Netherlands: Update on Dutch Competition Law

Written by Mr Tonnis Poppema and Mr Weyer VerLoren van Themaat

NMa publishes Guidelines for the setting of fines

On 19 December, the Dutch Competition Authority (NMa) published Guidelines in relation to the imposition of fines. With regard to fines for infringements of the Competition Act, the NMa is of the opinion that the Guidelines drawn up by the European Commission can not be taken as the point of departure without adaptation. The European Commission uses categories of infringements, in accordance with these Guidelines, to which fixed fines apply. A disadvantage of a system of fixed fines is that small undertakings are affected relatively more harshly than larger undertakings (undertakings which often operate internationally). The policy of the NMa with regard to fines must be applicable both to large undertakings and to small and medium-sized undertakings, without losing the intended preventive effect, on the one hand, and generating disproportionate results, on the other.

In the event of an infringement of Article 6 (prohibition of cartels) or of Article 24 (abuse of dominant position) of the Dutch Competition Act, the director general of the NMa may (A) impose fines or (B) impose orders sanctioned by periodic penalty payments on the natural person to whom, or the legal person to which, the infringement can be attributed.

The Competition Act specifies a maximum fine of EUR. 450,000 or, if this is greater, 10 percent of the total annual turnover of the undertaking or, if the infringement is committed by an association of undertakings, the joint turnover of the undertakings that have participated in the infringement. This relates to the turnover of all goods and services that the undertaking produces or supplies, irrespective of where in the world this turnover is realised.

In determining the level of the fine, the director general of the NMa shall take into account the seriousness and duration of the infringement. Therefore there is a margin for discretion for the director general of NMa. Justice must be done to the principle of equality, in terms of which equal cases should receive equal treatment. This does not mean that specific relevant circumstances of an individual case can not be taken into account. In accordance with the Dutch "General Administrative Law Act" (Algemene wet bestuursrecht), the director general of the NMa is required to take the principle of equality into account in determining the level of the fine.

In determining the amount of an exact fine, the NMa shall take into account the seriousness and duration of the offence. The seriousness of the infringement is determined by the gravity of the infringement, considered in combination with the economic context in which the infringement occurred. The NMa distinguishes between types of infringements: "very grave", "grave" and "less grave" offences.

Far-reaching horizontal restrictions are regarded as very grave infringements. Forms of abuse of dominant positions by undertakings which have an (almost) monopolistic position also belong to this category. Examples of very grave infringements are (1) horizontal price agreements, (2) collective vertical price fixing, (3) collective boycotts, (4) horizontal agreements aimed at partitioning markets and quota schemes and (5) forms of abuse of a dominant position aimed at driving or excluding an undertaking from a market.

Horizontal schemes, in particular, which cannot be regarded as very grave infringements, are regarded as grave infringements. Forms of abuse of a dominant position, such as discrimination and tied sales, which may not be qualified as very grave infringements, are regarded as grave infringements. Finally, vertical agreements that exert a direct influence on prices or sales opportunities, such as individual vertical price fixing and prohibitions on reselling, are also assigned to this category.

Shemes that distort competition to a limited degree are regarded as less grave infringements. As a rule, vertical schemes, in particular those that do not have prices and sales opportunities as their object, shall be deemed to be less grave infringements. As a rule, branch schemes that restrict competition, which do not directly have prices and sales opportunities as their object, will be deemed to be less grave infringements.

In determining the seriousness of the offence, the NMa, in addition to the gravity of the offence, also takes into account the economic context in which the infringement occurred. Therefore, important factors are the nature of the products or services involved, the size of the market or the company or companies involved and to the (combined) market share, the structure of the market and the applicable regulations. The NMa will particularly take into account the damage or potential damage inflicted on competitors, customers and consumers as a result of the infringement.

The fine will be based on the turnover involved of the undertaking. This is the value of all the transactions realised by the undertaking throughout the entire duration of the infringement from the sale of goods and/or the provision of services to which the infringement relates. The NMa may make an estimate of the turnover involved if, for instance, this cannot be determined on the basis of the information provided. If the infringement is committed by an association of undertakings, the turnover involved of the undertakings that are members of the association shall be taken into account.

If a report relates to numerous offences, the director general of the NMa may impose a fine for the entire combination of offences rather than imposing a fine for each separate offence.

The NMa shall base the fine on an amount equal to 10% of the turnover involved of the respective undertaking. Depending on the seriousness of the infringement, the basis for the fine shall be multiplied by a factor. The following factors are applied: (A) In the event of a less grave infringement, this factor shall be set at maximum of 1; (B) In the event of a grave infringement, this factor shall be set at a maximum of 2 and (C) In the event of a very grave infringement, this factor will be set at a value between 1.5 and 3. Therefore, in the event of very grave infringements, fines may therefore increase to 30% of the turnover involved

In setting the fine, the NMa may take into account circumstances that result in an increase or a decrease in the fine. Circumstances resulting in an increase in the fine include, for instance the circumstance that a competent authority, including the European Commission or a judicial body, has determined irrevocably that the undertaking previously committed a similar infringement of competition law or the circumstance that the undertaking involved instigated or played a leading role in committing the offence. Circumstances resulting in a reduction in the fine are for instance the circumstance that the undertaking involved has co-operated extensively in the NMa's investigation, beyond its obligation to do so, or for instance the circumstance that the company terminated the offence of its own accord.

In 1998, The Netherlands obtained a new Competition Act and a new competition authority, the Dutch Competition Authority (NMa). The NMa is currently still part of the Ministry of Economic Affairs, but has its own powers. These can be exercised independently of the Minister of Economic Affairs. A bill designed to convert the NMa into an independent agency (the ZBO) has been presented to the Council of State for its recommendations, and has been debated by parliament. On 5 february 2002 the proposal has been adopted by the Dutch Second Chamber. Once the Act has been made law, the NMa will no longer fall under the direct responsibility of the Minister of Economic Affairs. Competition policy will remain the responsibility of the Minister of Economic Affairs. The Minister will stay responsible for competition policy, however, he loses the competence of giving directions in certain individual cases. The Dutch Competition Agency will contain several "sector-specific chambers", like a transport-chamber and an energy-chamber (currently the "DTe").