More personal fines
More tip-offs
Involvement in state aid procedures
The Competition Authority seems to be spinning a bigger web: its enforcement rate is likely to increase due to more personal fines on individuals for cartel involvement, as well as suggestions to facilitate information exchange among regulatory authorities and active involvement of national competition authorities in state aid procedures. With the latter suggestion, the authority's web appears to become tangled up with the European Commission's exclusive state aid powers.(1)
Unlike the European Commission, the Competition Authority is authorised to impose personal fines,(2) and in November 2010 it used this power to impose personal fines on individuals for a cartel infringement.(3) The imposition of personal fines on the executives was not a complete surprise, as in August 2010 Competition Authority Board Chairman Pieter Kalbfleisch announced that the authority would consider levying personal fines on individuals in its investigations into potential cartels and abuse of dominance cases.(4) In addition, the chairman recently stated that the authority will take account of whether a corporation intends to pay its employees' individual fines in calculating the fine to be imposed on the corporation itself.(5)
The first personal cartel fines case was also the first case in which a court ruled that the public prosecutor could lawfully provide the authority with transcripts of telephone taps installed for criminal investigation purposes.(6) An increasing number of roads appear to lead to the authority, as it increasingly seems to tap new sources of information on possible competition law infringements through cooperation with, for instance, other competition authorities,(7) the Fiscal Intelligence and Investigation Service and the public prosecutor.(8) These 'tip-offs' are likely to increase in future, since the minister of economic affairs is looking into ways to facilitate information exchange between regulatory authorities in the Netherlands, as well as to intensify further the cooperation between investigative authorities.(9)
Involvement in state aid procedures
The authority has suggested a more active involvement by national competition authorities in European Commission state aid procedures after receiving signs from the financial sector that certain state aid measures have led to distortions of competition due to, for example, keen pricing or higher market shares.(10) Although the authority acknowledges that the commission often combines the approval of a state aid measure with commitments to prevent undue distortions of competition,(11) in practice it is difficult to establish whether certain market behaviour results from a state aid measure or is part of the normal competitive process. In addition, the commitments themselves could have undesirable market effects, which the authority suggests should be circumvented by the European Commission actively involving the national competition authorities in state aid procedures, and thus enabling an assessment of all relevant market information.
The authority's recent mortgage quick scan seems an example of the apparent tension between effective competition law and the granting of state aid. The quick scan(12) proved that since mid-2009, profit margins on Dutch mortgages have been high from a historical perspective, as well as when compared to mortgage rates in other countries.(13) Although an in-depth sector study will need to decide whether these high mortgage margins are the result of failing competition, the authority has already indicated that for a number of mortgage lenders, the state aid grant and related price leadership ban could be the reason for the historically and comparatively higher mortgage margins.
For further information on this topic please contact Jolling De Pree or Erik H Pijnacker Hordijk at De Brauw Blackstone Westbroek by telephone (+31 70 328 53 28), fax (+31 70 328 53 25) or email ([email protected] or [email protected]).
Endnotes
(1) The assessment of the compatibility of an aid measure is the exclusive responsibility of the European Commission (see Article 108(3) of the Treaty on the Functioning of the European Union).
(2) EU 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 EU 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 EU Regulation 1/2003).
(3) For further details please see "The heat is on: Competition Authority imposes its first personal cartel fines". The authority has already imposed fines on former employees for failure to cooperate with an investigation and on five executives for non-compliance with a merger remedy (for further details please see "High trust, high fines" and "Former general managers pay dearly for principles").
(4) See "NMa-baas: dreigen met strafrecht schrikt verklikkers van kartels af", B van Kalles, Financieel Dagblad (August 14 2003)
(5) See the speech by Pieter Kalbfleisch of October 7 2010 at the Elsevier congress, "Ontwikkelingen Mededingingsrecht 2010".
(6) For further details please see "Big Brother is listening: authority can use public prosecutor's telephone taps".
(7) For further details please see "Competition Authority paints bleak picture for cartel facilitators", in which the NMa requested the Belgian competition authority to search the home of the cartel facilitator's manager.
(8) For further details please see "Big Brother is listening: authority can use public prosecutor's telephone taps".
(9) Letter of the minister of economic affairs of October 7 2010.
(10) See the authority's Visiedocument toekomst financiële landschap of November 12 2010.
(11) See, for instance, the European Commission's approval of state support measures to Fortis Bank Nederland and ABN Amro, in which commitments were given to comply with a price leadership ban. See State Aid C11/2009 – Netherlands of July 30 2010.
(12) See the authority's press release of November 1 2010 and its quick scan.
(13) At first, the authority issued a press release stating that it continually monitors the financial markets and considered the high mortgage rates in the Netherlands an opportunity for small and foreign mortgage lenders to offer better rates; only to issue another press release a week later that it intends to investigate the mortgage market in more detail. See the NMa's press releases of August 9 and August 18 2010.