Denmark: Competition and Consumer Authority
The enforcement of competition law in Denmark is bifurcated between the Danish Competition and Consumer Authority (DCCA) and the public prosecutor. While the DCCA investigates cases and issues orders requiring individuals and undertakings to terminate infringements, it has no powers to impose fines as all fines are criminal in nature in the Danish system. For a fine to be imposed the case has to be referred to the public prosecutor who can initiate the procedure so that the criminal courts can impose a fine.
Criminal standards of proof and bifurcated enforcement add additional layers of complexity and also reduce efficiency. These procedures are not present in most systems and make comparisons with other jurisdictions difficult.
Despite these complexities, the Organisation for Economic Co-operation and Development (OECD) pointed out in a 2015 peer review that the DCCA is a well-regarded enforcement agency well in line with internationally recognised standards and practices.
Advocacy and the promotion of more efficient regulation hold an important space in our tool box. In 2016, more studies were published and a new strategy was launched. We strongly believe that as a competition authority it is important to offer guidance in order to foster compliance with competition law. The OECD pointed out that the authority has robust and effective consultation practices that permit easy access to staff and provides ample opportunity for consultation, and we believe it is an effective tool for improving compliance with competition law. Therefore, we continue to dedicate many resources to fulfil this objective, be it in the form of guidelines, such as the one on inspections published in 2016; articles on specific competition topics; or by offering companies and individuals informal general guidance on an ad hoc basis.
As a key priority, we have also strengthened our effort to attract and retain talent within the ranks of the DCCA by adding new career paths aimed at individuals who would like to advance in their career through further specialisation rather than by taking on managerial responsibilities. This will enable qualified staff members who are not necessarily attracted to management positions to be promoted by becoming experts in specific fields.
Our main focus is still on our key objectives within competition policy. 2016 was a busy year, marked by a considerable increase in the resources dedicated to merger review and by a number of significant infringement investigations that covered markets ranging from construction and energy to entertainment.
We work actively to prioritise our available resources to the cases with the most clout and beneficial effects for society and consumers. The main focus is on investigation and the efforts to prevent cartels and other serious infringements of the Competition Act. These crucial efforts continued to be at the top of the agenda in 2016, with new investigations being launched.
The Danish construction bid-rigging case, one of the largest cartels in Danish history, was closed in 2016 with 25 companies and 21 individuals being fined a total of €4.12 million. This cartel affected private and public construction projects, including the construction of schools and nursing homes. The application of the leniency programme contributed to the success of this investigation. After unannounced inspections were conducted, one of the cartel participants in this case applied for leniency and contributed to uncover further restrictive practices among construction companies.
Enforcement action was also taken to tackle anticompetitive agreements among providers of services on natural gas boilers. The case concerned a trade association and certain gas boiler service providers that had entered into a price coordination agreement. Households in a large part of Denmark were affected by the coordination of the subscription price for this service.
Another relevant case involved the entertainment sector. The Competition Council issued a decision ordering Danish associations of film distributors and cinemas to terminate anticompetitive agreements which restricted cinemas' ability to grant discounts on cinema tickets and created transparency on price-related aspects between film distributors.
Automobile manufacturer Opel Denmark accepted a €1.1 million fine for fixing minimum resale prices on pre-owned leasing, demo and hire purchase cars. The fine reflected the cooperation from Opel Denmark and the fact that part of the infringement was committed after higher level of fines where introduced in March 2013.
Five fines to companies and six fines to individuals in the real estate business were also concluded. The Real Estate Business case concerned anticompetitive boycott agreements against one particular real estate search portal. Furthermore, a case concerning resale price maintenance within the market for furniture led to a company being sentenced to a fine. We also took action to follow up on hotel booking portals' pricing clauses. The DCCA made a survey to look into whether hotel booking platforms' commitments to replace price parity clauses with narrow parity clauses were having the desired effect. The results of the daily netscraping survey from the sites of a number of platforms suggest some improvement in terms of competition between portals; the survey showed variation in hotel prices across different platforms, which was not allowed under the original price parity clause.
All in all, in its first full year since the reform, the streamlined Competition Council has made four decisions and referred four cases to the State Prosecutor for Serious Economic and International Crime (the State Prosecutor), which has jurisdiction to pursue fines in competition cases.
Moreover, significant cases have been opened and are currently being investigated. These include, for example: an abuse of dominant position in patient transportation; assessing the Danish swine breeding system; and reviewing commitments made binding in a merger case involving one of the major Danish bank and mortgage companies, Nykredit. As another publicly known example, the State Prosecutor is currently investigating a case in the demolition business.
All decisions on civil appeals in 2016 have confirmed the Competition Council's decisions. In one important and much-debated case, the Competition Appeals Tribunal confirmed that a consortia (joint bidding) agreement between two road-contractors constituted an infringement of competition law. Regarding abuses of a dominant position, the important Elsam decision was confirmed by the Maritime and Commercial High Court. In this decision, the Council found that the electricity producer had abused its dominant position by charging excessive prices in the wholesale electricity market. This ruling has been appealed to the Supreme Court.
In 2016, the Authority cleared 39 mergers, which continued to be an above average number, although slightly below the 2015 record. In parallel, there was a marked increase in the resources dedicated to merger analysis, particularly due to the contemplated merger between the largest privately owned media company in Denmark, JP/Politiken, and significant business media Dagbladet Børsen. In this case, the Authority conducted one of its most comprehensive investigations to date and developed a specific analytical framework to analyse mergers between undertakings active in two-sided markets. The DCCA expressed serious antitrust concerns as the merger would strengthen JP/Politiken's position in a number of markets, particularly in the market for national online and paper newspapers and certain advertising markets. However, the commitments submitted by the parties did not adequately address these concerns, and in early 2017 the parties chose to withdraw the notification before a decision was made.
Advocacy continues to be a priority for the DCCA in order to support the efforts of enforcement. The Competition Council approved two market studies in 2016. The first one analyses public sector activities in commercial markets and makes recommendations to prevent these public activities from distorting competition. The results of the market study are currently being considered by the government for possible political action.
The second market study focuses on competition in the distribution of medicines. It concludes that there is scope for more effective competition and recommends modifying the regulatory framework to remove barriers to entry and increase price competition. As a result of these studies, legislative changes are currently being considered.
We have also addressed the construction sector from an advocacy perspective, publishing three analyses on competition and productivity in the sector. Another important study currently underway looks into how competition can be strengthened in the mortgage market.
Since the merger between the former Danish competition and consumer authorities in August 2010, it has become increasingly clear how the demand side makes up for a very important role in a well-functioning market driven by competition. Consumer behaviour can make an important difference and behavioural economics therefore becomes an inevitable part of our market analyses. This has also led us to conduct experiments with nudging. As an example, both nudging and behavioural economics are incorporated in our upcoming analysis of the Danish mortgage market. In another example, our experts in consumer behaviour managed to raise a remarkable increase in awareness on the choice of dentist within a group of 18-year olds.
In our continued effort to raise awareness through a strong public profile, new instruments and platforms are continuously being used. We have initiated a new series of publications where we are periodically writing short and accessible articles on relevant competition issues. These articles are primarily aimed at sharing knowledge and experience with antitrust practitioners and policymakers. We have also launched podcasts covering specific topics that are available for download at theAuthority's website and further distributed through social media platforms. Among the aspects covered in the podcasts is the importance of competition as a driver of growth, which was also the focus of a press seminar held by the Authority.