LIDC Danish National Report. For the LIDC Congress in Prague October National Rapporteur: Sune Troels Poulsen

Transcription

1 LIDC 2012 Danish National Report For the LIDC Congress in Prague October 2012 National Rapporteur: Sune Troels Poulsen Question A: SMEs and competition rules - Should small and medium enterprises ( SMEs ) be subject to other or specific competition rules. 1

2 Introduction This report sets out how SME s are treated under the Danish Competition Act. Due to their limited turnover and market share SME s might be exempted from the prohibition in 6 of the Danish Competition Act on agreements restrictive of competition and SME s are most often not covered by the provision on abuse of a dominant position on a market or the rules on merger control. If SME s enter into hard core cartels then the exemption from the prohibition on agreements restrictive of competition is not applicable. The implication of this is that also cartels commanding only a very limited market share and local cartels with a limited geographical coverage have been subjected to fines under the Danish Competition Act. I Denmark there is very little activity concerning private antitrust enforcement and almost no final judgments. For this reason we will only briefly mention two cases which presently are before the Danish Courts. A. SMEs IN CONTEXT 1. SMEs economic context and legal definition 1.1 Legal definitions of SMEs Under Danish law there is no special definition of which companies are considered to be SME s. According to 6 of the Danish Competition Act it is prohibited for companies to enter into agreements that restrict competition. 1 This provision is identical to article 101, para. 1 of the Treaty on the Functioning of the European Union. According to 7 of the Danish Competition Act agreements of minor importance to competition (de minimis agreements) are exempted from the prohibition in 6: 7. - (1) The prohibition set out in Section 6(1) above shall not apply to agreements between undertakings, decisions made by an association of undertakings or concerted practices between undertakings, in case the undertakings involved have i) an aggregate annual turnover of less than DKK 1 billion [133 million ] and an aggregate share of less than 10 per cent of the product or service market concerned, cf. however subsections (2) (4); or ii) an aggregate annual turnover of less than DKK 150 million [20 million ], cf. subsections (2) (4). 2 In case of hard core cartels the exemption from the prohibition is not applicable: 1 Consolidated Act no 972 of 13 August 2010 of the Danish Competition Act. 2 Under this part of the provision there is no limitation on the market share. 2

3 (2) The exceptions in subsection (1) above shall not apply in cases where undertakings or an association of undertakings agree, coordinate or decide on i) prices, profits etc. for the sale or resale of goods or services, ii) restrictions on production or sales, iii) sharing of markets or customers, or iv) fixing bids prior to their tendering, fixing conditions for the opening of bids, deferring bids, prior notification of bids, or any other form of bid rigging. The exemption in 7 of the Danish Competition Act has some of the elements which are contained in the EU de minimis notice although differences can also be observed. The provision has also some of the elements which are contained in the EU definition on SME s from 2003: 3 The exemption in 7 is only applicable if the undertakings have a combined market share not exceeding 10 % (for companies with turnover less than 150 million DKK [20 million ] there is no market share threshold). The exemption in 7 is not applicable where the undertakings have entered into hard core cartels. 7 sets out a threshold on turnover where the EU de minimis notice has no such threshold. The threshold for turnover in the Danish Competition Act is lower when compared with the EU definition on SME s The economic perspective undertakings were in 2009 registered in Denmark including both limited liability companies and personal companies of these undertakings had fewer than 100 employees, and the average turnover for undertakings with less than 100 employees did not exceed 50 million undertakings had more than100 employees, and the average turnover of these undertakings was approximately 180 million (1,35 billion DKK). As it can be observed from these figures the structure of the Danish business environment is that approximately 99 % of all Danish undertakings are considered as SME s under the EU definition on SME s although in Denmark there are also undertakings with internationally known trademarks such as Arla (a dairy), Carlsberg (a brewer), Danish Crown (a slaughter house), Lego (a toy factory), Maersk (a container shipping line), Oticon (a hearing aid producer) etc Relevant cases In a number of court cases SME s have been prosecuted and convicted for breaking the prohibition in 6 of the Danish Competition Act on agreements restrictive of competition. The judgments include agreements between hostels and hotels on minimum prices, agreements between veterinary doctors in a local area (part of a town) on a common basis for setting their fees, agreements between 3 An undertaking is considered an SME, if it has less than 250 employees and a turnover not exceeding 50 million (375 million DKK). 3

