24. september 2008
The Danish Competition Authority (DCA) has treated an application from the co-operative society, Ditas, and decided that there are no longer sufficient grounds to require maintenance of the society’s merger commitments from 2002.
The commitments were offered by Ditas in connection with a merger between Ditas and another wholesale society on the market for building materials in order to meet the concerns expressed by the DCA.
These concerns were based on the DCA’s assessment that the merged entity would take a dominant position on the market for sale of building materials to professional builders as well as the market for purchase of building materials meant for resale to professional builders, and that there were reasons to believe that the merger might have an appreciably negative effect on competition, unless it was conditioned by necessary and relevant commitments.
When offering commitments in connection with the merger in 2002, Ditas made it clear that the society disagreed with the DCA on the authority’s market definition as well as its assessment of the society’s position on the relevant markets.
When applying for an annulment of the commitments in 2008, Ditas continued to argue against the DCA’s market definition, but Ditas also stated that even if applying the criteria, on which the DCA based its decision in 2002, Ditas can no longer be considered to take a dominant position on any relevant market.
This statement was due to the fact that two major timber chains had resigned from the society, and the DCA’s investigation of the changed market structure confirmed that Ditas no longer takes a dominant position on the market irrespective of the underlying criteria used to determine the society’s position.
Consequently, the DCA found that maintenance of the commitments, which primarily intended to remove competition concerns related to possible abuse of dominant position, could no longer be justified, and the DCA therefore decided to annul the commitments.
The annulment does not mean, of course, that Ditas will be exempted from the general rules of the Competition Act, including the prohibition against anti-competitive agreements in section 6 of the Act. And to emphasize that Ditas is now subject to the same rules as any other non-dominant wholesale society, Ditas has agreed to send at letter to the members of the society, explaining the legal framework they have to observe in the future.