Copenhagen, Denmark – The Danish Competition Council has ruled (29 January) that Coloplast Danmark A/S abused its dominant market position by engaging in anti-competitive behavior that hindered competition in the wholesale supply of stoma care products to municipalities.
According to the Council’s findings, Coloplast Danmark employed unfair pricing strategies that disadvantaged competing wholesalers, some of whom were forced to withdraw from the market. The company’s conduct also led to a substantial decline in the parallel import of Coloplast stoma care products, which typically help maintain competitive pricing.
Market Dominance and Anti-Competitive Practices
The stoma care market operates under unique conditions. Patients usually continue using the same product they were introduced to in hospitals, making it essential for municipalities to offer a wide range of products, including those from Coloplast. This creates a dependency on Coloplast’s supply, reinforcing its dominant market position.
Chairman of the Danish Competition Council, Christian Schultz, stated:
“Coloplast Danmark exploited its dominant position to push competitors out of the segment supplying municipalities with stoma care products. By entering a consortium with a wholesaler in 2019, Coloplast was able to leverage its market strength to charge significantly higher prices to rival wholesalers than those offered to municipalities through the consortium. This made it extremely difficult for competing wholesalers to secure municipal contracts, with some exiting the market entirely.”
Impact on Parallel Imports
Coloplast’s pricing strategies also affected parallel imports, which previously allowed wholesalers to purchase Coloplast products from lower-priced EU markets. Denmark has some of the highest prices for Coloplast products within the EU, making parallel imports a vital tool for maintaining affordability. However, as Coloplast’s consortium gained ground, independent wholesalers lost market share, leading to a decline in parallel imports from 50-70% in 2020-2021 to 30-40% in 2022.
Regulatory Action and Future Consequences
In the short term, Coloplast’s practices resulted in lower prices for municipalities. However, in the longer term, the lack of competition and reduced parallel imports risked leading to significantly higher costs for municipal buyers.
In response, the Danish Competition Council intervened in the summer of 2023, approving a temporary commitment from Coloplast to alter its pricing practices. The Council has now determined that Coloplast’s actions violated competition law through a practice known as “margin squeeze,” wherein competing wholesalers faced unsustainable cost pressures.
As a result, Coloplast Danmark has been ordered to cease its abusive practices. The Danish Competition and Consumer Authority will continue its investigation, with the expectation that the case will conclude with a financial penalty for the company.
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