News / Maersk fined $1.5m for 'gross negligence' over Damco merger

ID 160217028 © Andrii Yalanskyi

Danish shipping line Maersk has been fined 10m DKK ($1.5m) by the Danish Maritime and Commercial High Court for “regrettable procedural error”. 

The Danish Competition and Consumer Authority (DCCA) reported that Maersk had failed to notify a merger, and had implemented it without approval from the competition authority.  

The violations concern the merger between Damco USA Inc – a subsidiary of A.P. Møller-Maersk – and Pilot Air Freight Holdings LLC, back in 2022.  

“Damco is a US-based logistics company and an indirectly owned subsidiary of Maersk. The decision to acquire Pilot was a strategic decision made by Maersk,” said the DCCA. 

Maersk signed the agreement to acquire Pilot in February 2022 and subsequently notified the US competition authorities, who approved the merger. The transaction was completed in May 2022.  

In August 2023, the DCCA found that Damco and Mærsk had infringed merger control rules and brought the case before the Danish Maritime and Commercial High Court for a determination of the fine. 

The court noted that Mærsk acted in a “grossly negligent” manner by failing to report the business move to the DCCA. 

“Major mergers must be notified to and approved by the competition authority to ensure that they do not significantly impede effective competition,” explained deputy director general of the DCCA, Tine Rønde. 

“Merger control can only function effectively if companies notify mergers in a timely manner and refrain from implementing them before obtaining the competition authority’s clearance. Failure to do so constitutes serious infringements of the rules,” Ms Rønde added. 

A statement from Maersk sent to The Loadstar said: “When we later became aware that the merger—regardless of Pilot’s minimal activity on Danish soil—was also subject to notification in Denmark, we contacted the DCCA ourselves in June 2022. This formed the basis for the 2023 decision.”  

Indeed, while the merger was approved by the US competition authorities, the combined group turnover of Damco and Pilot exceeded the Danish merger thresholds, requiring DCCA approval. 

The carrier said it has taken note of the judgment and “will now study it further”.

“This was a regrettable procedural error,” it said. 

“We note that the court viewed it as a mitigating factor that Mærsk itself contacted the authority regarding the acquisition of Pilot Air Freight Holdings and that Mærsk fully and loyally cooperated with the authority to ensure the transaction was properly notified. Once the transaction was notified, it was approved without intervention.” 

Ms Rønde added: “Mærsk did the right thing by contacting us when the error was discovered, and we have had a good cooperation throughout the case.  

“It is worth noting that the court’s judgment took these circumstances into account. Overall, the reasoning behind the calculation of the fine is made very clear in the judgment.” 

The DCCA explained that certain mitigating circumstances justified a reduction of the fine. This included Maersk contacting the authority, the fact that Maersk cooperated fully and that Maersk had and continues to have a competition law compliance programme in place.