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Amendments to the Danish Competition Act: Civil fines and abolition of the obligatory appeal to the Danish Competition Appeals Tribunal

As part of the implementation of the ECN +-Directive in Denmark, the enforcement rules in the Danish Competition Act have been amended and a new two-tiered investigation and sanction system has been introduced, making it possible for the authorities to impose so-called “civil fines” on undertakings. The most significant amendments to the Act are summarised in this news article.

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Act no. L 116 passed by the Danish Parliament on 9 February 2021

The amendments are necessary in order to implement the ECN+-Directive (Directive 1/2019), which requires all Member States to provide the national competition authorities with certain enforcement and sanctioning powers.

The ECN+-Directive only imposes obligations on the national competition authorities when they investigate anti-competitive agreements or abuse of a dominant position which is capable of affecting trade between Member States. 

In order not to have multiple investigation and sanction systems, it has been decided in Denmark that the amendments prescribed by the ECN+-Directive are to apply to all types of competition cases. The changes to the investigation and sanction system will therefore apply regardless of the type of case. Merger cases will therefore also fall within the scope, as will all cases on anti-competitive agreements or abuse of a dominant position no matter whether they have an effect on trade between Member States or only affect the Danish market.

Two-tiered sanction system

Introduction of civil fines for undertakings 

Under the ECN+-Directive, national competition authorities should have the power to impose fines on undertakings, either directly themselves or by seeking the imposition of fines in non-criminal judicial proceedings. This has necessitated a change in the state of law in Denmark, where undertakings have so far been fined by the Danish courts in criminal proceedings. 

Until now, a case would first be investigated by the Danish Competition and Consumer Authority (DCCA), which would then refer the case to the Danish State Prosecutor for Serious Economic and International Crime. The State Prosecutor would then bring an action to have the court impose a criminal fine on the undertaking.

But from now on, the State Prosecutor will no longer be involved in the enforcement of the competition rules against undertakings. The DCCA will – when the substantive investigation has been completed – bring the case before the courts, claiming imposition of a so-called “civil fine” on the undertaking. 

The courts will then hear the case in civil judicial proceedings. The statutory amendment provides the DCCA with new responsibilities, and the DCCA will therefore set up a Competition Law, Investigation and Litigation Centre.

It will still be possible for the undertaking to admit the breach and accept a fine notice to avoid being sued in court. 

Since an undertaking breaching the competition rules risks civil – and not criminal – proceedings in future, the right to avoid self-incrimination as practised in criminal law will not apply to the undertaking (see Section 17 b of the Act). 

Natural persons breaching the Competition Act still risk criminal investigations and sanctions, however. As is the case today, they will – when the case against the undertaking has been closed – be investigated by the State Prosecutor under the Danish Administration of Justice Act in accordance with criminal law principles, including in relation to the right to avoid self-incrimination as practised in criminal law.

Fine level remains unchanged

The Act will not change the fine level. 

Civil fines are now regulated in Sections 23-23 i and Sections 24-24 c of the Competition Act.

Two-tiered investigation system

Inspections and the right to avoid self-incrimination

Under the ECN+-Directive, the competition authorities must also have powers to carry out inspections (dawn raids) in private homes if there is reason to believe that evidence of a breach of the competition rules committed by an undertaking is being kept in those premises. 

Until now, only the State Prosecutor has been authorised to search private homes under the Administration of Justice Act. Following the amendment, the DCCA will also be able to inspect private homes with a court order. Furthermore, the DCCA – not the State Prosecutor – will be responsible for investigating future competition law infringements by undertakings.

To ensure that investigations of natural persons are conducted by the State Prosecutor only – subject to criminal law rules – it was emphasised in the consultation process that if a natural person is personally under suspicion, then any search of his/her private home must be undertaken by the State Prosecutor under Section 18 a(3) of the Administration of Justice Act.  

Thus, the DCCA will be authorised to inspect private homes only if the natural person is not under personal suspicion, or if the State Prosecutor has been unable to obtain a court order to conduct the search under the Administration of Justice Act. This demarcation may prove difficult in practice.

