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Notification of agreement about Dansk Skadeservice A/S

03. november 2004

Journal nr. 3/1120-0301-0246/FI/LPML The Council meeting 3 November 2004

“Dansk Skadeservice A/S” is a cooperation agreement between 17 auto repair shops, authorised by Toyota Denmark A/S. The purpose of the agreement is to specialise in repair work covered by carinsurance and to market the cooperation agreement jointly. Marketing is directed at insurancecompanies.

The parties to the agreement applied for a statement issued in accordance with section 9 (1) of the Danish Competition Act - saying, that the agreement would have no appreciable effect on competition and therefore fell outside the scope of the prohibition in Section 6 (1). In the alternative the parties applied for an individual exemption according to section 8 (1).

The agreement includes cooperation about the purchasing of spare parts. According to the Commission Guidelines on horizontal agreements, it can be assumed that the agreement has no harmful effect on competition, if the parties do not have a combined market share in excess of 15 % with regards to purchasing as well as selling.

In this case, however, the parties had a combined market share which was more than twice that amount, so a specific assessment of the effects on competition was required. In making this assessment, the Council placed special emphasis on the extremely strong position that Toyota Denmark A/S holds on the market, for the supply of spare parts. Joint purchasing agreements of this kind may be the only viable alternative to the market power enjoyed by the national suppliers.

The original agreement contained a number of clauses, which was a cause of concern to the Competition Authority. Firstly, the board of Dansk Skadeservice A/S was to negotiate the agreements on behalf of the individual workshops, with the insurance companies. This caused concern with regards to price coordination. Dansk Skadeservice A/S is therefore going to change the agreement, so all the negotiations in future will be conducted solely between the individual auto repair shops, and the insurance companies.

Secondly, the agreement included a non-compete clause, which prevented a party pulling out of the agreement from entering into a competing cooperation agreement, for up to a year after the termination of the agreement – a termination which had to be notified 12 months in advance to the end of a calendar year.

That was, in the opinion of the Council, an unnecessary limitation of competition. The parties therefore agreed to change the non-compete clause. Hereafter a termination needs only be notified 12 months in advance to the end of a quarter. Furthermore, the leaving party is only excluded from starting a competing cooperation agreement – not from entering into one.

Thirdly, the agreement included an agreement with one insurance company concerning a maximum price on glass work. That agreement was terminated.

On the basis of these changes, the Council authorised the Competition Authority to approve the agreements concerning Dansk Skadeservice A/S, and thus issue a statement in accordance with section 9 (1) of the Danish Competition Act - saying, that the agreement will have no appreciable effect on competition and therefore falls outside the scope of the prohibition in Section 6 (1).