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Accura wins leading consortium case for Eurostar Danmark A/S before the Danish Maritime and Commercial High Court


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Details

Accura represented Eurostar Danmark A/S in a leading case before the Danish Maritime and Commercial High Court concerning the lawfulness of a road marking consortium.

The case concerned the Danish Road Directorate's re-procurement of road markings in 3 regions in March 2014. It was possible to tender for individual regions and at an aggregate discount if awarded the contract for several regions. The procurement form was based on recommendations of the consultancy firm McKinsey back in 2010 intended to encourage the pooling of several small projects to increase volumes, thereby creating synergies and more competitive tenders.

Eurostar Danmark A/S and GVCO A/S (formerly LKF Vejmarkering A/S) decided to join forces as a consortium and tender for the whole contract at an aggregate discount as neither of them had the capacity required to tender for the whole contract. Furthermore, based on the procurement discount structure and experiences from previous procurement procedures, they assessed that the actual competition was for the whole contract. The consortium won the whole contract submitting the lowest overall price. A competitor filed a complaint with the Danish Competition and Consumer Authority who decided to intervene in the case.

On 25 June 2015, the Danish Competition Council decided that the consortium was unlawful on a par with a classic cartel. The Danish Competition Council said that, as the two companies could have tendered separately for individual regions, fewer tenders were submitted than if the parties had not joined forces in a consortium. As a result, the consortium restricted competition in relation to the procurement. The case was brought before the Danish Competition Appeals Tribunal who affirmed the Danish Competition Council's decision of 11 April 2016. Further to the affirmation, the Danish Competition Council filed a report with the Danish Public Prosecutor for Serious Economic and International Crime who decided to bring charges against the two companies and certain members of their executive boards.

Eurostar Danmark A/S and GVCO A/S brought the case before the Maritime and Commercial High Court. On 27 August 2018, the Court quashed the Danish Competition Council's decision, as affirmed by the Danish Competition Appeals Tribunal. The Court found that the Danish Road Directorate's procurement form encouraged tendering for the whole contract in accordance with McKinsey's recommendations and that there appeared to be an actual possibility that tenders would be submitted for the whole contract and by foreign tenderers. The Court found that a company interested in tendering for the contract but lacking the capacity to tender for the whole contract on its own, only having the capacity for individual districts, could not be barred from participating in a consortium to submit a tender for all the regions, as such restriction would not necessarily intensify competition.

The Court found that, in determining whether the consortium was in contravention of the competition rules, regard should be had to whether the two companies were in fact incapable of tendering for all the regions on their own. The two companies' capacity calculations showed that they were incapable of doing so. The Court said that, despite their very extensive capacity calculations, the competition authorities had failed to prove by clear and convincing evidence that the two companies' capacity calculations were not fair and that the authorities had therefore failed to carry the burden of proof. The Court said that the assumption made by the authorities that the two companies could perform the contract on their own was based on hypothetical assumptions that the companies could employ more staff and buy additional machinery and that there was no documentation to prove that this was possible or commercially reasonable.

The competition authorities now have 4 weeks to decide whether to appeal the decision.

Christina Heiberg-Grevy represented Eurostar Danmark A/S before the competition authorities and the Maritime and Commercial High Court.

You may find the decision here (in Danish only).


Contact

Christina Heiberg-Grevy
Christina Heiberg-Grevy

Partner, Attorney-at-Law

Mobile: +45 3078 6739
christina.heiberg-grevy@accura.dk