Appeal to the Competition Appeals Tribunal becomes optional

In the proposed Bill, undertakings still had to bring a decision by the competition authorities before the Competition Appeals Tribunal before being able to bring it before the courts. 

If an undertaking did not bring the decision before the Tribunal, then the DCCA would have to bring the decision before the courts in order to impose a civil fine on the undertaking. In that case, it was proposed in the Bill to authorise the DCCA to claim that the court should stay the proceedings, until the Tribunal had considered the decision taken by the competition authorities. 

During the reading of the Bill, there were concerns, however, that it would lead to long case processing times and be unacceptable from a due process perspective.

Ultimately, the Danish Minister for Industry, Business and Financial Affairs accepted the proposal not to involve the Tribunal in all cases and changed the Bill. Accordingly, it is now up to the individual undertaking to decide if it wants to bring substantive decisions before the Tribunal or directly before the courts in order to obtain a full judicial review of the decision taken by the competition authorities and a proposed fine. Under the procedure to impose a civil fine on the undertaking the DCCA cannot demand that the case be brought before the Tribunal.

Our comments

The amendment involves significant procedural changes to the Competition Act. In particular, the introduction of a two-tiered investigation and sanction system gives rise to concerns from a due process perspective. 

In future, natural persons will have to await the outcome of a civil lawsuit against the undertaking before the State Prosecutor can bring criminal charges. The reason is that, technically, the person is charged with participation in the undertaking's breach. Therefore, the State Prosecutor will not bring charges before the claim against the undertaking has been finally adjudicated upon. 

Before the amendment, both the undertaking and the natural person would be subjected to the same criminal proceedings. Under the new regime, there is a risk of longer case processing times and greater uncertainty for natural persons who are involved in competition cases.

The two-tiered investigation system also gives rise to some concern. Natural persons who are under personal suspicion can only be investigated by the State Prosecutor and enjoy self-incrimination protection as practised under criminal law. 

If, however, a natural person is not (personally) suspected, but is being questioned by the DCCA because he/she works in an undertaking which is under suspicion, then that person is under an obligation to speak and will not enjoy self-incrimination protection as practised under criminal law. 

If the natural person is later suspected personally and is investigated by the State Prosecutor and perhaps met with criminal charges, the authorities may use all of the information from and about that person from the time before he/she was protected by the right to avoid self-incrimination as practised under criminal law.

This may cause problems in relation to the basic rights of the individuals, particularly in terms of determining at which precise time the suspicion against the person actually arose. 

In the light of the considerable concerns raised against the two-tiered investigation and sanction system during the reading of the Bill, the Minister for Industry, Business and Financial Affairs gave notice that the DCCA will prepare an internal guide for DCCA employees to be aware whether a natural person is under suspicion, whether the person needs to be investigated by the State Prosecutor or the DCCA, and whether the person is protected by the right to avoid self-incrimination as practised under criminal law.

The legislative process

After the Bill had been released for consultation, the Danish Ministry of Industry, Business and Financial Affairs received several responses, which the Ministry partially complied with in its consultation memo, and which resulted in a partial adjustment of the Bill before it was introduced to the Danish Parliament on 9 December 2020. 

During the reading of the Bill by the Trade and Industry Committee, the Bill gave rise to a considerable debate with as many as 41 written questions and subsequent hearing in the Danish Parliament on 13 January 2021. 

The Minister for Industry, Business and Financial Affairs agreed with the Trade and Industry Committee that it would be necessary to evaluate the Act within three years of its effective date. This agreement was probably a response to the many comments during the reading, the concerns described above, and the relatively rapid reading in the Danish Parliament.

The ECN+-Directive should have been implemented into Danish law on 4 February 2021, but owing to the many comments and questions during the reading of the Bill, the effective date of the Danish Act has been set for 4 March 2021.

Kontakt

Jens Munk Plum
Partner (København)
Dir. +45 38 77 44 11
Mob. +45 21 21 00 22
Erik Bertelsen
Partner (Aarhus)
Dir. +45 38 77 43 11
Mob. +45 20 19 74 12
Morten Kofmann
Partner (København)
Dir. +45 38 77 43 35
Mob. +45 24 86 00 40