1.1 Competition Promotion
Annual Report and Accounts 1998 New Competition Act The Act entails a "de minimis" rule for agreements. The main rule is that agreements are not covered by the prohibition if the aggregate turnover of the participants is below DKK 1 billion, and the market share concerned is below 10\%. Anti-competitive agreements may on certain conditions be exempted from the prohibition. Undertakings may also apply for a statement that the agreement or the practice of the undertaking is not covered by the Act (a negative clearance). Violation of the prohibition of the Act may be punishable by fine determined by the courts. It is expected that the level of penalty will be substantially higher than was the case under the previous Competition Act. Notifications under the transition rules The Act incorporates a transition rule. This will ensure that anticompetitive agreements that were in force at the time of implementation of the Act do not suddenly become prohibited. If the parties submitted their agreements to the Authority prior to July 1, 1998, they may be maintained until they have been evaluated under the stipulations of the new Act. By July 1, 1998, the Authority had received notifications concerning 1,070 agreements. This was more than anticipated. The majority of the notifications were received in the last days up to July 1. The distribution of the agreements on trades is reflected in the table below. The Authority gives priority to handling the notifications so that three circumstances are of particular importance:
The Authority has drawn up a plan for handling these agreements. The plan allows for the fact that in the beginning the number of principal - and thereby also more labour intensive - cases will be relatively higher. The objective is for the "bulge" of old agreements to be carried through in a maximum of 31/2 years.
Decisions In 1998, the Competition Council held 10 meetings. At these meetings, the Council made decisions in 68 cases. The Authority made decisions in 960 cases. Cartel cases So far, the work of clearing up has demonstrated that co-operation within tender cartels has been extensive. The Authority gives high priority to the work of disclosing the tender cartels and will allocate substantial resources to this work also in the coming year. Agreements
This has involved prohibition of several agreements that were acceptable under the stipulations of the old Act. In spring 1998, the Authority published guidelines concerning the prohibition against anti-competitive agreements.
If all of these conditions are not met, the bye-laws have to be considered specifically. The main principles are underlined in a number of concrete decisions. Abuse of a dominant position A refusal to supply is covered by the act and thus prohibited in the event that:
Refusal to supply cannot simply be justified by capacity problems. If capacity problems do exist, the undertaking will have to divide supplies among the customers according to reasonable, objective criteria. The Competition Council has decided a couple of cases on refusal to supply in 1998 where these criteria were laid down.
All of the cases will "stand or fall" with the way in which the relevant market is delimited. The Competition Authority therefore accounted in detail for the delimitation of the relevant market in a guideline published in 1998. Public activities During the past year the Council has published only one application. Moreover, in some cases a more informal application has been submitted, since the Council has wished to reserve publicised applications to cases of fundamental importance. The Council issued a guideline which accounts in detail for the Competition Act and the public sector. The Competition Authority and Section 20 of the Act on Charge Cards The amendment means that the Competition Authority shall have powers to interfere in the event of unreasonable fees, etc. User survey of case handling and services In general, the outcome of the study is considered as good, particularly in the actual areas of duration of case handling and service level, where user satisfaction is the highest. In some areas, trade awareness and legal and economic competence, user satisfaction is lower. It is very likely that it will be difficult to increase the satisfaction rate of the Authority's trade awareness as undertakings will always have higher knowledge than the Authority. For the coming period, the Authority has opted for an improvement of the legal and economic competence. Over a span of 3-4 years, it is the objective that the average user satisfaction in the areas of financial competence and legal competence shall exceed 70\%. The user survey will be conducted again in 1999 and expanded to include the areas of energy and public procurement. The EU-area With the new Competition Act and the plans of the Commission to increase decentralised application of the EU regulations, a strengthening has taken place of the co-operation between the Competition Authority and the Commission, which in several cases has transferred cases to the Competition Authority. The decisions of the Commission serve to prove that undertakings, which do not observe the competition regulation, are dealt with efficiently. Thus, the Commission has imposed large fines i.a. on Danish undertakings that violated the EU regulations on prohibitions against anti-competition agreements and abuse of a dominant position. The merger area saw an increase in the number of notifications to the Commission of planned mergers. The majority of the mergers will be approved by the Commission, possibly subject to various structural undertakings, for instance, divestment of certain specific activities. The Authority participates in the hearing of a number of the cases in the Advisory Committee.
