What is a cartel?
A cartel is an illegal agreement between competitors which restricts competition. Cartels are often difficult to detect because the cartel members have a common interest in keeping the agreement secret.
In the following, you can read about the most common kinds of infringements of the Danish Competition Act. If you have experienced one or more of the following indications, we would very much like to hear from you.
Types of cartel agreements
Two or more competing companies agree among themselves what their products or services should cost and in that way standardise prices for customers. This may involve e.g. agreements on uniform price increases, uniform discounts, or an agreement that prevents the parties from offering discounts. Price fixing can manifest itself in the following ways:
- Prices generally rise at all providers for no obvious reason such as increases in raw material prices etc.
Two or more companies agree to share the market between them and not be active in each other's areas. This may be a geographical division, a division by customer categories etc. Market-sharing agreements can manifest themselves in the following ways:
- A company outside the local area declines to perform a contract even if there is no obvious commercial reason for this.
Two or more companies agree in advance who will bid. Usually, it is also agreed in advance who should win the contract and at what price. Bid rigging can manifest itself in the following ways:
- Two different competing companies submit almost identical offers.
- One company sends calculations or prices to one or more of the other companies participating in the same tender. This is done to ensure that the bidding price is kept high. It can also be done as a favour in the form of so-called 'loan prices' because a company is unable to calculate an offer.
- A newly established company’s price for a contract is significantly lower than those of established companies, which may be a sign that the others have entered into illegal agreements.
- A company selected to perform a contract withdraws without giving a plausible explanation.
Limiting production or sale
A number of companies or an industry agrees what or how much each company will produce or sell so as to increase prices or prevent price drops. This can manifest itself in the following ways:
- It is agreed how much the individual company can produce and that it will be announced that the product is sold out when the target is reached. Buyers are forced to either buy from others or to sign up on a waiting list.
Other types of violation of the competition rules
Resale price maintenance
A supplier agrees to a minimum price with its dealers. Often - but not always - the supplier will, by means of threats to suspend delivery etc., pressure dealers into accepting certain prices. Resale price maintenance can manifest itself in the following ways:
- The prices of branded products are the same from store to store and are never - or very rarely (anniversary offers etc.) - available to buy at prices below the guideline price.
- This also applies to agreements to follow the suppliers' guideline prices.