4 a number of local banks on market sharing, agreements on bid rigging and agreements on resale price maintenance. 2. Specific treatment of SME s under competition law 2.1. The nature and scope of specific treatment for SME s 7 of the Danish Competition Act has a de minimis rule from which SME s might benefit; re. section 1.1 above. SME s might also benefit from the fact that other provisions of the Danish Competition Act has thresholds for the turnover of undertakings and for their market share; re. section 2.2 below Substantive and procedural rules The Danish Competition Act and SME s As of 1997 the leading principle of the Danish Competition Act as was changed as it from then on was prohibited to restrict competition. This amendment was to a large extent motivated by an intention to harmonise the Danish Competition Act with the competition rules of the EU. The Danish Competition Act now has provisions corresponding to article 101 and 102 of the Treaty on the Functioning of the European Union and it also has provisions corresponding to EU s regulation 139/2004 on merger control. The Danish Competition Act was amended in 2000, 2002, 2005, 2007, 2008 and In 2012 a proposal on amending the Danish Competition Act has been presented with the aim of making it possible to send persons to jail for breaking the prohibition in 6 on agreements restrictive of competition (cartels). In 1997 when introducing the principle of prohibiting restrictions of competition in the Danish Competition Act a special rule was set out for dominant undertakings, according to which a fine could not be imposed unless the dominant undertaking previously had been warned that its behaviour constituted an infringement of the Danish Competition Act. The political reasoning for this provision was that dominant undertakings should have a grace period where they could adapt to the new rules. This rule obviously did not benefit SME s as they most often would be targets of an abuse. This provision is not in force any longer. The de minimis rules set out in 7 of the Danish Competition Act also has its origin in the amendment of the Danish Competition Act; re. section 1.1 above. The rules on merger control became part of the Danish Competition Act in 2000 as it in 1997 was believed that as Denmark being a society with an open economy and considerable cross border trade there was not any need for controlling mergers. This view was only upheld until 2000 where rules on merger control was included in the Danish Competition Act as there in the years between 1997 and 2000 had been a number of mergers in Denmark leading to both near monopoly and the strengthening of a dominant position without the Danish competition Authority having had the necessary powers to intervene. In 2010 the thresholds for turnover were lowered considerably and mergers are now subject to merger control and should be notified to the Danish Competition 4

5 Authority if the participating undertakings has a combined turnover exceeding 120 million [900 million DKK], and at least two of the participating undertakings each has a turnover exceeding 13 million [100 million DKK]. From this it can be observed that SME s benefit from the provisions of the Danish Competition Act in several ways: Agreements restrictive of competition entered into by SME s are exempted from the prohibition in 6 of the Danish Competition Act on the basis of their turnover and the market share of the SME s, unless the subject matter of the agreements deals with prices, restrictions on production, market sharing or bid rigging (hard core restraints). The prohibition on abuse of a dominant position on a market will usually not be applicable to SME s as they normally do not possess any significant market share and therefore not have a dominant position. Mergers between two SME s will normally not be subject to merger control under the Danish Competition Act due to the size of the turnover thresholds in the Danish Competition Act The organisation of the Competition Authority and SME s The Danish Competition Act is distinct from EU competition law in at least two respects: Business and consumers participates in the Competition Council which under the Danish Competition Act is the body deciding whether an infringement of the Competition Act has taken place or not. The Competition Council does not have power to impose fines or other sentences for breach of the Danish Competition Act as only the ordinary courts have this power. Competition cases are initiated and investigated by the Competition Authority (an administrative agency), but it is the Competition Council, which has a chairman and 17 members, 4 that is the decision making body. The chairman of the Competition Council and eight of its members must be independent of business and consumer interests, seven members are appointed after consultation with business organisations, one member is appointed after consultation with consumer organisations and one member after consultation with the organisation of municipalities. The representation of business, consumers and municipalities in the Competition Council has the advantage that their views on competition issues are balanced towards the views of the administration but it can not be seen as being especially advantageous for SME s. Decisions taken by the Competition Council might be reviewed by the Competition Appeals Board, which consists of five members: A supreme court judge, to members having economic expertise and two members having legal expertise. 5 The decisions of the Competition Appeals Board might be reviewed by the ordinary courts. Decisions of the Competition Council can not be reviewed by the ordinary courts before the Competition Appeals Board has taken a decision in the case of the Danish Competition Act of the Danish Competition Act of the Danish Competition Act. 5