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OECD The interaction between trade policy and competition policy has received substantially higher priority with the OECD, and should also be seen as an input to the work taking place within the WTO on the same subject. In 1998, the OECD issued a recommendation on hardcore cartels. It is to encourage co-operation among competition authorities, so that together they may combat restrictive trade practices internationally. This particularly applies to violations such as price fixing agreements, market sharing, etc. The OECD has initiated a survey of deregulation systems and reforms in individual OECD countries. The project is described as "the Regulatory Reform Review". As part of the project, Denmark will be assessed by the OECD in 1999. Preparations started as early as 1998 where the Authority - together with a large part of the central administration - has contributed with input to the OECD report on Denmark. It will be published before the end of 1999. 1.2 Public procurement and state aid The Authority is monitoring that the EU public procurement rules are observed. The monitoring takes place, i.a., by the Authority's receipt of complaints from undertakings and organisations concerning tenders for public procurement. The number of complaints handled in 1998 was 61. If there are sufficient grounds for suspicion, the Authority contacts the principal concerned and through negotiations attempts to legalise the procedure. If it is not successful, the Authority may submit the case to the Complaints Board for Public Procurement. The Authority has no formal decision making competence in the area of public procurement. EU initiative The Authority has anticipated this development. In 1996, an initiative was implemented the purpose of which is to improve the opportunities of Danish business life to have a share of public procurement contracts in other countries. Undertakings are often encountering barriers when they submit tenders for public procurement abroad. In such events the Authority is ready to assist in ensuring that public procurement rules are observed. The initiative is based on the close contact of the Authority with the competition authorities in eight other countries and with the Commission. One of the reasons why public procurement cases across borders come up is that the rules are interpreted differently. In 1998 the Authority initiated a pilot project with participation from six EU member states with the purpose of ensuring a more unilateral understanding of the public procurement rules. This also includes development and testing of models for better enforcement of the rules in the individual counties. The Commission supports the project and in its abovementioned announcement referred to the project as the first attempt towards having a well-functioning single market for public procurement. State aid In connection with the advisory function, an advisory group has been established where the Ministry of Foreign Affairs and the Ministry of Justice have fixed seats. Other ministries participate on an ad hoc basis. In addition, the Authority holds the chairmanship and serves as secretariat in the "crossministerial state aid group". A majority of the ministries are represented in the group which has been established to ensure experience exchange in the area, among other things. In 1996, the Commission took the initiative to rearrange the state aid control with a view to making a more transparent, coherent and efficient policy. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The provisions in the Danish Electricity Supply Act and the Heat Supply Act concerning price fixing and supply conditions for power, district heating and natural gas are enforced by the Competition Authority. Decisions are made by two committees, the Electricity Price Committee and the Gas and Heating Price Committee, that have been set up by the Minister for Environment and Energy. The Authority presents cases involving fundamental and new problems to the two committees.
In June 1998, the Authority published a report on Competition in the Energy Sector, and in December a report on benchmarking was published.
Electricity In a liberalised electricity market, the so-called system operators play a vital part. The system operators are to determine prices of the main transmission network and lay down conditions for access to the network. Legislation requires the system operators to act independently of commercial interests in the remaining electricity area. The Electricity Price Committee therefore carefully followed the actions of the system operators in order to ensure that no commercial confusion was made with production and distribution interests. The Committee has dealt with the price fixing of the two system operators in the main network. First of all, they dealt with the price fixing for the so-called balance power and in addition a specific assessment of the price level of the secondary network which is made available to the system operators. Both system operators have chosen a tariff model according to which the entire network is considered as a whole where payment has to be made in order to get into and to extract from the network. In spite of this, the system operators fixed tariffs for the sea-bed cables to Norway, Sweden and Germany or on the Jutland border to Germany - the so-called border tariffs. The Committee instructed the system operators to cancel the announced border tariffs as the cables there must be taken to constitute part of the total main transmission network. However, the Committee found that it was legal to introduce special tariffs on those sections of the network - including the sea-bed cables - where there were capacity problems. The Act enumerates a number of public service obligations, the payment for which the system operators shall undertake to distribute equally on all electricity consumers in Denmark. This equal payment is ensured through a distribution of the so-called priority production to all customers in the areas of Eltra and Elkraft System, respectively. The Committee has also assessed the price fixing for this so-called priority production.
Gas and Heating The Committee has decided that in the event of delivery of hot water from one producer to another producer or distributor, the price shall not exceed the lowest of:
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