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Danish Ports' Standard Lease

29. november 2006

4/0120-0389-0008/ISA/KHS - The Council meeting 29th November 2006

On 29 November 2006 the Danish Competition Council decided that two conditions in the standard lease of Danish Ports regarding the adjustment of rent and the “turnover guarantee” do not have a distorting effect on competition.

Danish Ports is an organisation representing 60 ports in Denmark. Danish Ports’ standard lease is used by the members of Danish Ports when renting out port areas. From the standard lease it follows that the rent can be regulated yearly according to the change in the net price index or a corresponding index. The turnover guarantee in the lease constitutes part of the area rent – that is, part of the rent is paid via ship and tax dues.

The Council’s statement emerged from an examination made by the Competition Authority of the ports’ practical use of the standard lease’s conditions regarding the adjustment of rent and the turnover guarantee. The investigation showed that scarcely half of the members of Danish Ports automatically regulate their leases ac-cording to the net price index, whereas the rest uses other regulating schemes. As regards the turnover guarantee, the ports typically include a turnover guarantee in some of their leases, typically leases near the quay. However, the guarantee turn-over is used by the ports in much differentiated manners both as regards the size of the guarantee and the extent of how it is used.

The Council finds that the examination leads to the conclusion that the two condi-tions do not have a distorting effect on competition and therefore, are outside the scope of the prohibition in section 6 (1) in the Competition Act. That is, the two conditions are covered by section 9 (1) in the Competition Act.

However, some ports enjoy a monopoly status, and therefore the Council found it important that it is still possible to intervene in ports that abuse their monopoly status, although the standard lease is used. For this reason, the Council decided that section 11 (5) in the Competition Act is inapplicable as regards the standard lease.