6 Neither the Competition Council nor the Competition Authority has the power to impose sanctions for the breach of the Danish Competition Act as this power is reserved for the ordinary courts. Fines can therefore only be imposed on an undertaking as part of a penal case. On the basis of 23b of the Danish Competition Act the Competition Authority is authorised to settle a case if the undertaking acknowledges to have breached the Danish Competition Act. In most cases there will be a duplication of the investigation as the Competition Authority will investigate and the Competition Council will take a decision in the case, and if the Council decides that there has been a breach of the Danish Competition Act then the director of the Competition Authority will send the case to the police and suggest that the case should be investigated as a criminal case with the aim of having a fine imposed. This duplication of the investigation is time consuming and can be seen as having the consequence that fewer fines are imposed which will be an advantage for business and undertaking but can not be seen as something which especially is advantageous for SME s. The Danish Competition and Consumer Authority (the Danish Competition Authority), which is a division of the Ministry of Business and Growth, is the authority overseeing competition in Denmark. The Competition Authority initiates cases and conducts the necessary investigations and issues draft decisions which it presents to the Competition Council. The Competition Authority also has activities on providing information and advice on the Danish Competition Act which can be seen as especially targeting the needs of SME s, that rarely has legal experts employed Influence of size and economic power in decisions of the national competition authorities and courts Fines can be imposed for breach of the Danish Competition Act on both limited liability companies and personal undertakings. The management of an undertaking can also be subjected to a fine. 23 of the Danish Competition Act sets out, that when deciding on the amount of the fine the turnover of a limited liability company will be among the criteria providing the basis for setting the amount of the fine. In the preparatory works to the Danish Competition Act it is stated, that when a breach of the act is considered very serious a fine amounting to at least 2 million (15 million DKK) should be imposed on the undertaking. A breach of the Danish Competition Act will normally cover Denmark or part hereof. On this basis the basic amount for a breach of the Danish Competition Act will have be lower when compared with a breach of the EU competition rules. The aim of harmonisation with the EU competition rules necessatites, that the basic amount for a less serious breach of the Danish Competition Act will be from DKK [1300 ] to DKK [ ] When deciding on a serious breach the basic amount will be from DKK [ ] to 15 million DKK [2 million ] and a fine for a very serious breach should be15 million DKK [2 million ] and more. 7 [unofficial translation] 7 Preparatory act no L 171 for an amendment to the Danish Competition Act, presented by the Minister to the Parliament on the 20 March FT , 2. setting, comments to no 13. 6

