Denmark: the differences – and similarities – between Danish and EU competition law

In summary

This article provides legal practitioners with an overview of competition law in Denmark, which is based on EU competition law. To a large extent, the Danish rules are similar to the EU rules. By covering recent practice, including but not limited to the Danish Competition Authorities enforcement priorities, the focus of this article is to provide insight on relevant developments in Danish Competition Law.

Discussion points

• Agreements
• Unilateral conduct
• State aid
• Decision-making powers and sanctions
• Damages for breach of competition rules

Referenced in this article

• The Special Crime Unit, NSK (formerly the Danish State Prosecutor for Economic and International Crime, SØIK)
• The Danish Competition Act (Consolidated Act No. 360 of 4 March 2021) and the English version (Consolidated Act No. 155 of 1 March 2018 – historical version)
• The Danish Competition and Consumer Authority (DCCA)
• The Danish Competition Council (the Council)
• The Danish Competition Appeals Tribunal (DCAT)
• Case law

Agreements

Introduction

The prohibition on anticompetitive agreements in the Danish Competition Act (the Competition Act) follows a structure similar to that of article 101 of the Treaty of the Functioning of the European Union (TFEU). Section 6 of the Competition Act contains the general prohibitions and is comparable to article 101(1) of the TFEU, whereas section 8 is comparable to article 101(3) of the TFEU. Case law from the European Commission and the European Court of Justice (ECJ) is applied when interpreting the prohibition on anticompetitive agreements in the Competition Act.

Agreements subject to the Competition Act can benefit from the EU block exemptions as they have been implemented in Danish law. Further, the Competition Act provides a de minimis exemption in section 7, which was aligned as of 1 January 2018 with the De Minimis Notice 2014/C 291/01. According to the exemption, the rules on anticompetitive agreements do not apply to agreements or concerted practices if:

• the aggregate market share held by the parties to the agreement does not exceed 10 per cent on any of the relevant markets affected by the agreement, where the agreement is made between undertakings that are actual or potential competitors on any of those markets (agreements between competitors); or
• the market share held by each of the parties to the agreement does not exceed 15 per cent on any of the relevant markets affected by the agreement, where the agreement is made between undertakings that are not actual or potential competitors on any of those markets (agreements between non-competitors).

However, the Danish de minimis exemption does not apply to agreements that have restriction of competition as their object or that may affect trade between member states, as those types of agreements are subject to article 101 of the TFEU and, if applicable, the EU de minimis rule.

Section 9 of the Competition Act provides undertakings with the possibility to notify an agreement for assessment by the Danish Competition and Consumer Authority (DCCA). Similar to the previous EU system, the DCCA can, depending on the assessment, provide the undertaking with a declaration stating that the agreement does not violate section 6 of the Competition Act. However, it may refrain from considering a notification if the agreement appreciably affects trade between member states. In practice, the option of having an agreement assessed by the DCCA is rarely used.

The DCCA typically announces the strategy it intends to follow during the course of a couple of years. It follows from the strategy published in January 2019 that the DCCA will focus on, among other things, digital and technological developments. This is in accordance with the recently proposed initiative on digital markets launched by the Danish government in 2021: ‘Tech giants – fairer competition and better consumer protection’. The proposal contains several initiatives relating to competition law regulation, such as the introduction of a national market study tool for the DCCA inspired by British and Islandic experiences, an investigation on how to amend Danish merger thresholds to address killer acquisitions and a study on whether it is possible to make tech giants pay for analyses performed by independent experts. As such, the focus on digital platforms at EU level, including but not limited to the adoption of the P2B Regulation 2019/150, the upcoming Digital Services Act and Digital Markets Act, has had a distinctive impact on Danish competition law enforcement.

Cases on digital platforms

A variety of cases involving agreements between providers of digital platforms have been settled in the past few years.

In February 2022, the Competition Council (the Council) found that the Danish Association of Peugeot Dealers (PFF) had infringed the prohibition of anticompetitive agreements by deciding a collective boycott of the digital marketplace for advertisement of cars, bilbasen.dk. According to the Council, the aim of the collective boycott was to promote the competitor, biltorvet.dk, by agreeing with the independent car dealers of the brand Peugeot to refrain from advertising on bilbasen.dk. The Council concluded that the practice was detrimental to competition since it may have had harmful effects on both consumers and car sellers advertising on bilbasen.dk and has reported the case to the Special Crime Unit for criminal prosecution.

