Software suppliers beware of multiyear irrevocable contracts – Commitments to DCCA by dominant supplier of software.
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The Danish Competition Council has recently approved commitments from the software supplier Wolters Kluwer Danmark A/S ("Wolters Kluwer"), which inter alia provides software for calculation of personal taxes to accountants and tax advisors. The commitments are made subsequent to concerns raised by the Danish Competition Council (“DCC”) against Wolters Kluwer's usage of irrevocability clauses and conditional discounts.
In its investigation of Wolters Kluwer’s contractual terms the Danish Competition and Consumer Authority (“DCCA”) found that several of the supply agreements contained irrevocability clauses with a duration of up to three years and four months and/or terms making discounts conditional on customers entering into multi-year agreements.
On the basis of these findings the DCC considered that the contractual terms may constitute an abuse of Wolters Kluwer’s dominant position.
These concerns were raised, as the DCC assessed that Wolters Kluwer's terms could possibly deter customers from buying software from other suppliers and thereby exclude other suppliers from the market. The anti-competitive risks especially arose from the specific conditions in the market in question, as most customers in this market only acquired software programmes as those offered by Wolters Kluwer, from one supplier at a time.
Commitments made by Wolters Kluwer
To address the concerns of the Competition Council, Wolters Kluwer made a commitment to remove the potentially problematic contractual terms. On 16 December 2021, the DCC approved these commitments and made them binding until 31 August 2027.
Customers who have multi-year agreements with Wolters Kluwer can, therefore, from now on terminate their contract with written notice of three months. Further, Wolters Kluwer will remove its conditional discounts.
The DCC's decision may impact the contractual terms of other suppliers with a dominant position, as the commitment decision entails that companies with similar terms must consider if their contractual terms deter customers from buying products or services from alternative suppliers.
It is, however, important to stress that the DCC has not come to a decision as to whether Wolters Kluwer has infringed the Danish Competition Act. The DCC has merely ruled that the commitments made by Wolters Kluwer address the possible negative effects on competition of the above-mentioned terms.
A link to the Competition and Consumer Authority’s press release can be found here (in Danish).
For more information please contact Morten Nissen or Alexander Brøchner.
