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The Danish Competition Council issues fine notices to 18 nightclubs for cartel activities

18 nightclubs and their joint purchasing company have accepted fine notices issued by the Competition Council for participation in cartel activities in which the nightclubs agreed not to open branches in each other's towns or within a radius of 20 km from one another. This is the first time the Competition Council issues fine notices after the Danish Competition Act was amended in March 2021 to implement the ECN+ Directive.

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The case in brief

The 18 nightclubs and their joint purchasing company, NOX Network, had entered into agreements preventing them from opening branches in each other's towns/municipalities or within 20 km from each other. In some cases, the agreements were more than 15 years old.

The amounts of the fines – between DKK 28,000 and DKK 278,000 – are low considering the seriousness of the infringement. The reason is that the amounts of the fines are based on the total revenue of the undertakings in the preceding year, in this case 2020 when nightclubs had to stay closed for most of the year due to the corona pandemic. In addition, it has been a mitigating factor that the enterprises contributed to clarifying the circumstances.

Additional nightclubs are involved in the case, but proceedings against those nightclubs have not been finalized yet.

In many aspects, this case is similar to the Competition Council's 2007 case concerning local Zealand banks which had agreed in a cooperation agreement that if a bank wanted to open a branch in the town of another bank, the first bank should give the other bank prior notice thereof. This was subsequently classified by the Competition Appeals Tribunal as a "non-classic cartel".

The ECN+ Directive and civil fines

This is the first time the Competition Council issues fine notices after the rules were amended as a result of the ECN+ Directive. Until the amendment, the Competition Council and the Competition and Consumer Authority were only able to issue fines within specific fields following a delegation from the State Prosecutor for Serious Economic and International Crime.

However, the Competition Act was amended earlier this year to allow competition authorities, in cases involving infringement of competition rules by undertakings, to issue a fine notice or to seek imposition of a so-called "civil fine" in court proceedings. Consequently, as such cases are no longer criminal cases – but instead civil cases – the right to avoid self-incrimination does not apply to the undertakings, see section 17b of the Competition Act.

The amendment was introduced as part of the implementation of the ECN+ Directive (Directive 1/2019), according to which national competition authorities must have the power to issue fines to undertakings directly or to seek imposition of fines in non-criminal court proceedings. Only in cases which may affect trade between the different member states does the Directive impose requirements on the powers of the national competition authorities. However, to avoid operating with several different systems, Denmark has decided that the amendments provided for in the Directive must apply to all competition cases.

Read the Danish Competition and Consumer Authority's press release

Read our newsletter about the ECN+ Directive and the amendment to the Danish Competition Act

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Contact

Jens Munk Plum
Partner (Copenhagen)
Dir. +45 38 77 44 11
Mob. +45 21 21 00 22
Sonny Gaarslev
Partner (Copenhagen)
Dir. +45 38 77 43 62
Mob. +45 20 19 74 48
Sofie Moe Sølling
Assistant Associate, Advokatfuldmægtig (Copenhagen)
Dir. +45 38 77 20 63
Mob. +45 22 12 01 80