The Danish Maritime and Commercial High Court partially repeals decisions about coordination of discounts

Background

Clear Channel Denmark A/S and AFA JCDecaux A/S are two of the leading players in the market for outdoor media such as billboards and advertising pillars in the urban landscape, e.g. at bus stops and supermarkets. The companies had entered into a written agreement on coordination of common discount rates in connection with media commission, security, information compensation and, during part of the period, a cash discount. They had also discussed the customers' reactions to the discount rates during the period. The written agreement expired on 31 December 2010. The contact between the companies had ended before that. In the following period, the companies had largely applied the same discount rates until the Danish Competition and Consumer Authority conducted a dawn raid in April 2015. However, the cash discount had not been applied after the termination. The Competition Council subsequently found that such continued consistency constituted an illegal concerted practice and fined both players.

The companies brought the decisions before the Competition Appeals Tribunal, arguing that the agreement was based on an industry standard and that anti-competitive practices, if any, had in all circumstances ended on the expiry of the agreement. The Competition Appeals Tribunal did not agree with that argument; particularly with regard to the concerted practice claim, the Appeals Tribunal emphasized that the companies had not actively distanced themselves from continuing to apply the rates from the expired agreement after its termination.

The Maritime and Commercial High Court’s judgment

The companies subsequently brought the case before the Maritime and Commercial High Court. However, Clear Channel Denmark A/S's case concerned only the period after expiry of the written agreement.

The Maritime and Commercial High Court upheld the decision about the anti-competitive agreement for the period until 31 December 2010. However, the Maritime and Commercial High Court chose to repeal the decision regarding the concerted practice, concluding that such behaviour was not contrary to the competition rules. For that period after the expiry of the written agreement, the Maritime and Commercial High Court found that there was no evidence showing that the parties' behaviour constituted an illegal concerted practice of agreeing on discount rates, and that it was merely a matter of parallel behaviour. The Maritime and Commercial High Court emphasised that parallel behaviour may only constitute a concerted practice if coordination is the sole likely explanation of such behaviour.

The Maritime and Commercial High Court also emphasised that the last contact between the companies had taken place more than one year before the parallel behaviour, that the cash rate had not been continued, that the rates for media commission and security were an expression of widely used industry standards, and that the preceding written agreement had been for a fixed term.

Our comments

The decision is of particular interest because it shows that it is necessary to have concrete and positive evidence in order to establish a concerted practice. The Maritime and Commercial High Court thereby restricts authorities from applying the concept of a "concerted practice". Thus, the decision contributes to securing predictability and due process for companies operating in markets where there is little room for differentiated behaviour.

The judgment proves that it is not sufficient for establishing an infringement that the relevant defendants do not distance themselves from previous illegal coordination, but that the competition authorities must be able to prove that the defendants have de facto coordinated their practice.

Read our previous newsletter on the Competition Appeals Tribunal’s decision.

Read the decision of the Maritime and Commercial High Court (In Danish).