7 In the preparatory works to the Danish Competition Act it was stated that price fixing, market sharing and serious abuses of a dominant position on a market should be considered very serious breaches. 8 The Danish Courts has until this date only considered breaches of the Danish Competition Act to be either less serious or serious and not very serious. The amount of a typical fine for breach of the Danish Competition Act is for an undertaking approximately [ DKK], and a typical fine for the management of the undertaking is approximately [ DKK]. This level of fines has been set out by the Danish Supreme Court in 2010, and later court judgments have been in line with this level. Fines of this amount has been imposed for agreements on resale price maintenance, bid rigging, trade associations activities with harmonising prices among their members etc. These agreements have all been classified as serious breaches of the Danish Competition Act. When the courts set the fine for a breach of the Danish Competition Act they will in most cases take the turnover of the undertakings into consideration. On the other hand it can not be observed from the published judgments that differences in turnover have had any effect on the size of the fine, re. section B.4 below. The largest fine was imposed in 2006 on Arla (a dairy) for breach of 11 of the Danish Competition Act on abuse of a dominant position on a market. 9 The abuse consisted in Arla attracting the customer (a super market chain) of a smaller competitor by offering a very low price conditional upon the customer instantly severing its commercial relations with the competitor. The fine was set be the court to approximately (5 million DKK), 10 which according to information provided by the Danish Competition Authority corresponds to 0,06 % of Arla s turnover Specific programmes addressed to SMEs (compliance, information policies, enhancement of competition enforcement) The Danish Competition Act has in 7 de minimis rules which SME s might benefit from, re section A.1.1 above. The activities of the Competition Authority with providing information on the Danish Competition Act can be seen as benefitting especially SME s. 3. The role of trade associations 8 The preparatory works of 2000 for an amendment to the Danish Competition Act. 9 The public prosecutor against Arla Foods Amba, judgment of the city court of Aarhus of 10 February 2006 in case SS / In a follow on case damages were awarded to the competitor that was the target of Arla s abuse. The amount of the damage is not published. 7

8 In Denmark trade associations are important for SME s, as they assemble and distribute information on business opportunities and markets to their members. Trade associations do also provide legal expertise to their members. In recent years The Competition Council has decided in several cases that a trade organisation has breached 6 of the Danish Competition Act on the prohibition against agreements restrictive of competition and on this basis either a court has imposed a fine on the trade association or the case has been settled by the association agreeing to a fine. Amongst the cases are: Danish Christmas Tree Growers. 11 The association had distributed a recommendation to its member on minimum prices. The association was sentenced with a fine on [ DKK]. Danish Tourist Buses. 12 The association had distributed a recommendation to its member on raising their prices by 4 % due to increased fuel costs. The association was sentenced with a fine on [ DKK]. Danish Undertakers. 13 In its code of conduct the association had stated, that it was reserved for the association to advertise in radio and TV, and that it was illegal for the members of the association to state anything with respect to prices, free services etc when advertising in other media. The case was settled with the association agreeing to a fine on DKK. Danish Potato Growers. 14 The association had issued a recommendation to its members on minimum prices and limits on production. The association was sentenced with a fine on [ DKK]. There seems to be a fine line for a trade association between providing its members with information on business opportunities and markets on the one hand and coordinating the market activities of its members on the other hand which the trade associations sometimes find it hard not to overstep. 4. Policy recommendations 4.1. Enforcement Being a small country like Denmark the question can be raised whether the competition rules should be stricter or more lenient when compared with larger countries. It is probably a consequence of Denmark being a small country with its own language, and there also being other barriers to entry for foreign undertakings such as toll bridges that the Danish business environment to a very large extent consists of SME s. Exploitation of consumers can take place on both large and small markets, and whether the market is large or small makes no difference for the consumer who feels the effect of an increase in prices due to a cartel agreement or an agreement on resale price maintenance. Based on this observation it could be argued that enforcement of the competition rules in Denmark should reflect the Danish business environment as it is in the interest of the consumers that enforcement action should be taken against any restriction of competition which has a substantial negative effect on competition 11 Judgment of the Supreme Court of 30 August 2010 in case no 319/ Judgment of the Supreme Court of 30 August 2010 in case no 320/ Decision of the Competition Council of 22 December Judgment of the City Court of Kolding of 6 September 2011 in case no /

