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Denmark: Government Permits Merger to Stem IKEA

(Oct. 17, 2013) The Danish Competition Agency (Konkurrence- og Forbrugerstyrelsen) on September 25, 2013, approved the purchase of smaller furniture retailers by the Danish-owned company JYSK, in an effort to stem an otherwise growing dominance of the market by competitor IKEA. The fusion will give JYSK the largest market share of the furniture retail business in Denmark. (Julia Mia Fogde, Lars Larsen er nu større end IKEA, EPN.DK (Sept. 26, 2013).)


The Office Manager for the Danish Competition Agency, Søren Bo Rasmussen, explains that the decision was the best alternative, given the circumstances. (Id.) According to the Danish Competition Agency, had JYSK, now the largest furniture company in Denmark, not bought the smaller businesses, those small enterprises would most likely have gone bankrupt, and there would have been fewer furniture options in the Danish market. Now, the Agency contends, following the merger, Danes will enjoy greater variety of furniture on the market than they otherwise would have. (Press Release, Danish Competition Agency, Konkurrencerådet godkender stor møbelfusion (Sept. 25, 2013).)


Rasmussen acknowledges that there will likely be price increases in the Danish market as a result of the merger, but argues that without it they would have been even higher. The Danish Competition Agency’s analysis found a 30-40% price increase by IKEA to be a reasonable projection without the merger, whereas the projection for JYSK following the merger is a 10-20% price increase for its own stores and an increase of 0-5% for the market as a whole. Rasmussen points out, however, that these figures represent the worst case scenario and should be taken with a grain of salt. (Lars Larsen er nu større end IKEA, EPN.DK (Sept. 26, 2013).)