) overturned a decision from the Competition Council against German engine manufacturer Deutz AG and the company’s Danish distributor, Diesel Motor Nordic. With its judgment, the Court of Appeal turned around a 10-year-old abuse of dominance decision from the Competition Council and generated widespread discussion among practitioners. The Competition Council has requested permission to appeal the judgment to the Supreme Court of Denmark.
The competition case related to Deutz AG and Diesel Motor Nordic has a long appeal history in the Danish court system. In 2013, the Competition Council ruled that the two companies had infringed Danish and European competition legislation. According to the Competition Council, they did so by preventing the supply of spare parts for the Danish IC3-trains, owned by the Danish State Railways, (DSB). The decision was upheld by the Danish Competition Appeal Tribunal in 2013 before the Danish Maritime and Commercial High Court confirmed the ruling in 2021.
However, the Court of Appeal has now remitted the case back for renewed assessment by the Competition Council. The Court of Appeal reasons that remittance is justified as the case has not been sufficiently investigated. In its excerpt from the case, the Court of Appeal stated that the basis for the definition and assessment of dominance was inadequate to an extent that justified the cancellation and remittance of the part of the Competition Council’s decision concerning Deutz AG’s abuse of a dominant position. For instance, the Court stated that a small but significant non-transitory increase in prices test in the decision by the Competition Council appeared to be based solely on input from DSB.
Practitioners welcome economic analysis from advisers but find little transparency in the DCCA’s analysis
The use of economics in Danish competition law enforcement continues to be prevalent, especially in the context of merger cases, according to the practitioners. As in previous years, most interviewees noted merger investigations as a primary example where economists continued to provide valuable support.
The interviewees have been inclined to involve economic advisers in merger cases as early as possible. When the economists are brought in early, it leaves more room for them to contribute to the overall merger proceedings. The role of economists is focused on classical issues such as market definitions, market share calculations, diversion ratio estimations and price pressure indices assessments.
The DCCA also considers the early involvement of economists as beneficial for their case handling, particularly in cases where a merger is perceived early on as ‘risky’ (ie, it is highly likely that the merger will be referred to Phase II review). In such situations, the economic analysis provided by the parties can shorten the clearance process, the DCCA added. The DCCA considers such contributions particularly useful when they consist of economic analysis supported by data and factual evidence rather than a rebuttal of the DCCA’s analyses.
Despite the general view that economic analyses provide valuable support, the interviewees have mixed views on how the DCCA welcomes economic analysis from economic advisers. As also noted in previous articles, the authority has a large team of in-house economists, which seems to have been central in driving an increased focus on economic analysis and evidence in recent years. According to some practitioners, the authority’s increased use of its own economic analyses means that the authority is less reliant on evidence brought forward by the parties. While the practitioners see the need for the authority to have a healthy scepticism, they also believe that too little emphasis is sometimes placed on the economic evidence brought forward by the merging parties and their advisers.
While the DCCA does not recognise the view of being ‘too hands-on’, it notes the importance of testing economic analysis and results provided by the merging parties. Evidence put forward by the parties will always be considered by the DCCA in its assessment. However, because the authority may very well have access to more information than the parties, a potential analysis done by economic advisors cannot always replace the analysis done by the DCCA.
Several interviewees still consider that the economic analysis conducted by the DCCA can be somewhat of a black box. They mention that – especially in merger decisions – the DCCA rarely shares information about the economic analysis they have conducted or the models they set up, which are often big and complex. This makes it difficult for merging parties to know what to expect and can lead to uncertainty and a lack of predictability for the companies involved.
Generally, the interviewees asked for more insight into the economic analysis done by the DCCA, especially for the legal and economic advisers. Some of the interviewees consider a lack of insight an important legal rights issue because advisers have difficulty advising their clients.
One example brought forward by the interviewees is that the advisers do not get full access to the data from the authority’s market investigation. According to the interviewees, the advisers receive the results in a condensed form, which makes it impossible to replicate the findings from the DCCA and use the data to conduct their own analysis.
