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Co-operation-agreement between Ove Juel Catering A/S and Th. Schulz A/S

26. november 2003

Journal nr.3/1120-0301-0132/KB/SEK The Council meeting 26. november 2003

1. Ove Juel Catering A/S and Th. Schulz A/S are catering-wholesalers, operating on either side of the Great Belt. The undertakings notified the Competition Council requesting a comfort letter stat-ing that an oral agreement between the parties is not prohibited under section 6 (1) of the Competi-tion Act. Alternatively the parties have requested an individual exemption according to section 8 (1).

2. The agreement covers customers requiring deliveries in the whole country. The parties have agreed to submit joint offers to these customers. One party will supply the eastern part of the coun-try with catering goods and the other party will supply the western part of the country. This co-operation will be carried out on an ad hoc basis from one offer to another. The purpose of the co-operation is to give the parties the opportonity to participate in offers where the contract concerns a customer requiring deliveries in the whole country.

3. Wholesale of catering goods differs from wholesale of convenience goods to the retail trade in relation to both the range of goods, trade and distribution conditions. Import and export of catering goods hardly ever happens on the wholesale level. Therfore, wholesale distribution of catering goods in Denmark constitutes the relevant market in this case.

4. Competition among wholesales primarily takes place within a certain radius of the wholesalers’ outlets. This is due to the conditions on the catering-market, for instance the demand for frequent and fast deliveries and service. Few players on the market are capable of fulfilling the demands from customers requiring deliveries in the whole country who wish to enter into an agreement with a sole supplier who can deliver a swift service to customers’ establishments regardles of geographi-cal position.

5. The notified agreement only concern contracts with customers requiring deliveries in the whole country. The parties have a fairly small share of the market. However, the treshold under section 7 of the Competition Act does not apply. The reason being that Ove Juel Catering is part of the Da-grofa group, which has a turnover above one billion Danish kroner.

6. The agreement constitutes a horizontal marketing co-operation. This type of agreement is only excepted from the prohibition under section 6, if the co-operation objectively is necessary in order for the business to submit offers on a contract that they could not carry out as separate entities.

7. The Competition Authority does not find it sufficiently proven that the investments costs etc. in it self constitutes such barrier that makes the co-operation between the parties objectively necessary in order for the parties to participate in offers concerning deliveries covering the whole country. Therefore the agreement constitutes an anti-competitive agreement under section 6 and the primary request of the parties cannot be granted. See section 9 of the Competition Act.