Extensive amendments to the Danish Competition Act
On 9 December 2020, the Danish Ministry of Industry, Business and Financial Affairs introduced a bill to amend the Danish Competition Act. Implementing the so-called ECN+ Directive, the bill includes several extensive and major amendments to the Danish Competition Act, among these an introduction of civil fines for companies, fines for simple negligent infringements, parent company liability, vicarious liability for members of trade organisations and a possibility of imposing structural remedies and carrying out inspections or searches in private homes. The bill includes a number of amendments compared to the draft sent out for consultation earlier this year.
On 29 September 2020, the Danish Competition and Consumer Authority’s draft bill was sent out for consultation. Read Plesner's Insight (in Danish) here.
A number of organisations submitted their views in response to the consultation document, including the Association of Danish Law Firms. Plesner contributed to the response. Read the Association of Danish Law Firms' response to the consultation document (in Danish) here.
Read the other responses to the consultation document (in Danish) here.
Read the Danish Ministry of Industry, Business and Financial Affairs’ memorandum commenting overall on the views submitted in response to the consultation document (in Danish) here.
Read the bill which has now been introduced (in Danish) here.
The most significant innovations in the bill compared to current law are described in Plesner’s Insight on the draft bill (in Danish) here. Overall, the bill introduced is in line with the draft sent out for public consultation.
However, a number of changes and clarifications have been made to the bill and the comments to it as a consequence of the views received in response to the consultation document, including from the Association of Danish Law Firms. This applies to the following, among other things:
- Interim orders: It is clarified in the comments that a structural remedy will rarely be applicable as an interim order. It applies to, for instance, orders requiring the sale of an entire undertaking or part of an undertaking, the sale of intangible assets, the division of activities or the sale of shares in another undertaking.
- Provision of information: It is clarified in the comments that the Danish Competition and Consumer Authority (the “CCA”) cannot request information from an undertaking if excessive costs or efforts would be incurred in connection with the provision of such information. It is also clarified that the CCA may also request information from public authorities.
- Inspections in private homes: A new provision has been inserted to the effect that inspections in private homes must be conducted as searches by the Danish State Prosecutor for Serious Economic and International Crime (SØIK) under the rules of the Danish Administration of Justice Act if there is reasonable cause to suspect the person whose home is being searched. The CCA will be present during the search. The CCA will only be able to carry out an inspection by itself if there is no reasonable cause to suspect the person in question.
- The prohibition against self-incrimination: It is stated in the comments that an individual specifically suspected, based on specific and articulable facts, of having assisted in an undertaking’s (grossly negligent or intentional) infringement of the competition rules does not have to answer questions, including about matters relating to the undertaking.
- Maximum periodic penalty payments: The comments introduce a maximum for periodic penalty payments of 5% of the undertaking’s daily total global (consolidated) revenue. This corresponds to that which applies to periodic penalty payments imposed by the European Commission.
- The ten-year absolute limitation period: It is clarified in the comments that the ten-year absolute limitation period is not interrupted for the duration of formal investigative measures. If a penalty has not been imposed within ten years from the day when the infringement or omission ended, a penalty cannot be imposed on the undertaking any longer, irrespective of any interruption of the five-year limitation period.
However, in some respects the bill is unchanged or changed in a manner that gives rise to the same uncertainties as the previous draft This applies to the following, among other things:
- Responsibility for infringements by consolidated companies: The Ministry of Industry, Business and Financial Affairs maintains the wording of the provision concerning consolidated companies’ responsibility for infringements of the competition rules, which not only makes it possible to hold a parent company responsible for a subsidiary's infringement of the competition rules but may also be understood to the effect that, for instance, a subsidiary can be held responsible for a parent company's infringement of the competition rules. The Ministry of Industry, Business and Financial Affairs acknowledges in the consultation memorandum that no case law is available from the Court of Justice of the European Union with respect to subsidiaries’ responsibility for parent companies’ infringement of the competition rules, but this is not included in the comments to the bill. Nor do the comments expressly indicate that the relevant provision (currently) only provides scope for holding parent companies’ responsible for subsidiaries’ infringement of the competition rules.
- Provision of information: The Ministry of Industry, Business and Financial Affairs has deleted the comment that a subsidiary receiving a request for information may be obliged to procure information from a subsidiary abroad. However, some comments have been inserted to the effect that, due to the EU judicial notion of undertaking, the undertaking would be obliged to procure information from other undertakings in the group. It does not appear whether it is the opinion of the Ministry of Industry, Business and Financial Affairs that this means that a subsidiary may become obliged to procure information from a parent company abroad.
- Interruption of a limitation period: The Ministry of Industry, Business and Financial Affairs maintains that the limitation period is interrupted with respect to all parties involved in an infringement if the CCA or another authority in the EU initiates an investigation against just one of the parties involved, irrespective of whether the other parties involved have been informed of this. The Ministry has rejected a proposal from the Association of Danish Law Firms that the other parties involved as far as possible should be informed that an investigation has been initiated.
Passing and coming into force of the bill
The bill has now been submitted to the Danish Parliament. Be updated on the reading at the Parliament’s website here.
According to the bill, amendments will enter into force on 4 February 2021. However, competition matters in relation to which the Danish Competition and Consumer Authority has issued a statement of objection before that time, or in relation to which SØIK has charged persons or undertakings, are still to be considered under the present rules.
The amendments to the Act will make it easier for the competition authorities to discover and impose sanctions for infringements of the competition rules. In addition, it will increase the risk of fines being imposed on undertakings for infringements committed by subsidiaries.
Accordingly, the amendments to the Act give undertakings good reason to review their own and their subsidiaries’ compliance programmes in order to protect themselves against infringements of the competition rules.