The Danish Eastern High Court overturns decision from the Danish Competition Council
On 27 February 2023, the Danish Eastern High Court (the "EHC") annulled a decision from the Danish Competition Council (the "DCC") pursuant to which Deutz AG, which is a German train engine manufacturer, and Deutz's Danish exclusive distributor, Diesel Motor Nordic (DMN), had infringed the competition rules by restricting passive sales and parallel trade of spare parts for Deutz train engines, and referred the case back to the DCC for renewed consideration. The EHC found that the decision was flawed, inter alia, because it was based on a misapplication of the vertical block exemption. Plesner represented DMN in the case.
On 12 June 2013, the DCC issued a decision pursuant to which Deutz and DMN had infringed the competition rules by restricting passive sales and parallel trade of spare parts for Deutz train engines from Deutz's dealer network in other countries to a consortium in Denmark that had won a tender for the renovation of DSB's IC3 trains. According to the DCC, this amounted to both an abuse of a dominant position by Deutz in the form of refusal to supply and restrictions of passive sales and parallel trade, and an anti-competitive agreement between Deutz and DMN.
The Danish Competition Appeals Tribunal upheld the decision by order of 9 December 2013. Deutz and DMN then brought the competition authorities' decisions before the Danish Maritime and Commercial High Court (the "DMCHC"), which – after a lengthy process, including a court-appointed expert's assessment of certain issues relating to the definition of the relevant market – upheld the decisions by judgment of 11 January 2021.
However, by judgment of 27 February 2023, the EHC decided to annul the DCC's decision and refer the case back to the DCC for renewed consideration.
As regards Deutz's alleged abuse of a dominant position, the EHC found that the DCC's market definition was flawed, inter alia, because it was based on an insufficient market investigation and did not take into account the possibility of purchasing unoriginal spare parts. Furthermore, the EHC found that the DCC's assessment of Deutz's market position was flawed, inter alia, because it did not take potential competition into account.
As regards the alleged anti-competitive agreement between Deutz and DMN, the EHC found that Deutz and DMN had entered into an agreement pursuant to which Deutz was to take both unilateral actions and enter into agreements with other Deutz dealers than DMN to restrict passive sales and parallel trade of Deutz spare parts.
However, contrary to the DMCHC, the EHC held that such an agreement may be block exempted under the Vertical Block Exemption Regulation ("VBER") (at the time, Commission Regulation (EU) No 330/2010 of 20 April 2010), provided that the conditions for such an exemption are met.
In this respect, the EHC – contrary to the DCC – held that an agreement such as the one mentioned above does not constitute a hard-core restriction under Article 4(1)(b) of the VBER.
Thus, the agreement between Deutz and DMN would be block exempted unless the market share threshold of 30% was exceeded for Deutz and/or DMN. Due to the above-mentioned flaws in the DCC's market definition, it had not been established that the market share threshold was exceeded for Deutz, and the DCC had not even examined the market share of DMN.
On this basis, the EHC found that the agreement between Deutz and DMN was exempted under the VBER.
It has not yet been decided whether the DCC will try to bring the case before the Danish Supreme Court. If the case is not appealed, the EHC's ruling will mark only the third time ever that a decision by the Danish competition authorities has ultimately been overruled in its entirety by the courts.
Plesner represented DMN in the case.