Introduction
Highest number of clearances
No prohibitions
Quick clearance for simplified filings, prolonged clearance for others
Prolonged pre-notification
Competition Council renders few decisions
Heavy remedies procedure
Internal documents
2021 became another record year for Danish merger control rules, including:
- the highest number of clearances;
- the shortest review period for simplified notifications; and
- the longest review period for uncomplicated standard notifications.
Denmark has had merger control rules since 2000. As of January 2022, the Danish Competition and Consumer Authority (DCCA) has cleared more than 580 cases but only blocked one.
This article gives an overview of the merger control rules in 2021 and focuses on seven key takeaways and predictions for 2022.
In 2021, a record 65 cases secured clearance from the DCCA, which is an increase from the 32 clearances that were recorded in 2020 and 48 in 2019.
Prediction for 2022: the authority will render fewer decisions.
The DCCA did not block any transactions – and has not done so since 2008 – but it cleared two cases with remedies, one of which was structural (including a rare maximum price ceiling)(1) and the other which was behavioural.(2)
Prediction for 2022: the DCCA will not prohibit any transactions (parties will normally offer remedies or abandon their transaction if the DCCA raises serious concerns).
Quick clearance for simplified filings, prolonged clearance for others
In terms of timeframes, the completion of simplified filings was at an all-time low in 2021. Contrarily, processing times for standard filings remain high and are at an all-time high for uncomplicated cases:
- Simplified notifications (55 of the cases filed) took an average of 3.6 working days to gain clearance from a complete filing, which is an increase from 3.3 working days in 2020 (however, the time limits were suspended from mid-March 2020 to mid-September 2020, thus automatically lowering the average) and an average of 6.1 working days since the introduction of this form of notifications in 2010. Despite 2020 being a special case, this is the lowest average.
- Standard notifications with simplified case handling (four of the cases filed) took an average of 19.5 working days from a complete filing, which is an increase from 6.6 working days in 2020 (with the same caveat as above regarding the suspension of time limits), and an average of 12.9 working days since the introduction of this combination in 2010 – this is the highest average.
- Standard notifications with standard case handling (six of the cases filed) took an average of 44.5 working days from a complete filing, which is an increase from one working day in 2020 (with the same caveat as above regarding the suspension of time limits), an increase of 39.4 working days from 2019 and an average of 38.6 working days since the introduction of this combination in 2010. Two of these cases progressed to phase two.(3) This is the fourth-highest average, with 2017 being the highest with 62.7 working days.
A recent amendment to the Danish Act on Competition gave the DCCA the power to "stop the clock" in case it asks questions and the parties do not respond before the deadline. The DCCA already actively uses the "stop-the-clock" measure and will likely continue to do so in 2022.
(For an overview of the average working days for case handling in 2021, 2020 and all cases since the new regime entered into force in 2010, click here.)
Prediction for 2022: the DCCA seems to have been overburdened with cases in 2021, which affected its average case-handling times. If the caseload returns to normal, the average case-handling times will likely drop for standard notifications.
The DCCA expects merging parties to engage in voluntary pre-notification discussions and not to simply submit a filing.
This is also reflected in the above-average case-handling times. Although there are no publicly available statistics showing when parties first approached the DCCA, the available statistics do show a significant difference between the average time to secure clearance from a complete filing and from the first time that there is public information showing the parties reached out to the authority (eg, publication of the transaction on its website).
Some companies, particularly foreign enterprises that are used to dealing with other competition authorities, will likely be surprised by the duration of the Danish pre-notification phase.
For example, the 3.6 working days average for a simplified filing is artificially low. Parties will normally not submit the actual filing before the deadline for third-party comments, which means that the 3.6 working days corresponds with the time it takes the DCCA to draft its decision. In reality, this process takes approximately one to two months from the first draft.
There has been an increase in the overall timeline for securing clearance, including the pre-notification phase. This change might backfire on the DCCA as it becomes increasingly difficult to justify voluntary pre-notification discussions unless it actually benefits the overall timeline. Some might even question whether the authority is able to finalise its review in more complex cases without a long pre-notification period.
Prediction for 2022: the DCCA will have to examine its pre-notification procedures if it wants to maintain the pre-notification institute in its present format.
Competition Council renders few decisions
The Competition Council (the Council) handed down decisions on four merger cases in 2021, which is an increase from two in both 2019 and 2020.
Two of the 2021 cases were commitment decisions, where the Council's involvement was standard practice because such cases, by definition, are a matter of principle or of larger significance.
The other two decisions both followed in-depth investigations. One had potential local effects – a new favourite theory of harm of the DCCA – between building markets, which progressed to "phase two" and lasted a year from the DCCA's first publication of the transaction on its website. The other was cleared in "phase one", where the parties were deemed unable to increase prices despite achieving market shares of between 40% and 50%.
The DCCA decided on the remaining 61 cases.
Prediction for 2022: the Council will continue to render decisions in few cases.
Offering remedies has become a more bureaucratic process than it was 10 years ago. In 2016, the DCCA translated the European Commission's model text for structural remedies into Danish. The practical takeaway is that the DCCA makes it difficult for parties to make changes to this, even in places where it has been mistranslated. Although voluntary by law, the model text is almost totally mandatory in practice, but there is more scope in the case of behavioural remedies as there is no corresponding model text.
Prediction for 2022: the DCCA's current formalistic approach to structural remedies will continue.
The DCCA normally requests internal documents and applies broad requests for information.
It is not uncommon for the DCCA to also request internal documents from the seller which outline other potential buyers. As the DCCA consistently refuses to consider a sale to another buyer as the relevant counterfactual, this creates confusion as to why the DCCA finds it necessary to burden sellers with such requests for information.
The DCCA has also been known to reach out to Danish subsidiaries and request them to compile internal documents from its (sometimes foreign) parent group. Although the Danish Act on Competition does not give the DCCA this "upward" power, because a subsidiary lacks the ability to legally control its parent group, the DCCA still carries out this practice.
Prediction for 2022: the DCCA's focus on internal documents will further intensify.
For further information on this topic please contact Kristian Helge Straton-Andersen at Gorrissen Federspiel by telephone (+45 33 41 41 41) or email ([email protected]). The Gorrissen Federspiel website can be accessed at www.gorrissenfederspiel.com.
Endnotes
(1) Further information is available here.
(2) Further information is available here.
(3) In Denmark, the merger control process is split into two phases. Phase one can last up to 25 working days. Phase two can last up to an additional 90 working days. It is possible to extend both phase one and phase two in case the parties offer remedies. It is also possible to extend phase two at the request of or with the approval of the notifying party.