9 on the market. For this reason the important issue should be whether the undertakings in question have market power and therefore are able to restrict competition and raise prices, and the EU definition of SME s might therefore not be relevant in a Danish context, as it is in the interest of consumers also to enforce the competition rules against cartels entered into by SME s. It follows from this that also restrictions of competition taking place in a geographical small area (local area) should be enforced if this area can be delimited to be a separate geographical market no matter whether the turnover of the undertakings involved is below the de minimis thresholds in the Danish Competition Act or the undertakings are defined as SME s under the EU definition. On the other hand it could be argued that industrial policy considerations should lead to rules that are more lenient for SME s as they usually are facing obstacles in competition due to their limited size. This fact is reflected in the rules on merger control in the Danish Competition Act as the thresholds for notification of a merger are set at such a level that mergers between two undertakings which both are SME s according to the EU definition are not covered by merger control. With respect to agreements which are in breach of the prohibition in 6 of the Danish Competition Act it is not as obvious that enforcement should be more lenient based on industrial policy considerations as fierce competition among SME s is a useful tool for strengthening their competitiveness which also will benefit an SME when trying to compete in other parts of the EU. If SME s were allowed to enter into cartels, agree on their bidding activities etc., this could lead to them being less competitive. Setting up a joint venture might on the other hand be something which should be looked upon more favourably in a small economy in order for the joint venture to be able to compete on the internal market of EU SME s market problems The obstacles for SME s when competing with larger undertakings are to a large extent connected with SME s having fewer resources. Amongst other things SME s might have difficulties with: Access to risk capital as a basis for making investments might be mor troublesome as SME do not itself have accumulated such capital and due to this fact it will have to convince a bank or another investor that the SME or its project is a good business opportunity for the investor. Information on markets or technologies is more limited for SME s when compared with larger undertakings due to the fact, that SME s have less experience with respect to development of new technology, marketing of new products or entering new markets. With respect to breaches of the Danish Competition Act a number of issues special for SME s can be identified: The capital base is smaller for SME s and they have accordingly less strength when taking up a fight with larger undertakings on prices, legal battles etc. Legal expertise on competition rules is very often not something which an SME has taken effort in investing in and for this reason they might be ignorant as to when their agreements or other activities are in conflict with the competition rules. These types of problems for SME mentioned above are related to their size and lack of experience and it is not issues that easily are dealt with by amending the competition rules. 9

10 B. PUBLIC ANTITRUST ENFORCEMENT AND SMES 1. Substantive and procedural rules applicable to SMEs 1.1. Introduction Due to their limited size and market share SME s are in many circumstances exempted from the Danish Competition Act but an exemption is not applicable if SME s enter into hard core cartels. The implication of this is that also cartels commanding only very limited market share and local cartels with a limited geographical coverage have been subjected to fines under the Danish Competition Act Safe harbours for SME s As mentioned in section A above SME s are to a large extent outside the prohibitions the Danish Competition Act SME s are most often not covered by the Competition Act The agreements of SME s are due to their limited turnover and limited market share exempted from the prohibition in 6 of the Danish Competition Act, unless the subject matter of the agreement is related to price fixing, limiting production, market sharing or bid rigging (hard core restraints). SME s will most often not have any significant market share and accordingly not have a dominant position on a market, and the conduct of an SME will therefore normally not be covered by the prohibition in 11 of the Danish Competition Act on abuse of a dominant position on a market. Mergers between two undertakings which both are SME s under the EU definition are according to 12 of the Danish Competition Act not subject to merger control in Denmark as the thresholds are set at such a level that the participating undertakings should have a combined turnover on at least 120 million [900 million DKK] and at least two of the participating undertakings should have a turnover on 13 million [100 million DKK] or more SME s and the de minimis rule in 7 of the Competition Act SME s can take advantage of the de minimis rule in 7 of the Danish Competition Act, unless the subject matter of the agreement is related to price fixing, limiting production, market sharing or bid rigging (hard core restraints). Local banks market sharing and information exchange This case is an example demonstrating that SME s can take advantage of the de minimis rule in 7 of the Danish Competition Act. 15 Seven local banks had divided the market between themselves as they agreed on (i) not setting up a branch in a city where another bank had its main branch, and (ii) they agreed on not actively attracting each others customers. Furthermore the seven banks had shared information on their prices and fees. The Competition Council decided, that the agreement amounted to a cartel in breach of 6 of the Danish Competition Act and that there had been a 15 Decision by the Danish Competition Council of 28 March 2007 on Cooperation by Local Banks, upheld by order of the Danish Competition Appeals Board of 2 October

