DENMARK Trends and Developments Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
The Danish Competition and Consumer Authority ( Konkurrence- og Forbrugerstyrelsen ) has embarked on a systematic and ongoing supervision initiative. This initiative initially aims to oversee approximately 400 Danish digital intermediation services in order to ensure their compliance with the DSA. In cases of non-compliance, the Danish Competition and Con- sumer Authority holds the authority to levy fines that can reach up to 6% of the company’s global turnover. However, such substantial fines are typically reserved for severe and persistent breaches of the DSA. Growing influence of private equity Private equity and venture capital funds are increas- ingly becoming key players in driving technological advancements through M&A. These investment funds are actively seeking opportunities in the tech sector, motivated by the potential for substantial returns and significant growth. Private equity and venture capital funds typically target companies that demonstrate strong growth potential, possess innovative technolo- gies and have scalable business models. In recent years, there has been a notable increase in private equity- and venture capital-backed M&A transactions within the technology sector. These funds provide not only the necessary capital but also strategic expertise and operational support to their portfolio companies. By leveraging the resources and knowledge of private equity and venture capital funds, tech companies can achieve enhanced performance, expand into new markets and strengthen their com- petitive positions. Danish foreign direct investment regime The Danish foreign direct investment (FDI) regime, governed by EU Regulation 209/J452 and the Dan- ish Investment Screening Act ( Investeringsscreening- sloven ), has introduced significant regulatory meas- ures that directly impact M&A. Effective from 1 July 2021 and amended on 1 July 2023 and on 1 July 2024, this regime is administered by the Danish Busi- ness Authority (DBA) and mandates pre-approval for direct and indirect investments, including transactions involving ownership, control over shares, voting rights, asset transfers and long-term loans.
The regime is particularly relevant for technology M&A transactions involving sectors sensitive to national security or public order, such as: • defence; • IT security; • dual-use products; • critical technology; and • critical infrastructure. The broad definition of “other critical technology” extends to areas such as: • AI;
• industrial robotics; • drone technology; • semiconductors; • cybersecurity;
• energy technologies; • quantum technology; • nuclear technology; • nanotechnology; • biotechnology; and • 3D printing for industrial components.
However, technologies developed for consumer prod- ucts that are widely available are generally exempt from these stringent requirements. The screening process is divided into two phases to expedite uncritical cases. Phase I involves an initial review where the DBA grants approval within 45 cal- endar days if no risks are identified. Phase II is initi- ated if further investigation is necessary, extending the review by a further period of up to 125 calendar days. Additionally, a pre-screening option is available to confirm the investments do not involve critical tech- nology or critical infrastructure. This takes approxi- mately two to three weeks and requires less informa- tion than the full pre-approval process. The DBA retains the right to investigate transactions up to five years post-completion to determine if they should have been filed for pre-approval. If a trans- action has bypassed necessary filings, it is deemed illegal. Consequences of non-compliance include: • publication of the investor’s details;
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