Six Danish heating plants have been fined for coordinating bids and prices on the electricity reserve market, a court ruling that exposes extensive illegal cooperation in the country’s energy sector.
Heating Plants Found Guilty of Price Coordination
The Danish Maritime and Commercial Court has ruled that the company Effekthandel A/S and five district heating plants illegally coordinated their bids and pricing on electricity reserve auctions. According to the court, Effekthandel acted as a central coordinator, helping the plants align their offers and share profits. This has been declared a violation of Danish competition law.
The ruling affects Jetsmark Fjernvarme, Brønderslev Varme, Ø. Brønderslev Fjernvarmeværk, Bramming Fjernvarme, Hvide Sande Fjernvarme, and Brøns Kraftvarmeværk. Each received fines of different sizes after the court concluded that their cooperation distorted fair competition by forming what effectively amounted to a cartel.
Details of the Fines
Effekthandel A/S was fined 29,000 Danish kroner for involvement over a 44-month period. Although the initial fine was set at over one million kroner, it was reduced due to limits on corporate fines under competition law.
Jetsmark Fjernvarme must pay 300,000 kroner for roughly three years of violations, while Bramming Fjernvarme was fined 200,000 kroner for four months of misconduct. Hvide Sande Fjernvarme received a fine of 100,000 kroner for about two months of coordination. Brøns Kraftvarmeværk must pay 40,000 kroner. Finally, Brønderslev Varme and Ø. Brønderslev Fjernvarmeværk will jointly cover a fine of 45,000 kroner.
The case stems from the companies’ sale of so-called “reserve capacity,” which is used to stabilize the power grid. The court agreed with the Danish Competition and Consumer Authority’s finding that the firms collaborated to set artificially high prices and share the profits.
Background of the Case
In 2024, Brønderslev Varme had already received a previous fine of 11.5 million kroner for cartel behavior through the same network with Effekthandel. That arrangement involved a total of 46 heating companies working through Effekthandel to set joint offers in electricity reserve auctions, effectively establishing a minimum price.
Although the goal was initially described as trying to improve income for heating companies and potentially lower costs for consumers, authorities concluded that the practice breached competition law. Similar to a case where the Danish government targeted farmers with fines, officials have emphasized that coordinated actions undermining fair competition cannot be tolerated, even when done by publicly owned utilities.
The Competition Council based its 2023 decision on evidence showing that Effekthandel had direct access to the power auction data and distributed information to the 49 plants involved. Emails revealed that Effekthandel calculated how to divide profits among them, ensuring every participant received some financial benefit regardless of whether their individual bids succeeded.
Financial and Legal Consequences
For the affected companies, the issue now is not simply being fined but rather the size of the penalties. They claim that their earnings from the cooperation amounted to only a fraction of the amounts reflected in the fines. Some local authorities could also face budget challenges since many of the heating companies are municipally owned.
In one example, Brønderslev Varme’s total annual revenue was 178 million kroner in 2022. The company estimates that the earlier Ø. Brønderslev heating plant earned somewhere between 25,000 and 50,000 kroner from its work with Effekthandel. Despite that small gain, they are being held responsible for fines based on up to 10 percent of their total turnover.
The chair of Brønderslev Forsyning has stated that the company will review the ruling carefully with its lawyers before deciding on further action.
Sources and References
The Danish Dream: Danish government targets farmers fines for illegal manure in winter
The Danish Dream: Energy electricity in Denmark for foreigners
TV2: Danske varmeværker dømt for karteldannelse
