Danish Business Authority exempts first standard agreement from the Investment Screening Act
The Business Authority has exempted Amgros’ medicine procurement and supply contracts from the rules in the Investment Screening Act on “special financial agreements”. It is the first time since the Act came into force two years ago, that the Business Authority has exempted standard agreements from the rules on special financial agreements that are otherwise subject to prior approval.
Legal basis
The Investment Screening Act, which came into force on 1 July 2021, aims to prevent that foreign direct investments and special financial agreements pose a threat to national security or public order in Denmark. A distinction is made between a mandatory sectoral authorisation regime and a voluntary cross-sectorial notification regime.
The Application Order provides three exemptions from the mandatory authorisation regime in the case of special financial agreements, including where the special financial agreement is entered into on the basis of a commonly used standard agreement. The reason for this exemption is that commonly used standard agreements normally include terms to ensure that the agreement cannot pose a threat to national security or public order. The authority to exempt an agreement which is based on a standard agreement lies with the Danish Business Authority, which has not previously granted exemptions from the rules.
Exemption of Amgros’ supply contracts
On 28 August 2023, the Business Authority announced that it had approved Amgros’ medicine procurement and supply contracts as a standard agreement and, as such, exempt from the rules in the Investment Screening Act on special financial agreements. Amgros I/S is a Danish procurement partnership that secures supplies of medicines to the Danish regions and public hospitals through procurement and tendering procedures. This is the first time that an exemption has been granted and thus the first example to be mentioned on the Authority’s list of exempted standard agreements.
Our comments
The need to exempt the agreements shows, first of all, that public contracting entities also fall within the rules on special financial agreements, and that special financial agreements may include a variety of agreements, including agreements for the supply of medicine. For an agreement to be regarded as a “special financial agreement” within the meaning of the Act, it must confer control or significant influence over the Danish contracting party to a non-EU/EFTA party. The Business Authority seems to take the view that it cannot be ruled out that a medicine supply contract can confer such influence, as it would otherwise not be necessary to exempt such contracts as approved standard agreements.
The exemption also shows that the Business Authority adopts a strict approach when exempting standard agreements, as the exemption is granted only for the contracts of a specific contracting entity.
It will be interesting to see how the Business Authority will enforce the rules on standard agreements in the future, and whether exemptions will be granted only for agreements made by specific Danish contracting parties or also for agreements based on templates such as the Danish State’s standard contracts for IT projects, K01 etc.
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