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The founding of Rejsekort A/S

16. september 2003

Journal nr. 3/1120-0401-0046/lob/hla/ISA The Council meeting 16. September 2003

On 18 August DSB, HUR, Ørestadsselskabet and four other county transport authorities founded the company Rejsekortet A/S. On the same day the parties notified the Danish Competition Authority of the joint venture Rejsekortet A/S.

The total turnovers of the different participating companies in the joint venture exceeds the thresholds in section 12 (1) (1) of the Competition Act. Furthermore, Rejsekortet A/S is a joint venture which is able to perform all the functions of an autonomous entity on a lasting basis. Therefore, the founding of Rejsekortet A/S is covered by the Danish merger control rules according to section 12 (a) (1) (2) and subsection 2.

The relevant market is the marked for delivering, running and maintaining ticket systems for public transportation in >Denmark

The authorities currently have the power to set the ticket prices for the different kinds of public transportation and will retain this authority. Therefore, the founding of Rejsekortet A/S will have no influence on the price setting of the different kinds of public transportation which is covered by this joint venture.

Hence the Danish Competition Authority finds that the merger does not create or strengthen a dominant position which will impede competition on this market significantly. Therefore, the merger will be approved according to section 12 (c) (2) in the Competition Act.

Furthermore, the Competition Authority finds that neither the object nor the consequences of this merger is to coordinate the competitive behaviour of the undertakings that remain independent under section 12 (c) (3) and subsection 4.

According to the competition clause in the shareholders agreement the parties are obliged not to participate in other competitive travel cards for a period of five years. The Competition Authority finds that the clause in connection with the parent companies is associated to the founding of the joint venture and therefore not covered by the Competition Act.

Beside the joint venture the parties have also notified the Competition Authority of an admission agreement. All the transportation companies that wish to use the travel card have to sign this agreement. Both companies which are a part of the joint venture and companies that are not are obliged to sign this agreement.

According to a clause in the admission agreement the agreement is irrevocable for a period of five financial years from the day Rejsekortet A/S takes over the administration from the relevant transportation company. Furthermore, this agreement contains a clause which limits the connected companies' possibility to use other types of tickets, than the travel card and tickets that are paid in cash.

It is the Competition Authority's evaluation that this agreement is not associated with the merger. The agreement contains clauses that by effect limits the competition, it is therefore covered by the prohibition in section 6 (1) in the Competition Act.

The admission agreement comply with the conditions set out in section 8 (1) of the Competition Act concerning an individual exemption. The exemption is granted for a five year period from the expected start date to the 31 December 2010. The travel card is expected to be up and running the 1 January 2006. If the start date is delayed the exemption period will be shorter than five years. These circumstances will be taken into consideration in connection with a possible extension of the exemption after the 31 December 2010.