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Competition & EU law insights

Keeping you up to date on Competition & EU law developments in Europe and beyond.

| 2 minutes read

Amendments to the Danish Competition Law result in challenging alterations

On July 1, 2024, the amendments to the Competition Act will enter into force. The legislative change is extensive and is expected to have significant implications for Danish businesses, as it mandates the notification of certain mergers below turnover thresholds, introduces the possibility of market investigations, and provides for the imposition of fines.

Mergers below turnover thresholds

The amendment introduces a national call-in option for mergers below the turnover thresholds, whereby the Danish Competition and Consumer Authority (DCCA) can, subject to penalties, require notification of mergers, even if they do not meet the existing threshold values. The amendment is aimed at, but not limited to, catching so-called “killer acquisitions”, for example buying start-ups, with a view to removing future competitive pressure from innovative technology. The DCCA can however intervene in all transactions meeting the criteria.

The obligation to notify is contingent upon the fulfillment of two cumulative conditions: (i) the combined annual turnover of the participating undertakings amounts to at least DKK 50 million, and (ii) the DCCA assesses that there is a risk that the merger will significantly impede effective competition, particularly because of the creation or strengthening of a dominant position. 

The DCCA will have three months after a merger agreement has been concluded, a takeover offer has been published, or a controlling stake has been acquired, whichever is the latest.

Possibility for market investigations and behavioral orders

Inspired by the United Kingdom and Germany, a new market investigation tool has been introduced, whereby the DCCA is authorized to ex officio investigate structures or practices within business sectors if there is reasonable suspicion that the market structure or the behavior of market participants is weakening competition. If such structures or practices are identified, the amendment allows the DCCA to issue behavioral orders with the purpose addressing the identified weakening of competition in the relevant sector. 

Imposition of fines 

The new legislation finally overhauls the current approach to penalties for infringements, instead adopting the European Commission's guidelines which base penalties on the turnover associated with the violation. According to these guidelines, the severity of the violation determines the percentage of this turnover, capped at 30 percent, which constitutes the baseline fine. This amount is then multiplied by the number of years the violation has persisted. However, in particularly severe cases, the fine may be further increased by an additional 15-25 percent. 

Upcoming transaction uncertainty

The legislation will entail increased focus on merger control in Denmark, leading to significant uncertainty and unpredictability in the transaction processes. The Danish competition authorities are granted broader regulatory authority to inspect market practices, which normally would be subject to political oversight. With the amendment, companies with high turnovers risk substantially larger fines than is the case today.  There will also be a considerable deal of uncertainty regarding regulatory intervention in smaller transactions, which will now need in-depth analysis on the substantive side to see if there is a risk of a transaction being called by the DCCA. Market definition and analysis of complex markets is often difficult and requires specialist knowledge, turning the assessment into a potentially time and resource consuming exercise for management.

If you need more information or further guidance in this area, please contact Morten Nissen or Nanna Krabbe.



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