Netherlands: Companies Paying Their Employees' NMa Fines? It's Wise To Go Dutch

Unlike the European Commission, the NMa is authorised to impose fines on individuals for competition law violations.¹ The NMa stated already in 2010 that it would take account of companies picking up the tab for their employees' individual fines when deciding on a potential downward adjustment of the company's fine.² In October 2011, it warned that a company paying fines levied on individual employees could even result in an increase of the company's fine.³ The Dutch Association of General Practitioners recently found out the NMa means business: its basic fine was increased by 5% because it had promised to pay the fines imposed on two of its officials.

This appears to be the first time that a company's payment of fines levied on individuals has led to a company's fine actually being increased.⁴ In 2010, the NMa already stated that indemnification against fines levied on individuals amounts to "fine sponsoring", something which "law-abiding" companies should not do. In this context, it makes sense that a general indemnification against fines prior to any potential NMa investigation being initiated might be regarded as providing employees "carte blanche" in regard of competition law violations. Companies should, however, be aware that the NMa does not seem to distinguish between general indemnifications against NMa fines and indemnifications given during an NMa investigation: even though the Association decided during the NMa's on-going investigation that it would pay any fines imposed on individuals, the Association's fine was subsequently increased. Companies should also be aware of including NMa fines in directors' and officers' liability insurances. According to the NMa, it would be against the "social responsibility" laid down in the Dutch Association of Insurers' code of conduct for insurance companies to insure NMa fines. This has not, however, been tested yet.

Footnotes

1. Regulation 1/2003 (OJ 2003, L1/1) does not authorise the European Commission to impose fines on individuals. The European Commission can interview individuals who consent to be interviewed on the basis of Article 19 of Regulation 1/2003. Under Article 20(2)(e) of Regulation 1/2003, the European Commission is empowered to ask individuals to explain facts or documents relating to the subject matter and purpose of a dawn raid. It is only in such event that the European Commission can impose a fine on the undertaking for failure by an individual to respond to a question (see Article 23(1)(d) of Regulation 1/2003).

2. See the speech by Pieter Kalbfleisch of 7 October 2010, "Ontwikkelingen Mededingingsrecht 2010".

3. See the speech by Henk Don of 6 October 2011, "Ontwikkelingen Mededingingsrecht".

4. In 2010, the NMa imposed fines on 8 executives, whereas in 2011 the NMa imposed fines on 2 individuals.

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