In relation to transparency and market investigations, the recent ruling by the Court of Appeal of Eastern Denmark was also mentioned. When the case was brought before the Court of Appeal, the advisers got access to the market investigation done by the DCCA, both the data and the questions, which was crucial.
The DCCA – on the other hand – does not recognise such a lack of transparency. The DCCA states that the parties are given full access to data. Full access is only limited by the requirement for the authority to extract information that contains business secrets or information that can harm competition.
Room for more effect-based economic analysis when civil fines start being tested in court
The amendment of the Danish Competition Act in 2021 meant that the DCCA can now issue civil fines to companies who breach competition law. In cases where the companies do not accept these fines, or in cases without legal precedence, the DCCA will approach the Maritime and Commercial High Court to claim the issuing of civil fines.
The DCCA still considers the amendment to be somewhat of a game-changer as it allows the DCCA to efficiently handle many cases. While some practitioners noted that companies are happy with the option of civil fines because the DCCA and the Competition Council can handle cases faster, they also mentioned that the new process gives rise to uncertainty, for instance, concerning how the DCCA determines the level of the fines and the fact that, so far, no cases or fines have been brought before the courts. The practitioners’ general impression is that the level of civil fines is currently at the lower end of the spectrum, which could incentivise companies to accept the fine instead of spending resources on testing the case in court.
How such court proceedings will affect the need for economic analysis remains unclear. Some practitioners expect that it will make room for more economic analysis. As of now, most cases at the DCCA relate to ‘by object’ infringements that disregard effect-based analysis. When cases make their way to the courts, the interviewees consider that such analysis could be relevant for determining the right size of the civil fine.
 The ordinary procedure requires a more thorough analysis than the simplified procedure. A proposed merger is – per default – assessed under the ordinary procedure; however, it can be assessed under the simplified procedure if certain conditions are met. For instance, if there is no horizontal or vertical overlap between the merging parties, cf. https://www.kfst.dk/vejledninger/kfst/dansk/2020/20200915-vejledning-om-fusionskontrol/ (only available in Danish).
 Atea/KMD (2022), https://www.kfst.dk/afgoerelser-ruling/konkurrenceomraadet/afgoerelser/2022/20221130-godkendelse-af-atea-as-erhvervelse-af-enekontrol-over-kmd-as-forretningsenhed-kmd-product-and-services/ (only available in Danish).
 Volvo Danmark/Titan Lastvogne (2022), https://www.kfst.dk/afgoerelser-ruling/konkurrenceomraadet/afgoerelser/2022/20220928-godkendelse-af-volvo-danmark-as-erhvervelse-af-aktiver-og-rettigheder-fra-titan-lastvogne/ (only available in Danish).
 The Competition Council cleared Semler Mobility Retail/Car Holding by 28 June 2023, and therefore the interviewees did not get a chance to share their view on this acquisition for this year’s article.
Semler Mobility Retail/Car Holding (2023), https://kfst.dk/afgoerelser-ruling/konkurrenceomraadet/afgoerelser/2023/20230628-semler-mobility-retail-as-erhvervelse-af-enekontrol-over-car-holding-as/ (only in Danish).
 Titan is an authorised dealer and repairer of Volvo and Renault trucks. Volvo Denmark is a part of the Volvo group, is the Danish importer of Volvo and Renault trucks and owns an authorised dealership.
 Also the part of the decision concerning an anticompetitive agreement was cancelled and remitted back for renewed assessment by the Competition Council.
 The DCCA: https://www.domstol.dk/media/u3zloulk/bs-5308-21-og-bs-13351-21.pdf (only available in Danish).
 The DCCA: https://www.kfst.dk/pressemeddelelser/kfst/2023/20230227-ostre-landsret-hjemviser-konkurrencesag-om-togreservedele/ (only available in Danish).
 Previously, a breach of competition law was considered a criminal offence, meaning that only the police could issue fines.