In two cases from 2020, the Council also found that digital platforms had violated the competition rules. In the first case, a platform for offers on auditing services, Ageras, had among other things informed submitters with low bids on ‘estimated market prices’ and provided the submitters with the opportunity to raise bids accordingly. The price mechanism that advised submitters on ‘market prices’ was found to be incompatible with the Competition Act’s prohibition of restrictive agreements. Ageras agreed to pay a fixed penalty fine of 1.275 million Danish kroner.

In the other case, the Council found minimum pricing on digital platforms offering private cleaning services to be restrictive on competition. The practices in question were found to prevent free pricing between independent, competing companies and were, thus, incompatible with the competition rules. The cases were closed owing to commitments from the undertakings concerned to remove the pricing mechanisms.

The HMN case

In June 2019, the Maritime and Commercial High Court upheld the Danish Competition Appeals Tribunal’s (DCAT) decision from 2017 that HMN Naturgas (HMN) and its service partners Gastech-Energi and Kiertner, as well as the energy industry association DEBRA – Energibranchen, had coordinated prices on gas furnace maintenance subscription for end-users in 2014. The Court found that the parties had agreed on a raise in HMN’s prices for end-users on subscriptions with the objective of making it possible for the service partners, who also offered gas furnace maintenance services independently of HMN, to raise their prices as well. For this reason, the Court found the agreements between HMN and the service partners to be agreements between competitors with restriction of competition as their object in violation of section 6 of the Competition Act. The Court thus refused to recognise the fact that the agreements ultimately reduced the total prices for HMN’s end-users with more than 9 million Danish kroner. The case was subsequently appealed to the High Court of Eastern Denmark by HMN, which upheld the ruling in March 2021.

In March 2022, criminal prosecution of HMN, Gastech Energi and some of the associated individuals was initiated by the Special Crime Unit. The criminal proceeding was interesting since the agreement in the civil proceedings was found to be anticompetitive ‘on principles’, even though it ultimately reduced end-user prices by 9 million Danish kroner and solely stemmed from a wish to accommodate customer complaints. However, although the legal review as well as the standard of proof differ significantly from the civil case, the City Court of Glostrup fined the companies 8 million Danish kroner and the individuals between 50,000 and 100,000 Danish kroner.

The Clear Channel/AFA JCDecaux case

In another significant judgment of November 2021, the Danish Maritime and Commercial High Court partially revoked a decision by the Council and upheld by DCAT. The case concerned two of the largest players in the market for outdoor media, Clear Channel Danmark A/S and AFA JCDecaux A/S.

Both the Council and DCAT found that the companies had entered into an illegal written agreement, which had led to coordinated discount rates in relation to different services, for example agency commission, from September 2008 to April 2015. However, quite importantly, the written agreement between the companies, which contained the clauses on discount rates, expired on 31 January 2010. Accordingly, one of the main discussion points in the case before the Court was whether the parties had continued to have a concerted practice after January 2010, and what level of proof was needed to demonstrate that such a practice existed after the agreement expired.

According to the Council and DCAT, the concerted practice did continue after January 2010, since the parallel conduct had continued after the expiration of the written agreement, and since they had not actively distanced themselves from continuing the practice after the expiration of the agreement.

Conversely, the Danish Maritime and Commercial High Court did not find it proven that a concerted practice had continued after the expiration of the agreement. According to the Court, such a finding would require more concrete and positive elements of evidence. Thus, the Court partially annulled the previous decisions by the Council and the DCAT and ruled that there had (only) been an anticompetitive agreement up until the written agreement expired, but not after. The case has now been appealed by the Council to the High Court of Eastern Denmark, where it is now pending.

The Hugo Boss, Ginsborg and Kaufmann case

The retail clothing industry has been under scrutiny in two cases from June 2020, where the Council found that competing dealers had illegally exchanged information on prices, discounts and quantities in connection with future sales. The illegal activity had taken place between, on the one hand, the manufacturer of clothing, Hugo Boss, and, on the other hand, the clothing retailers Kaufmann and Ginsborg.

