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20 December 2018
Elsam – excessive pricing saga is over
CD Pharma – infringement decision regarding abuse of dominance confirmed
Demolition cartel – no prison sentences as yet
Gun-jumping case decided
There were a number of significant events in Danish competition law in Autumn 2018. This article examines the most important cases.
One of Denmark's most significant abuse of dominance cases ended following the High Court of Western Denmark's issuance of its final decision, which repealed the Competition Council's decision. The case revolved around excessive pricing in 2005 and 2006 in the market for electricity and the use of economic tests for deciding excessive pricing (for further details please see "Decision on excessive pricing in electricity sector repealed, but it's not over yet").
The Competition and Consumer Authority (DCCA) had sought permission to appeal the case to the Supreme Court in the third instance. However, the Appeals Permission Board denied that permission on 25 October 2018. To be granted permission to appeal to the Supreme Court in the third instance a case must be of general public importance. This was not the case and the Elsam saga has finally ended after more than 10 years.
In January 2018 the Competition Council found that Swedish pharmaceutical distributor CD Pharma AB had abused its dominant position in Denmark by charging excessive prices (ie, a price increase of 2,000%) (for further information please see "Competition Council finds that CD Pharma abused its dominant position"). CD Pharma was the only supplier able to supply the drug in question to Danish hospitals for a certain period and was therefore considered dominant. The Competition Appeals Tribunal decided the case on 29 November 2018.
CD Pharma argued before the Competition Appeals Tribunal that the company was not dominant, because there had been only a very short period where another supplier (Orifarm) was unable to distribute the drug. CD Pharma also argued that it was necessary to raise prices in order not to end up with a large stockpile.
The Competition Appeals Tribunal concluded that CD Pharma was dominant. The tribunal emphasised:
With regard to abuse, the Competition Appeals Tribunal rejected CD Pharma's argument regarding the reason for the significant price increase.
In April 2016 the DCCA reported the first Danish cartel case with risk of imprisonment (for further information see "First Danish cartel case with risk of imprisonment"). This case has now been decided. It concerned an employee in a company involved in a so-called 'demolition cartel', which entailed alleged cover pricing and bid rigging.
On 19 September 2018 Retten i Holbæk (a district court) decided on the case regarding a senior employee in the company Midtsjællands Nedbrydning. The employee had received an offer from a competitor regarding a specific project.
The district court noted that the conduct constituted coordination of bids, as information regarding a specific project had been shared. However, the court did not find that it was a serious cartel infringement, which is required for imprisonment. The court emphasised that:
The offence was qualified by the court as a 'serious offence' and not a 'very serious offence', which could have been the case. The minimum fine for serious offences is Dkr100,000 (€13,300), which the court decided on in this case as there were no mitigating circumstances.
There are other cases in the pipeline and it remains to be seen whether a prison sentence will be handed down in any of those cases.
A widely discussed gun-jumping case has finally been decided after a preliminary ruling from the European Court of Justice (ECJ).
The case concerned the question as to whether Ernst & Young and KPMG Denmark had infringed competition law when KPMG Denmark terminated its cooperation agreement with the international KPMG network before the merger between KPMG Denmark and Ernst & Young had been approved by the Danish competition authorities. The Competition Council originally found that KPMG's termination of the agreement violated the gun-jumping prohibition, as the termination was merger-specific and irreversible and could, in itself, potentially affect the Danish market for audit services.
Ernst & Young subsequently brought the Competition Council's decision before the Maritime and Commercial High Court, which referred the case to the ECJ for a preliminary ruling. In the ruling of 31 May 2018 (C-633/16), the ECJ found that there had been no pre-implementation of the merger. Even though the termination of the cooperation agreement was conditional on completion of the overall concentration, it did not contribute to a change of control of the target undertaking. Consequently, the Competition Council accepted Ernst & Young's claim before the national courts. The Competition Council's decision was annulled by a 13 November 2018 decision.
For further information on this topic please contact Martin André Dittmer or Sofie Kyllesbech Andersen at Gorrissen Federspiel by telephone (+45 33 41 41 41) or email (email@example.com or firstname.lastname@example.org). The Gorrissen Federspiel website can be accessed at www.gorrissenfederspiel.com.
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