11 substantial effect of the agreement. The basis for this assessment was that the agreement was considered to be a hard core breach of the Competition Act, and that the banks had a market share on 3-6 pct. The breach was considered serious as it was concerned with market division and thereby limiting the possibilities of banks for competition for new customers. The product market in the case was defined as the market for private customers and smaller business, and the large banks of Denmark had on this market approximately a market share on 80 %. 125 local or regional banks were active on this market and all of these banks had a combined market share on less than 10 %. The geographic market was split between Eastern and Western Denmark and the Council was of the opinion that the market most likely was even narrower and could be defined as smaller regions or local areas as having a branch or an office in an area was vital for the possibilities to compete in an area. The de minimis rule in 7 of the Danish Competition Act was relevant for the case as the agreement did not include price fixing, limiting production, market sharing or bid rigging. In 2002 and 2003 the turnover of the seven banks were below the threshold in 7, their combined market share was also below the 10 % market share threshold and based on this the agreement fell outside of the prohibition in 6 of the Danish Competition Act. As for the period the combined turnover of the seven banks exceeded the threshold set out in 7 of the Danish Competition Act and accordingly the agreement were not exempted from the prohibition in 6 of the Danish Competition Act. Milana og Miljølaboratoriet bid rigging This case is an example demonstrating that SME s can not benefit from the de minimis rule of 7 of the Danish Competition Act as the agreement was concerned with bid rigging. 16 In 2009 Milana had a turnover on approximately 6 million [44 million DKK], and Miljølaboratoriet had in 2009 a turnover on approximately 6,5 million [49 million DKK] and on this basis both undertakings qualify as SME s under the EU definition. The background to the case was, that Milana and Miljølaboratoriet had coordinated their bidding, and bid rigging is explicitly mentioned in 7 of the Danish Competition Act as one of the types of agreements which hinders the application of the de minimis rule set out in 7. The fines were set to [ DKK] for each of the undertakings and [ DKK] for each of the CEO s. Lise Aaagaard Copenhagen resale price maintenance The Danish Competition Council has in a number of cases decided that SME s breached the Danish Competition Act by setting and enforcing resale price maintenance. The following judgment demonstrates that an undertaking enforcing resale price maintenance is not in a position to benefit from the exemption in 7 of the Danish Competition Act. 17 In this case the prohibition in 6 of the Danish Competition Act was breached as the undertaking had obliged its dealers to uphold a minimum level of prices. The producer had a market share on 1-2 % in a product market defined as jewellery, accessories etc. No information on the turnover of the undertaking was published. When setting the fine the breach of the Danish Competition Act was classified as serious but it was also considered as a mitigating factor that only two the dealers were involved and that the breach of the competition rules had only lasted a very short time. The fine was set to DKK for the undertaking and the fine for the CEO was set to [ DKK]. 16 Judgment of the High Court of Eastern Denmark of 4 April 2012 in department 15, case no S and more, where the high court upheld a judgment given by the city court of Glostrup of 25 March 2011 in case no 954/ Judgment of 26 November

