There has been an enhanced focus on personal fines in competition law cases in Denmark. It is now common that fines are not only issued to companies but also individuals when the Danish Competition Act is violated – and the first prison sentence may not be far away.
In 2005, personal criminal liability was claimed for the first time in connection with a violation of the Danish Competition Act. In the following years, fines were rarely issued to individuals, but this has changed significantly in the recent years with more fines being handed out to managers of companies that have infringed the competition law.
Two Fresh Examples: Bid Rigging and Resale Price Maintenance
In 2015, the Danish Competition and Consumer Authority initiated an investigation of possible bid rigging in the plumbing sector in Denmark. In August 2019, the last case was closed with a fine of DKK 100,000 being issued to a member of the management in the now-dissolved plumbing company, Sanoterm Danmark A/S. The manager acknowledged having exchanged prices with a competitor in connection with a tender in Copenhagen. The case ended up with penalties of totally DKK 1,750,000, including the fine of DKK 100,000 and three other personal fines of DKK 25,000 to individual members of the management of Sanoterm Denmark A/S. It is worth noting that the DKK 25,000 fines were issued for violations conducted before the increased level of fines in the Danish Competition Act entered into force in March 2013. The DKK 100,000 fine concerned an infringement carried out after this date.
Personal fines are not only issued as a result of horizontal agreements and cartels, but also based on vertical agreements. On 15 February 2019, a court issued a DKK 1,000,000 fine to the hair product wholesaler, Icon Hairspa A/S, for violating the Danish Competition Act’s prohibition on binding resale prices. In addition, a member of the management received a personal fine of DKK 100,000 for his participation.
Fines and Imprisonment for Competition Law Infringements in Denmark
In Denmark, individuals who intentionally or grossly negligent violate the Danish Competition Act can be fined or imprisoned.
The calculation of the penalties is based on the gravity and duration of the infringement. The minimum fine for a person who has committed a less severe offence is DKK 50,000. For a serious violation, the minimum fine is DKK 100,000, and for a grave infringement, it is DKK 200,000. A violation of shorter duration (less than one year) does not add a surcharge to the minimum fine. A medium-term infringement (one to five years) results in a surcharge of up to 50 % and a long-term offence (more than five years) entails a 10 % surcharge for each year the violation has existed.
Since 2013, it has been possible to impose prison sentences in severe cartel cases. In the case of an intentional cartel agreement of a gross nature, the person who entered into or participated in the cartel agreement may be sentenced to imprisonment for up to one year and six months. Under particularly aggravating circumstances, the sentence can be increased up to six years, and in extraordinary cases up to nine years.
A person must have acted intentionally to be sentenced to imprisonment. Thus, one cannot go to prison for the willful infringements of others. However, the management of a company cannot avoid jail by leaving the implementation of a cartel agreement to subordinate employees.
Will We See a Prison Sentence in Denmark Soon?
Despite the rules on imprisonment having been in force for more than six years, no one in Denmark has yet been sentenced to prison for violating the competition rules. However, the Danish State Prosecutor for Serious Economic and International Crime have in previous cases stated that they intent to claim prison for senior staff in companies, which have participated in cartels. In the two cases described above, everyone accepted the fine proposed by the State Prosecutor before the case went to court. It is not unlikely that some of the accused agreed to the fine to avoid a court case and the risk of imprisonment.
Imprisonment have been used in other countries and there has been an increasing debate in Europe about the use of prison to enforce cartel law. Moreover, the committee preparing the 2013 amendment of the Danish Competition Act, which introduced the possibility of prison, compared competition law violation to crimes such as tax fraud and insider trading – crimes where imprisonment has been used for decades. Hence, it is not unrealistic to expect a prison sentence for a cartel violation in Denmark within a foreseeable future.
Horten Law Firm, Copenhagen
Andreas Christensen, Partner
Kristen Helms Skov, Junior Associate