Denmark: Deutz is back on track after High Court’s judgment in saga on sale of spare parts for trains

On 27 February 2023, the High Court annulled a decision by the DCC regarding Deutz and its Danish exclusive distributor DMN. DCC had initially established that the conduct constituted an abuse of Deutz’ dominant position, and an anti-competitive agreement between the parties in the form of a refusal to supply and restrictions of passive sales and parallel trade of spare parts for Deutz’ engines. 

In brief, Deutz had refused to supply spare parts for the refurbishment of DSB’s IC3-trains to Fleco ApS (“Fleco”), which had entered into a contract with the Danish rail company, DSB, for the refurbishment of Deutz-engines in DSB’s IC3-trains. Moreover, Deutz had entered into an agreement with DMN to the effect that Deutz should hinder parallel imports and passive sale from Deutz’ distribution network.

In relation to the abuse of a dominant position, the High Court found that the market definition applied by the DCC was flawed, as it did not take into account the possibility of purchasing original unoriginal spare parts. The investigation undertaken by the DCC was not extensive enough and the presentation of the conclusions did not sufficiently take uncertainties in the investigation into account. Further, the assessment of Deutz’s dominant market position was flawed, as it did not take potential competition from other manufacturers of spare parts into account. Consequently, the finding of an abuse was so flawed that it was annulled by the High Court.

In relation to the anti-competitive agreement, the High Court acknowledged that the parties had entered into an agreement pursuant to which Deutz were to enter into both unilateral actions and agreements with other Deutz dealers than DMN to restrict passive sales and parallel trade of Deutz spare parts. 

However, unlike the DCC the High Court found that an agreement for Deutz to take on an obligation to unilaterally not actively or passively supply goods in an exclusive distributors territory does not constitute a “hard-core restriction” pursuant to Article 4(1)(b) of the now-expired 2010 VBER. 

Consequently, the agreement would be block exempted pursuant to the VBER if the market share of the parties did not exceed 30%. In light of the above-mentioned flaws in the definition of the relevant market by the DCC, the High Court found that it had not been established whether the 30% threshold was exceeded by Deutz. Additionally, the DCC had not examined the market share of DMN in its relevant market.

As a result of this annulment, the case has been referred back to the DCC for renewed consideration.

Interestingly, this marks only the third time ever that a decision by the DCC has been set aside by the courts. Moreover, it is highly unusual for a court to overturn a decision based on the definition of the relevant market.

The decision by the Danish High Court is available here (in Danish). 

For more information, please contact Morten Nissen, Alexander Brøchner or Nanna Sofie Krabbe.

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