In a judgment of 27 August 2018, the Maritime and Commercial High Court found that a consortium agreement between Eurostar Danmark A/S and LKF Vejmarkering A/S in connection with the Danish Road Directorate's tender procedure concerning re-marking of road lines was not contrary to the rules of the Competition Act. The judgment goes against the Competition Council’s and the Competition Appeals Board's decisions.

On 24 June 2018, the Competition Council made a decision as to whether Eurostar Danmark A/S (Eurostar) and LKF Vejmarkering A/S (LKF) had violated the prohibition against anti-competitive agreements in section 6 of the Competition Act and Article 101 of the TEUF by concluding a consortium agreement. The agreement concerned preparation, submission and performance of a tender in connection with the Road Directorate’s tender procedure concerning re-marking of lanes in the districts: South Denmark Region, Region Zealand and the Capital Region of Denmark. It was possible to submit tenders in relation to individual districts or all districts. However, an aggregate tender involving all districts implied a tender concerning each district offering at the same time a discount. The consortium’s tender included a total discount of 20 % if the consortium won all three districts, and a discount of 5 % if the consortium only won two districts.

Section 6 of the Competition Act and Article 101 of the TEUF contain a prohibition against agreements that have restriction of competition as the object or effect. The assessment as to whether a consortium agreement is contrary to the rules must, of course, be made based on whether the two tenderers are separately unable to submit an aggregate tender as they will then not be considered competitors in relation to the contract. If the parties are considered competitors, and the object or consequence of the contract is to restrict competition, the consortium agreement will be contrary to the competition rules.

THE COMPETITION COUNCIL'S DECISION THE AGREEMENT WAS UNLAWFUL

In its decision of 24 June 2015, the Competition Council stated that Eurostar and LKF had concluded an unlawful consortium agreement in connection with the preparation and submission of a tender in relation to the Road Directorate’s tender procedure.

Subsequently, the decision was upheld by the Competition Appeals Board's decision of 11 April 2016. The Competition Appeals Board found that Eurostar and LKF had separately been able to submit tenders for individual parts of the Road Directorate’s tender procedure, and that the consortium’s cooperation was objectively not necessary. Consequently, Eurostar and LKF were not considered actual competitors.

The Competition Appeals Board also found that the consortium agreement's object was to restrict competition because the parties, by concluding the consortium agreement in stead of making separate tenders, eliminated the business risk which would otherwise exist between them as competitors.

THE CONSORTIUM AGREEMENT WAS STILL UNLAWFUL

In the Maritime and Commercial High Court’s judgment of 27 June 2018, the court found that the consortium was still unlawful.

The Court made its judgment on the grounds that simply because a company does not have sufficient capacity itself to make a tender for the aggregate contract, but enough capacity to make a tender for individual districts, this does not mean that this company should be prevented from concluding consortium agreements for the purpose of submitting an aggregate tender for all districts as such restriction will not necessarily intensify competition.

In addition, the plaintiffs had made capacity calculations showing that they were in fact separately unable to provide an aggregate tender, and it is then for the competition authorities to prove that these calculations are not true and fair. According to the Court, the competition authorities had not provided such proof.

The Court further stated that the Competition Appeals Board had not made the required correct assessment of the agreement’s object and nature for the purpose of determining whether the agreement’s clear object was to harm competition to such an extent that it would be considered a violation of section 6 of the Competition Act and Article 101 of the TEUF.

On the basis of the above, the Court cancelled the Competition Council’s decision of 24 June 2015.

contacts

Andreas Christensen

Partner

Mia Anne Gantzhorn

Attorney