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Godik has abused its dominant position on the Danish market for rental of portable toilets to events by applying a standard exclusivity obligation to customers on long-term rental agreements

30. April 2020

On 29 April 2020, the Danish Competition Council (“the DCC”) adopted a decision concerning Godik’s (a supplier renting out equipment to events) abuse of dominant position by applying a formal standard exclusivity obligation to customers renting portable toilets on long-term rental agreements. The DCC has found that Godik abused its dominant position between 2014 and 2018. Consequently, the DCC has ordered Godik to cease the illegal conduct.

The customers were primarily events such as music festivals. Godik’s standard exclusivity obligation applied to rental of portable toilets as well as other types of equipment needed at event locations. The decision in this case only relates to the standard exclusivity obligation applied in long-term rental agreements including portable toilets.

The exclusivity obligation formally obliged the customers to cover their full demand of portable toilets from Godik. The exclusivity obligation had a minimum duration of three years, which worsened the likely foreclosure effects of Godik’s behaviour. During the contractual period, the contract was further non-terminable to the customers and in case of non-compliance, customers were contractually obliged to pay back the rebate received and to pay an additional penalty to Godik.

The investigations carried out by the Danish Competition and Consumer Authority (“the DCCA”) showed that customers were likely to rent other types of equipment along with portable toilets and that customers had a preference for using as few suppliers as possible. Godik applied the same formal standard exclusivity obligation to these other types of equipment. The DCC found that Godik’s behavior on a number of possible markets for rental of other types of equipment to events also worsened the likely foreclosure effects of the exclusivity obligation.

Godiks exclusivity obligation was capable of leading to foreclosure of both actual and potential competitors on the relevant market.

Godik has not demonstrated that the exclusivity clause in Godik’s long-term rental agreements was either objectively justified, or that the exclusionary effect it produced was counterbalanced or outweighed by advantages in terms of efficiency gains to the benefit of the customers.