Commitment decision on free choice of provider of cash handling and cash transportation services

20. December 2017

The Danish Competition and Consumer Authority (“DCCA”) has accepted commitments offered by the parties in a case concerning an agreement on supply of cash handling and transportation services.

The parties to the agreement were a cash handling company, Loomis Danmark A/S (Loomis) on the one hand and 50 bank customers on the other hand.

The agreement was made as a ‘non-termination clause’ in an addendum to a transfer agreement in connection with a horizontal takeover by Loomis in August 2016 of another cash handling and transportation company, Bankernes Kontantservice A/S (BKS), which was formerly owned by the banking sector.

According to the addendum the parties (i.e. Loomis and the bank customers) had i.a. agreed that neither party would terminate or demand amendment of service agreements between BKS and these bank customers in a transitional period of 3 years and 5 months. It was further specified in the addendum that during that period of time each of the bank customers would undertake “in all material respects” and “consistent with past practice” to continue to purchase the services from Loomis/BKS.

The addendum did not contain an explicit obligation for the bank customers to purchase a certain minimum volume of the services from Loomis/BKS. But so far, the bank customers had subscribed almost exclusively to the services of BKS, and according to the ‘non-termination clause’ these bank customers undertook to continue do so. Furthermore, investigations have shown that bank customers prefer to contract with only one provider of cash handling and transportation services and are unlikely to allocate their purchases between two or more providers.

Accordingly, the DCCA found that the ‘non-termination clause’ implied a de facto obligation on the bank customers to cover all or most of their future demands with Loomis/BKS.

The bank customers cover about 65 per cent of the total turnover of cash handling and transportation services in Denmark, and by the merger Loomis obtained an substantial share of the total market.

Besides Loomis there is only one provider of cash handling and transportation services of any importance on the Danish market, Nokas Værdihåndtering A/S (Nokas), and the DCCA found that the ’non-termination clause’ of the addendum was likely to have a foreclosure effect, as it would preclude the only competitor from a large segment of customers.

However, the involved parties have offered commitments to meet the concerns expressed to them by the DCCA in its preliminary assessment. The parties have offered to replace the obligation in the ‘non-termination clause’ of the addendum, with a text that makes it clear that the bank customers have no obligation whatsoever to acquire their services from Loomis/BKS, neither in whole or in part.

The DCCA found that the offered commitments will meet the concerns of the DCCA. The commitments will remove the barrier to competition on the market, as the bank customers will be free to make their own decisions on which provider can offer the best service at the most favourable price. Accordingly, the DCCA has settled the case by making the commitments binding on the involved parties of the case.

20. December 2017