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Illegal price coordination between the joint venture company Wewers Belægningssten and the parent company Ikast Betonvarefabrik

24. november 2004

3/1120-0289-0072/MM/SEK The Council Meeting 24 November 2004

On 24th November 2004, the Danish Competition Authority adopted a decision concerning illegal price coordination between the joint venture company Wewers Belægningssten and the parent company Ikast Betonvarefabrik. As the two companies did not form an economic entity, the coordination was covered by the Danish Competition Acts prohibition against concerted practice.

Wewers Belægningssten is a joint venture, which is under joint control of Ikast Betonvarefabrik and Wewers Teglværker.

During a dawn raid in May 2003 The Danish Competition Authority got possession of a number of mails which showed, that Wewers Belægningssten A/S and A/S Ikast Betonvarefabrik was coordinating there prices.

There were two central questions that the Competition Council had to address. First it should be examined whether the emails presented established an agreement/concerted practice, and second it should be examined whether an agreement/concerted practice between a joint venture under joint control and one of its parent companies was covered by the Danish Competition Act section 6.

Agreement/concerted practice
Concerning the first question the council stated, that the e-mails presented consti-tuted a concerted practice, which had as it object or effect restriction of competition. The presented e-mails showed among other things, that the two companies had exchanged price list’, in order to “raise prices” on common products.

Not part of an economic entity
The second question concerned an interpretation of the Danish Competition Act section 5, were it is laid down, that an agreements and concerted practice within the same company or group of companies is not covered by section 6 in the Danish Competition Act.

Section 5 in the Danish Competition Act shall be interpreted in accordance with the European Court of Justice interpretation of the term “economic entity”. The European court of justice has not ruled on the question whether an agreement between a joint venture under joint control and one of its parent companies is covered by the term economic entity. It was therefore the Commissions practice which was crucial for the Competition Councils decision. According to the Commissions practice, an agreement between a joint venture under joint control and one of the parents com-pany is covered by section 6 in the Danish Competition Act. When a joint venture is under joint control, none of the parent companies will have sufficient control over the joint venture to impose an agreement.

The parties did agree on the fact, that the parent companies had joint control over the joint venture company.

Viewed in the light of these facts the Competition Council decided, that the con-certed practice was covered by the Danish Competition Act section 6, and issued an order that the coordination of prices should be terminated immediately.