12 Danish Hostels and Hotels limitations on the use of prices in the marketing This example demonstrates that undertakings can not benefit from the exemption in 7 of the Danish Competition Act when a trade association coordinates the marketing activities of its members. 18 The trade association had stated in its statutes that members were not entitled to advertise prices below a certain level, but besides this restriction on advertising there were no restrictions on the prices or discounts which the members could negotiate with their customers for rent of rooms or other services. The prohibition in 6 of the Danish Competition Act was breached and the exemption in 7 was not applicable as the internal rule of the association restricted the advertising of prices. The members of the trade association had a combined market share on 3,7 % and the trade association itself had a turnover on approx.10 million DKK. When setting the fine the limited turnover of the trade association and the limited market share of its members were taken into account. The fine was set to DKK, and the fine for the CEO was set to DKK Access to justice There does not seem to be any rules special for SME s with respect to access to justice or court fees. 2. Fundamental rights of SME s (as infringers and victims) 2.1 Complaints There does not seem to be any special rules for SME s with respect to complaints. 2.2 Access to the file There does not seem to be any special rules for SME s access to the file. 3. Leniency, settlements and commitment decisions for SME s The rules of the Danish Competition Act on leniency etc. apply to SME s as to other undertakings 4. Sanctions: different penalties for different size? It can be observed from the published judgments that the size of an undertakings turnover is taken into account as one element when setting the amount of the fine although it is not possible to determine the relative weight of this factor and in most judgments the fine is set to approximately [ DKK]. In two judgments from 2012 and 2011 concerning Milana A/S and Miljølaboratoriet I/S 19, Milana had in 2009 a turnover on approximately million [44 million DKK], and Miljølaboratoriet had in 2009 a turnover on 5,5 million [49 million DKK]. When setting the fine the court explicitly took 18 Danish Hostels and Hotels, judgment of the city court of Horsens of 4 October 2007 in case no SS 785/ Judgment of the High Court of Eastern Denmark of 4 April 2012 in department 15, case no S and more, where the high court upheld a judgment given by the city court of Glostrup of 25 March 2011 in case no 954/

13 the subject matter of the case (bid rigging) and the market shares of the undertakings into account whereas it did not mention the turnover of the undertakings: When setting the fine, the starting point will have to be the principles stated in the preparatory works to the Danish Competition Act of Furthermore the market share of the undertakings and their very limited profit earned on the contracts in question should be taken into account. On the basis of all elements of the case the fine should be set to DKK [ ] for each of the undertakings. [unofficial translation] The fine for the CEO s of the two undertakings was set to [ DKK], and the court did not find it relevant to take the relative size of the income of the CEO s into account when setting the fine. In a judgment from 2011 concerning Erik Jørgensen Furniture Factory, 20 the subject matter of the case was resale price maintenance. The turnover of Erik Jørgensen Furniture Factory in 2003 (the time when the breach of the Danish Competition Act took place) was 5,5 million [49 million DKK]. When setting the fine the court did not mention the turnover of the undertaking as it only took into account that the breach was classified as serious and had lasted for a while, and as a mitigating factor it was taken into account that the activity apparently had not had any effect on competition on the market. The judgment of the Danish Supreme Court from 2010 on Danish Christmas Tree Growers, 21 an association had encouraged its members to keep a certain minimum price level for the sale of Christmas trees. The Supreme Court took the relatively limited turnover of the members of the association into account when setting the fine to [ DKK]: When assessing the encouragements of the Danish Christmas Tree Growers association in the time period lasting from December 2002 until August 2006 on the minimum price level of the sale of Christmas trees it will have to be taken into account that the members of the association have a relatively limited turnover and a limited market share. On the other hand emphasis must also be put on the type of the breach and the time period it has lasted we are concerned with encouragements concerning prices during a period lasting 3-4 years. [unofficial translation] In a judgment of the Danish Supreme Court given on the same date concerning Danish Tourist buses, 22 a trade association had distributed a recommendation to its member on raising their prices by 4 % due to increased fuel costs. When setting the fine to [ DKK] the Supreme Court amongst other elements put emphasis on: it must be taken into account that the members of the association had a considerable turnover and a large combined market share. On the other hand it will also have to be taken into account that the breach of the competition rules only lasted for a short period and that the competitive conditions 20 Judgment of the High Court of Eastern Denmark of 17 January 2012 in department 16, case no S , where the high court upheld a judgment given by the city court of Svendborg of 18 May 2011 in case no R2-2234/ Judgment of the Supreme Court of 30 August 2010 in case no 319/2009, which increased the fine set by the High Court of Eastern Denmark in a judgment of 24 September 2009 in department 10, case no S Judgment of the Supreme Court of 30 August 2010 in case no 320/2009, which increased the fine set by the High Court of Eastern Denmark in a judgment of 3 September 2009 in department 10, case no S

