Companies behind illegal road marking consortium acquitted

Background to the case

In its judgment of 27 November 2019, the Supreme Court concluded that the companies Eurostar Danmark A/S and LKF Vejmarkering A/S (now GVCO A/S) had violated section 6 (1) of the Danish Competition Act and Art. 101(1) TFEU. 

In 2014, the two companies were among the biggest Danish contractors in road marking. In connection with the Danish Road Directorate's tender of a contract for re-marking of the state road network, the companies had – at the Directorate’s request – established a consortium that submitted a single, combined tender for three subcontracts in the tender. The consortium offered the lowest overall price for all three districts and was awarded the contract.

The Supreme Court found that the companies were to be considered competitors, seeing as both companies could have independently bid for at least one of the subcontracts for the individual districts. The Supreme Court found that it had not been established that the tender should be considered as a whole and including all three subcontracts. Moreover, the Supreme Court found that the consortium agreement in itself would have to be regarded as having been established for the object of restricting competition rather than collaborating on production.

The Competition Council reported the parties to the police, and in 2020 the prosecution brought legal proceedings against Eurostar, GVCO and three individuals, claiming payment of fines and suspended prison sentences. The decision by the Copenhagen City Court thus only concerns the criminal-law side of the action.

The judgment of the Copenhagen City Court

The Copenhagen City Court acquitted all of the defendants, finding that not all of the conditions for punishment under s. 23(1) and (3) of the Danish Competition Act were met.

The Court did find that the consortium agreement established a cartel, thus meeting the criterion for applying s. 23(3) of the Competition Act as then in force, but held that the three individuals charged had not acted wilfully and therefore could not be punished under s. 23(3) of the Competition Act. 

The Court further found that none of them had acted with gross negligence, which is a precondition for imposing fines both on businesses and individuals under s. 23(1) of the Competition Act.

In the wilfulness assessment, the Court attached importance to the fact that statements by the Competition Authority in two memos would have to be construed as indications that the Authority did not find that the individuals had acted with intent.

In the assessment of both intent and gross negligence, the Court was satisfied that the individuals charged had believed that the tender for the combined contract was a competitive parameter. Moreover, the defendants had retained prior to the consortium’s bid in the 2014 tender a legal opinion which had not disabused them of the notion that this was so.

Lastly, the Court attached importance to the fact that the defendants, on their understanding of the competitive parameters, had not considered the fact that their possibility of tendering for a single district was the decisive element in the competition-law assessment, which also was not established until the Supreme Court judgment in 2019.

The prosecution has appealed the decision.

You can read our previous article on the Supreme Court judgment