Amendment of the Danish Competition Act

The Danish Parliament has adopted amendments to the Competition Act, which will enter into force on 1 July 2024. The amendments affect mergers below the applicable turnover thresholds for merger control and the imposition of fines in infringement cases. With the amendment of the law, the competition authorities will also be empowered to issue behavioural regulatory orders to companies without the competition rules having been breached.

The purpose of the new rules is to ensure more effective competition. This is done, among other things, by giving the Danish Competition and Consumer Authority more opportunities to intervene in mergers and markets where competition is assessed to be weakened.

The amendment is particularly significant for companies in connection with mergers below the applicable turnover thresholds. Today, mergers must only be notified to the competition authorities in Denmark if the turnover exceeds the following turnover thresholds:

1. The participating companies have a total annual turnover in Denmark of minimum DKK 900 million, and at least two of the participating companies each have an annual turnover in Denmark of minimum DKK 100 million, or
2. At least one of the participating companies has a total annual turnover in Denmark of minimum DKK 3.8 billion, and at least one other participating company has a global annual turnover of minimum DKK 3.8 billion.

The competition authorities in Denmark are now given the opportunity to require mergers below these turnover thresholds to be notified, with a view to the authorities' assessment of whether the transaction can be approved.

Mergers below the turnover thresholds can be required to be notified

One of the most significant changes is the introduction of a so-called call-in option for the Danish Competition and Consumer Authority. This gives the authority the opportunity to require certain mergers to be notified, even if they do not exceed the applicable turnover thresholds. On the basis of experience from other countries, it is assumed that one to two transactions which do not exceed the turnover thresholds will be required to be notified annually.

When can mergers below the turnover thresholds be required to be notified?

In order to require a merger below the turnover thresholds to be notified, two conditions must be met:

1. The participating companies must together have an annual turnover in Den-mark of at least DKK 50 million.
2. The merger must significantly impede effective competition.

The first condition sets a lower turnover limit for which transactions can be required to be notified. The second condition of significantly impeding effective competition depends on an assessment. This may primarily include mergers that create or strengthen a dominant market position. However, a merger can also impede effective competition in other cases. These may for example be mergers in markets with few competitors, or where the parties have close trading relationships prior to the transaction, and the merger may make it difficult for others to compete in the market.

Deadlines for merger control below the turnover thresholds

The Danish Competition and Consumer Authority has 15 working days to decide whether a merger is required to be notified from the time the authority is made aware of the transaction in question. That deadline runs from the time the authority has received sufficient information to determine whether the conditions for requiring notification have been met. A press release or mention of the transaction in the media is not sufficient.

It requires special evidence to require a merger to be notified later than three months after the parties' conclusion of the agreement (signing). Special circumstances exist, for example, if the merger parties have kept the merger agreement secret or informed the authority close to the end of the three months.

Mergers can in any case be required to be notified no later than six months after the completion of the merger (closing).

Market investigation - behavioural change without breaching the competition law

With the amendment of the law, the Danish Competition and Consumer Authority has a new opportunity to initiate a market investigation of behaviour or structures in a business sector and, under certain conditions, issue orders to change market behaviour. With its existing powers, the authority can already carry out sector investigations, demand information from companies and issue orders in infringement cases. What is new is, thus, the possibility to order companies to change their behaviour without a violation of the competition rules having taken place.

Initiation of a market investigation requires the Danish Competition Council's prior approval, including that the Danish Competition Council finds signs of a weakening of the effective competition in the sector that is to be investigated. It is also a condition that a draft of the decision to initiate a market investigation is sent for consultation.

New fines for infringement of the competition rules

With the amendment to the law, the principles for imposing fines for infringements of the competition rules are changed.

For companies' infringements of the competition rules, the imposition of fines must be based on the Commission's guidelines. This means that the fines will to a greater extent reflect the companies' turnover and profit from the infringement.

Other principles apply to companies' violations of other rules, including the merger rules and formal rules.

The amendment to the law does not affect the options for fine and penalty leniency.