14 in the transport sector made it likely that the encouragement only would have a limited effect. [unofficial translation] As it can be seen from the judgments referred above the turnover of an undertaking will normally be taken into account as an element when setting the amount of the fine. On the basis of these judgments it is on the other hand not possible to determine the relative weight of the turnover when setting the amount of the fine and in most cases the fine is set to [ DKK]. 5. Policy recommendations As long as the level of fines for breaches of the prohibition in 6 of the Danish Competition Act on agreements restrictive of competition is as low as [ DKK] it is in our opinion not necessary to differentiate between SME s and large undertakings when setting the amount of the fine. C. PRIVATE ANTITRUST ENFORCEMENT AND SMES 1. Substantive rules, procedural aspects for SMEs in civil suits In Danish Law there are not any special rules set out for SME s with relation to private antitrust enforcement Obstacles N/A. 1.2 best practices N/A. 2. Collective redress Under 26 of the Danish Competition Act there is a possibility for class actions: In case several persons have raised claims for damages due to infringements of this Act or Articles 101 and 102 TFEU, the Consumer Ombudsman may be appointed as a representative for the class for the purpose of the class action to recover these damages, cf. Part 23a of the Administration of Justice Act. We are not aware of any cases under this provision. There are presently two cases pending before the Danish courts, both of which are follow-on cases to decisions of the Danish Competition Council. One case is pending before the Supreme Court of Denmark concerning damages for the abuse of a dominant position on the market. The Danish Competition Council decided in 2004 that Post Denmark (the former Danish postal monopoly) had tried to exclude its only competitor by offering 14

15 very low prices to one of the large supermarket chains in Denmark for the distribution of commercials. In 2009 the High Court of Eastern Denmark awarded the plaintiff damages amounting to 10 million [75 million DKK]. One case involving more than plaintiffs is pending before the Commercial and Maritime Court of Denmark. The Danish Competition Council has in several decisions concluded that the dominant Danish electricity company (DONG and its predecessor Elsam) has abused its dominant position by charging excessive prices for electricity. The complainants sued in 2008 for damages amounting to more than 500 million. The case has not yet been decided by the court. 3. The role of trade associations (standing) A plaintiff in Denmark must have a sufficient interest in the case before it can bring it before the courts and this rule applies as well to trade associations when bringing cases on behalf of its members. 4. Policy recommendations N/A. D. CONCLUSIONS AND POLICY RECOMMENDATIONS The important aspect for SME s with respect to the competition rules is in our opinion that the competition rules should not be a limitation for the possibilities for SME s to enter into agreements unless such agreements might have an effect on competition on a market and this is dependent on the market share of the undertakings and not their size or the size of their turnover. There can not be seen to be a one size fits all with respect to a relation between the size of an undertaking and the size of its market share as this is dependent on the size of the relevant product and geographical market as for instance producers of medicine might have a turnover on several billion but only command a limited market share on a market whereas producers of specialised machinery might have a large market share although they do only have a relatively limited turnover, and suppliers of services will often provide their services within a geographically limited (local) area and on this market they will often have a substantial market share. The de minimis rules in 7 of the Danish Competition Act exempts certain agreements from the prohibition in 6 on agreements restrictive of competition, unless the subject matter of the agreements is price fixing, limitations on production, market sharing or bid rigging. The de minimis rule is based on the turnover of the undertakings but turnover will not always be linked to the effect which an agreement will have on a market, and turnover will neither be determinative of whether or not an undertaking has a dominant position on a market. There might be seen to be a need for more information for SME s on the rules of the Danish Competition Act in order for them to avoid entering into agreements which are in breach of the prohibition in 6. The Danish Competition Authority conducts a number of activities with respect to providing SME s with information on the Danish Competition Act although undertakings should be cautious when making contact with the Competition Authority as it has been seen that an 15

16 enforcement action has been initiated after an undertaking sought advice at the Competition Authority. 16