The cases are interesting because Hugo Boss manufactures and supplies products to Kaufmann and Ginsborg, and, at the same time, distributes products directly to consumers. Hugo Boss is therefore active in the same downstream market for menswear as its retailers, which is why Hugo Boss has a vertical as well as a horizontal relationship with Kaufmann and Ginsborg.

Naturally, as a supplier, Hugo Boss must maintain ongoing contact with its dealers. However, as competitors, the undertakings must remember to act independently on the market and refrain from entering into any anticompetitive agreements (eg, by providing information in advance on sales ranges, sales prices and discounts in connection with future sales). Following the Council’s decisions, the DCCA has sent six injunctions and enforcement notices to undertakings in the clothing industry, thereby emphasising the illegality of exchanging information that may impede competition.

The two cases were appealed to DCAT, which upheld both decisions in June 2021. Subsequently, the Council referred the cases to the Special Crime Unit for criminal prosecution. Hugo Boss and Kaufmann (but not Ginsborg) have, however, appealed the DCAT’s decision to the Danish Maritime and Commercial High Court where the cases are now pending.

Cases on resale price maintenance

The DCCA has generally paid attention to resale price maintenance.

In December 2019, the High Court of Eastern Denmark upheld a ruling by the City Court of Næstved and imposed a fine of 1 million Danish kroner on a Danish distributor of hair products, Icon Hairspa A/S, and a fine of 100,000 Danish kroner on a member of the Icon Hairspa management for violating the prohibition on resale price maintenance. The company had required of its dealers to follow the recommended retail price as the minimum price when selling certain hair products.

In a similar case from September 2020, the design company GUBI A/S was found guilty of resale price maintenance for a period of not less than two-and-a-half years. In determining the amount of the fine, emphasis was placed on the gravity of the infringement, including that the agreements contained both vertical and horizontal elements, the duration of the infringement and GUBI’s turnover. As mitigating circumstances, it was considered that GUBI approached the DCCA voluntarily and, thus, contributed to the clarification and investigation of the case. Moreover, GUBI documented the implementation of measures to ensure such infringements will not occur again.

Cases on market sharing

At the end of 2021, the DCCA uncovered a large-scale cartel cooperation between (so far) 22 Danish nightclubs, referred to as the Nightclub cartel case. In short, the nightclubs had agreed not to open branches in each other’s designated cities or within a 20 kilometre radius of each other. The violations ranged in duration from between approximately two and 15 years. The DCCA has issued civil fines to the implicated nightclubs ranging from between €3,500 and €35,000. As such, the Nightclub cartel case was the first example of the DCCA using its new legal basis to issue fines trough the civil regime. The rather low level of fines is in part due to the rules for fixing fines (ie, the low turnover of the nightlife establishments in the preceding financial year due to covid-19), but also due to the fact that the companies themselves contributed to the uncovering of the cartel.

In a case from May 2020, MediaCenter Danmark had agreed with a competitor, MPE Distribution, that the two companies would share the market for distribution of bulk mail between them. Such agreements – on market sharing or partitioning of markets – are clear violations of the Competition Act. MediaCenter Danmark accepted to pay a fine of 2.25 million Danish kroner, while MPE Distribution received immunity from the imposition of any fines since they applied for leniency and assisted with the investigation as required.

In another case from December 2020, the City Court of Roskilde found that Sydkystens Automatik P/S had violated the Competition Act by agreeing to share the market with a competitor, FinDan El-Anlæg A/S in the period from November 2016 to February 2017. The City Court imposed a fine of 400,000 Danish kroner on Sydkystens Automatik P/S and a fine of 100,000 Danish kroner on a senior employee. The judgment has been appealed by Sydkystens Automatik P/S, and the separate case against FinDan El-Anlæg A/S is still pending.

Unilateral conduct

Introduction

Anticompetitive unilateral conduct is regulated in section 11 of the Competition Act. The section corresponds to article 102 of the TFEU and is interpreted in accordance with case law from the Commission and the ECJ. If a certain practice affects trade between EU member states, the national provision is applied with article 102 of the TFEU.

