Previous fines for vendors
No notification responsibility for vendor
Comment
Contrary to the European Commission(1) and regulators in most other jurisdictions, the Competition Authority considers the acquirer and vendor jointly responsible for the notification of (sole control) acquisitions. In December 2010 the authority imposed fines of €1.73 million and €677,000 - on a vendor and a acquirer, respectively - for failure to notify a concentration.(2) However, this may be the authority's last fine on a vendor, given the Rotterdam District Court's recent decision that a vendor bears no responsibility for filing a concentration that meets the Dutch turnover thresholds.(3)
Since the entry into force of the Competition Act in 1998, the authority has fined 10 vendors for failure to notify a concentration. Following its imposition of a fine of €1.73 million in December 2010, the authority rejected the vendor's argument that it should follow practice under the EU Merger Regulation in holding the acquirer solely responsible for the notification of acquisitions. According to the authority, a joint notification duty for vendor and acquirer follows from the wording of Article 34 of the act and the act's explanatory memorandum. Article 34 provides that "it is prohibited to implement a concentration (before the [Competition Authority's] Board has been notified of the intention to do so)".
The authority found that because a vendor contributes to the implementation of the concentration by transferring control to the acquirer, both vendor and acquirer were responsible for notification. This joint responsibility is confirmed by the explanatory memorandum's language (ie, 'parties', 'joint initiative', 'each', 'the other' and 'all') when discussing obligation to notify. However, the authority considered the fact that the ICN Template, available on its website,(4) contained incorrect information in regard of the vendor's duty to notify a mitigating circumstance and reduced the fine by 20%.
No notification responsibility for vendor
In contrast, in January 2011 the Rotterdam District Court ruled that the authority had wrongfully imposed a fine on a vendor for failure to notify an acquisition of sole control. The authority had imposed a fine (later corrected in an administrative appeal) of €22,500 on the vendor in 2008 on the basis of reasoning similar to that above. The court ruled that if the authority's reasoning were followed, this would lead to the peculiar situation in which a vendor realises the concentration, although its turnover is not taken into account in determining whether the turnover thresholds are triggered. The court also considered it illogical from a competition law perspective for a vendor to have a notification duty, since the vendor is the party that transfers control and thus loses market position. The court, furthermore, referred to the regulation to support its reasoning that vendors are not caught by the notification duty laid down in Article 34 of the act in cases of (sole control) acquisitions.
It is unknown whether the authority intends to appeal the court's ruling. It thus remains to be seen if and when the authority will adjust its fining policy for a vendor's failure to notify acquisitions of sole control. In joint control situations, all parties acquiring joint control have the duty to notify. The authority's fining policy with regards to notification of such concentrations obviously remains unaltered.
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) Pursuant to Article 4(2) of Regulation 139/2004 (OJ 2004, L24/1), mergers must be notified jointly by the parties to the merger or by those acquiring joint control, as the case may be. In all other cases, the notification must be effected by the person or undertaking that acquires control of the whole or parts of one or more undertakings (ie, the acquirer).
(2) Competition Authority decision of December 17 2010 in Case 6905, Saipol SAS.
(3) Rotterdam District Court, January 13 2011, LJN BP0781.
(4) The Merger Notification and Procedures Template of the International Competition Network is available at www.internationalcompetitionnetwork.org/uploads/templates/merger/netherlands.pdf, as well as on the Competition Authority website, www.nmanet.nl.