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19 July 2018
One of Denmark's biggest abuse of dominance cases is coming to an end following the High Court of Western Denmark's issuance of its final decision, which repealed the Competition Council's decision. However, the Competition and Consumer Authority (DCCA) has sought permission to appeal to the Supreme Court.
In 2007 the Competition Council found that the electricity producer Elsam A/S had abused its dominant position from 1 January 2005 to 31 December 2006 on the wholesale market for electricity in Western Denmark. The abuse consisted of using a strategy for enrolment in Nord Pool (a European market for electrical energy) which resulted in excessive pricing.
The Competition Council assessed that Elsam had a market share of between 30% and 50%, but that its market strength should possibly have been measured on a narrower market, in which Elsam had a market share of between 40% and 79% in the relevant period. Elsam therefore had a dominant market position. The abuse consisted of excessive prices on 900 electricity hours in that period.
In 2006 Elsam was acquired by Ørsted A/S (then DONG Energy A/S), which is now party to the case.
The decision was upheld both in the Competition Appeals Tribunal (DCAT) and the Maritime and Commercial High Court. The court found that Elsam, as a dominant market player, had a special obligation not to undertake conduct likely to lead to unreasonably high prices. In assessing whether Elsam had abused its dominant position, the court found that it was crucial to ascertain whether Elsam had charged prices that:
The court found that this was the case and thus that Elsam had abused its dominant position by charging excessive prices in contravention of the Danish Competition Act and Article 102 of the Treaty on the Functioning of the European Union (TFEU).
However, the High Court of Western Denmark recently found that the Competition Council did not establish with the required degree of certainty that Elsam had abused its dominant position by demanding excessive prices on the wholesale of physical electricity in Western Denmark. Further, the court noted that:
Therefore, the Competition Council's decision was repealed.
This case has several interesting procedural aspects, which is one of the reasons why it has gone on for more than 10 years. The decision had already been upheld by the DCAT in 2008 and was appealed by Ørsted to the Maritime and Commercial High Court. However, the Maritime and Commercial High Court did not issue a judgment until 2016. This was likely due to a long process of expert valuation as well as a preliminary question to the European Court of Justice, which was declined.
Ørsted then tried to appeal the case to the Supreme Court at the second instance, which requires that the case is of general public importance or evidence of other special reasons. The Supreme Court did not accept the appeal, noting that it could not be assessed whether the case was of general public interest. This may have been because a certain amount of evidence still needed to be produced.
Ørsted subsequently appealed the judgment to the High Court of Western Denmark, which rendered its decision on 24 May 2018. Since the high court ruled in favour of Ørsted, the DCCA sought to appeal the case further. The main rule in Denmark is that a judgment can only be appealed once.
On 21 June 2018 the DCCA sought permission from the Appeals Permissions Board to appeal the case to the Supreme Court. The DCCA believes that the case is of general public importance, which is one of the criteria to obtain permission to appeal at third instance.
The case has become somewhat of a saga and the ruling offers an interesting clarification on how to apply Article 102 of the TFEU and economic analysis to the electricity sector.
The case shows the importance of economic analysis in abuse of dominance cases. Establishing excessive pricing requires extensive economic analysis and there seems to be a high bar for proof.
Further, the case shows the role of procedural aspects and hurdles in competition cases. The case has gone through four different administrative and judicial bodies and could be appealed once again. At the same time, many years have been spent on evaluating expert witnesses and other procedural hurdles. For these reasons, some competition cases can drag out for many years without resolution.
It will be interesting to see whether this case is finally resolved or whether permission to appeal to the Supreme Court will be granted.
For further information on this topic please contact Martin André Dittmer at Gorrissen Federspiel by telephone (+45 33 41 41 41) or email (firstname.lastname@example.org). The Gorrissen Federspiel website can be accessed at www.gorrissenfederspiel.com.
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