Advertising on digital platforms

The most high-profile abuse cases in Denmark have undoubtedly been in the postal sector (ie, the Post Danmark cases). The market for the distribution of unaddressed mail has, however, been declining in recent years, while the market for advertisement on digital platforms has been growing. The two markets are connected in the sense that a large proportion of advertisers are customers in both markets; hence, the DCCA has had an increased focus on abusive conduct on digital platforms.

In June 2020, the Council found that FK Distribution had abused its dominant position by tying distribution of unaddressed mail to promotion on its digital platforms. When customers bought distribution of unaddressed mail from FK Distribution, it was a condition that they also bought display on FK Distribution’s digital platforms, including minetilbud.dk. The Council found that the behaviour could create entry barriers and exclude competitors from the growing market on advertisement on digital platforms.

The Deutz AG case

In June 2013, the Council ruled that Deutz AG (a German engine manufacturer) abused its dominant position by preventing the supply of spare parts for the IC3 trains owned by the Danish state railway company, DSB. Deutz refused to supply spare parts for the IC3 trains and prevented parallel imports of spare parts in an agreement with its distributor in Denmark.

In December 2013, the DCAT upheld the Council’s decision, after which the case was appealed to the Maritime and Commercial High Court. Owing to a rather extensive exchange of statements regarding expert valuations and appointment of the expert appraisers, the case was only closed by the Maritime and Commercial High Court in January 2021. The Court ultimately found that the Deutz AG and the company’s Danish dealer, Diesel Motor Nordic A/S, had illegally prevented the sale of spare parts for use in the renovation of DSB’s IC3 trains. The judgment has been appealed to the High Court of Eastern Denmark.

The CD Pharma case

In November 2018, the DCAT upheld a decision by the Council in which it found that CD Pharma (a pharmaceutical distributor) abused its dominant position by charging excessive prices for the drug Syntocinon. The case concerned the Danish market for oxytocin (contained in Syntocinon), which is used for pregnant women in connection with childbirth. CD Pharma had an exclusive distribution agreement on the Danish market with the European producer of the drug.

In March 2020, the Maritime and Commercial High Court rendered its judgment in the case with dissent. Three of the five judges found that CD Pharma was dominant in 2014 and 2015 on the market for oxytocin, while the two other judges found that CD Pharma was not dominant.

The question of dominance is of interest because CD Pharma only became a residual supplier as a result of another supplier’s (Orifarm) breach of contract with the buyer, Amgros, and because CD Pharma acted on a one-year tender market in which it submitted bids in competition with Orifarm, among others. Thus, a dominant position based on a one-year tender can be sufficient to consider an undertaking to be dominant under Danish competition law. All the judges found that CD Pharma’s high price for Syntocinon for a period of less than six months was excessive and, consequently, violated the Competition Act and article 102 of the TFEU.

The Falck case

In January 2019, the Council found that Falck (Denmark’s largest provider of ambulance services) abused its dominant position by excluding its largest competitor, BIOS, from the Danish market for ambulance services. Between August 2014 and October 2015, Falck decided on, and implemented, a strategy that comprised, among other things, conveying negative stories about BIOS to the press and to Falck’s employees with the purpose of influencing any paramedics who were considering jobs with BIOS to abstain from applying for those jobs. The behaviour shown by Falck made it difficult for BIOS to recruit paramedics, and ultimately BIOS was forced to leave the market.

In December 2019, Falck confessed to the infringement, and the City Court of Copenhagen imposed a fine of 30 million Danish kroner. The size of the fine reflects the increased level of fines that apply to competition law infringements as of 1 March 2013 and is to date the highest fine imposed by the Danish competition authorities in Denmark for a violation of competition law.

The Godik case

In April 2020, the Council found that Godik Aps had abused its dominant position from 2014 to 2018 by requiring the majority of its customers to rent mobile lavatories exclusively from Godik.

The Council found that Godik held a dominant position on the Danish market for rental of mobile lavatories for events. According to the Council, Godik’s standard agreements contained exclusivity clauses of at least three years’ duration without a right to termination. The Council considered that the exclusivity clauses hindered competing rental companies in accessing the Danish market for rental of mobile lavatories for events and that they may have led to higher prices for customers.

