On 24 May 2018, the Western High Court ruled as to whether Elsam violated the Competition Act in 2005 and 2006 by charging unreasonably high prices for electricity in Denmark. The High Court found that the competition authorities had not substantiated with sufficient certainty that Elsam had abused its dominant position.

According to EU case law, a dominant company is assumed to have abused its dominant market position to fix unreasonable prices when two criteria are met: first of all, the difference between the price and the expenses paid must be unreasonable and, secondly, the price must be unreasonable - either in itself or compared to the price of competing products.

On 30 August 2016, the Maritime and Commercial High Court affirmed the Competition Council’s and the Competition Appeals Board's decisions that Elsam's (which is today a part of Ørsted A/S) price strategies on the Nordic electricity market exchange (Nord Pool) reflected an abuse.

On Nord Pool, the players place sales and purchase orders on an hourly basis This means that bottlenecks may appear in relation to some of the cables if more electricity is to be imported than the cables can carry due to a higher demand to one area. In the event of a bottleneck, the "underbid" area will become its own price area, and the area price will be fixed based on the purchase and sale bids in the area alone.

As the competition authorities, the Maritime and Commercial High Court ruled that Elsam had exploited the system contrary to section 11 of the Competition Act. Elsam held a monopoly on a part of the West Danish demand because the other players on the electricity market were not able to cover this demand themselves. As Elsam was only subject to a partially effective competitive pressure, Elsam could - in case of bottlenecks - fix the price in this area to be way above the competitive level.

NOT POSSIBLE TO ESTABLISH ABUSE AFTER ALL

Even though the Competition Council, the Competition Appeals Board and the Maritime and Commercial Court found that Elsam’s price strategy reflected abuse of a dominant position, the Western High Court ruled differently.

On 24 May 2018, the High Court ruled that the competition authorities had not substantiated with sufficient certainty that Elsam had abused its dominant position in order to obtain unreasonably high prices in the period from 1 January 2005 to 30 June 2006. The Competition Council was ordered to pay legal costs to Ørsted A/S of DKK 6.7 million.

The competition authorities will now review the judgment and consider how to relate in this respect.


contacts

Andreas Christensen

Partner

Mia Anne Gantzhorn

Attorney