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Road marking consortium found guilty of infringing the Competition Act

The Court of Appeal of Eastern Denmark (the High Court) has ruled that the illegal consortium agreement entered into by the undertakings LKF Vejmarkering (now GVCO) and Eurostar Denmark constituted a criminal infringement of the Danish Competition Act. However, due to special circumstances, neither the companies or three management members will be punished. The verdict concerns the so-called road marking consortium.

Facts About the Danish Road Marking Consortium's Bid for Road Marking in 2014

In February 2014, the Danish Road Directorate issued a tender for road marking in three areas of Denmark: Southern Denmark, Zealand, and the capital region.

At that time, LKF Vejmarkering and Eurostar Denmark were among the largest companies in Denmark within road marking. The two companies formed the consortium "Danish Road Marking Consortium" and bid on all three areas, also submitting a combined bid for the entire task. No other companies submitted bids for the task in the capital region.

The Danish Road Directorate awarded the consortium, which had the overall cheapest bid, the task in all three areas. Had the two companies submitted separate bids, it might have been even cheaper. Competition for the task in the capital region, where the consortium was the sole bidder, could have been created.

A consortium collaboration between competitors can be legal if it provides significant efficiency gains. In the road marking case, the consortium agreement did not involve the companies working together on tasks, pooling their resources, or similar activities. Therefore, it was not a true production collaboration but rather a sales collaboration. Therefore, there were no efficiency gains that could justify the collaboration.