State aid

The Danish rules on state aid

Section 11(a) of the Competition Act contains the Danish rules on state aid. The Council may issue orders for the termination or repayment of aid granted from public funds to support certain forms of commercial activity in cases where the direct or indirect object or effect of the aid is distortion of competition, and the aid is not lawful, according to public regulation.

Section 11(a) is similar to – and interpreted in accordance with – the corresponding provisions of the TFEU; however, it is not applicable if the aid is lawful, according to public regulation. Seeing as section 11(a) only applies in cases where trade between member states is not affected, it is rarely used, and there is no recent case law on the Danish rules on state aid.

The Danish rules on state aid do not entail block exemptions similar to those issued by the Commission with regard to the application of articles 107 and 108 of the TFEU to certain categories of state aid; thus, the application of section 11(a) does not require the aid to exceed a certain de minimis ceiling, and even aid amounting to rather limited sums may be caught by the provision.

The Council may refrain from investigating a case under section 11(a) if the aid scheme at issue affects trade between EU member states. Typically, this will be the case if the aid scheme at issue is being, or has been, assessed by the Commission under articles 107 and 108 of the TFEU, or if the Commission intends to do so in the near future.

Decision-making powers and sanctions

Fines

The competition authorities have the power to investigate undertakings and to decide whether anticompetitive conduct (eg, agreements and concerted practices) is in violation of the Competition Law. If an undertaking is found to infringe the competition rules intentionally or negligently, the competition authorities may request the courts to impose civil fines in accordance with Danish civil procedure (sections 23 to 24 of the Competition Act). The civil fine regime is a consequence of the adoption of the ECN+ Directive (EU) 2019/1 and is a new and rather significant deviation from Danish legal tradition of only imposing sanctions in accordance with criminal procedure.

Individuals who participate in, or contribute to, infringements of the Competition Law are subject to criminal prosecution (section 23(4) and (6)). The competition authorities do not have the power to impose sanctions on individuals; they must forward those cases to the State Prosecutor, who investigates the suspected individuals and decides whether criminal prosecution should be initiated. Criminal prosecution is led by the State Prosecutor and brought before the courts in accordance with Danish criminal procedure.

The competition authorities may offer undertakings a fine instead of prosecution in uncomplicated cases without evidential doubt. If the undertaking accepts the fine and pleads guilty, the undertaking can thereby avoid trial proceedings. The competition authorities cannot offer individuals a fine instead of prosecution.

In December 2012, the Danish parliament passed an act on sanctions for competition law violations. The object of the act was to increase the fines for companies and individuals and to introduce custodial sentences in cartel cases. The amendment entered into force on 1 March 2013 and, consequently, the rules only apply to competition infringement after 1 March 2013.

Imprisonment

Custodial sentences in cartel cases were also introduced in the amendment from 2013. Cartel agreements are punishable by imprisonment if the participation in the cartel was deliberate and if the offence is grievous, judging by its scale and the adverse effects it is capable of causing.

Under section 23(4) of the Competition Act, the punishment for participating in a cartel may be imprisonment for up to 18 months. Under aggravating circumstances, the punishment may increase to imprisonment for up to six years.

The custodial sentence is primarily directed towards the members of management, the members of the board and the responsible employees who are involved. The State Prosecutor (now Special Crime Unit) has unofficially announced that it will request unconditional imprisonment in cartel cases and that the punishment of up to 18 months’ imprisonment applies if the estimated total value of the infringement (eg, a price-fixing cartel) is more than 10,000 Danish kroner. Further, according to an unofficial announcement from the State Prosecutor, imprisonment for up to six years applies if the estimated value of the infringement is more than 500,000 Danish kroner.

It remains to be seen whether the courts will follow the view of the State Prosecutor. In the Demolition case, mentioned above, the State Prosecutor, for the first time under Danish competition law, made a claim to imprison the managing employees in the company; however, both the City Court of Holbæk and the High Court of Eastern Denmark dismissed the claim for imprisonment and instead imposed a fine of 100,000 Danish kroner. Again, in the above-mentioned HMN case, the State Prosecutor argued for imprisonment, which the City Court of Glostrup dismissed and imposed fines between 50,000 and 100,000 Danish kroner. Finally, in a high-profile case, the Vejstribe case, the State Prosecutor made a claim for imprisonment of three individuals following the Supreme Court’s judgment from November 2019 that the companies involved had committed a by-object infringement of competition law by coordinating tender bids. However, the City Court of Copenhagen dismissed the claim for imprisonment in its judgment from February 2022; the Court did not find that the State Prosecutor had lifted the burden of proof that the individuals had acted with intent nor gross negligence.

Leniency

Since 2007, it has been possible to apply for leniency in cartel cases in Denmark.

The Danish leniency regime is similar to that of the European Union; thus, the first undertaking to satisfy the criteria will obtain withdrawal of charges, and the subsequent leniency applicants may obtain a reduction of the fine, provided they submit new, relevant information. Similarly, if an individual fulfils the criteria for leniency, he or she may avoid a custodial sentence or other type of punishment, and the subsequent leniency applicants may have their sentences reduced.

In general, plea bargaining does not exist under Danish law and, consequently, any reduction in custodial sentences to those who report a cartel subsequent to the first reporter will be decided by the courts.

To benefit from the leniency scheme, the applicant must satisfy the following criteria:

• the authorities are presented with new evidence enabling them to conduct an investigation or to establish a cartel offence;
• the undertaking in question cooperates with the authorities throughout the processing of the case;
• the undertaking ends its participation in the cartel no later than at the time of application for leniency; and
• the undertaking has not forced others to participate in the cartel.

As of 1 January 2018, a preliminary application (a marker) for leniency can be submitted, which shall be finalised within the time limit determined by the competent authority. In that case, the application is deemed to have been submitted as at the date of submission of the preliminary application and, consequently, the preliminary application facilitates the possibility of reserving a place in the queue for leniency, while putting together a final application.

Damages for breach of competition rules

Introduction

The right to damages for loss as a result of breach of either Danish or EU competition rules is governed by the Act on implementation of the Damages Directive 2014/104/EU and the general Danish rules on damages.

The Act ensures a right to full compensation for competition law infringements and provides an extended limitation period of five years for bringing actions for damages in competition cases, compared to the general statute of limitation for damages in Denmark, which has a limitation period of three years.

The Act entered into force on 27 December 2016 and is not applicable to infringements initiated before this date. Damages for infringements before the commencement date may be obtained only if the plaintiff proves negligence (culpa) or intent by the defendant; a causal and foreseeable loss; and absence of fault by the plaintiff.

Case law

To date, only a limited number of cases on damages for breach of competition law have been heard by the Danish courts. Most of those cases concern damages as a consequence of anticompetitive agreements.

Moreover, all those cases concern damages for infringements before the new Act on implementation of the Damages Directive entered into force. Consequently, case law gives no guidance on how the new damages claim regime works, as all cases are from before 2016. Two cases (before 2016) illustrate the difficulties of determining the loss in a case concerning damages for breach of competition rules.

In a case from 2006 concerning an electricity cartel, the municipality of Copenhagen claimed to have suffered a loss (320,000 Danish kroner) caused by a bid-rigging cartel for electricity works. Although the City Court agreed with the municipality that the standard of proof should be mitigated regarding the loss, the Court found that the counterfactual situation without a cartel would most likely have resulted in a price that was only 3 per cent lower, and the damages were, therefore, fixed at 50,000 Danish kroner.

In a case from January 2015, the Maritime and Commercial High Court rendered a judgment regarding a damage claim from Cheminova A/S arising out of the Commission’s decision of 19 January 2005 in which six Akzo Nobel companies (including the two defendants) were issued with fines for participating in price-fixing and market cartel from years 1986 to 2000. The case was subject to a court-appointed expert survey and valuation in which the expert assessed, among other things, the calculation model that was most appropriate for calculating potential overprices of the product, the size of the potential overprices and the percentage of Cheminova’s costs that could be deemed to have been passed on to customers. Without specifying any details of the calculation, the Court found that Cheminova’s total losses amounted to (only) 10.71 million Danish kroner, despite Cheminova’s claim for damages of 47.2 million Danish kroner.