Contrary to the European Commission(1) and most jurisdictions, the Dutch Competition Authority considers a purchaser and seller jointly responsible for notification of (sole control) acquisitions under the Dutch merger rules, and fines both purchaser and seller for failure to notify a concentration. However, this practice will soon come to an end, as the Trade and Industry Appeals Tribunal - the highest administrative court in competition matters - recently upheld the Rotterdam District Court's earlier ruling(2) that a seller bears no responsibility for notifying a concentration that meets the Dutch turnover thresholds.(3)
In January 2011 the Rotterdam District Court ruled that the authority wrongfully fined a seller for failure to notify an acquisition of sole control.(4) The authority imposed a fine, corrected in administrative appeal, of €22,500 on the seller in 2008. According to the authority, a joint notification duty for seller and purchaser follows from the wording of Article 34 of the Competition Act and the act's explanatory memorandum.
Article 34 provides that "it is prohibited to implement a concentration (before the [authority's] Board has been notified of the intention to do so)". The authority found that because a seller contributes to the implementation of the concentration by transferring control to the purchaser, both seller and purchaser are responsible for notification. This joint responsibility is supported by the explanatory memorandum's use of the plural form - that is, 'parties', 'joint initiative', 'each', 'the other' and 'all', when discussing responsibility for notification.
The Rotterdam court ruled that if the authority's reasoning were followed, this would lead to a peculiar situation in which a seller realised the concentration even though its turnover was not taken into account in determining whether the turnover thresholds for notification were triggered. The court also considered it illogical, from a competition law perspective, to oblige a seller to notify, since the seller is the party that transfers control and thus loses market position. Furthermore, the court referred to the EU Merger Regulation to support its reasoning that sellers do not fall under the duty to notify laid down in Article 34 of the act in cases of (sole control) acquisitions.
The tribunal upheld the court's ruling and stated that it seemed unlikely that the Dutch legislature intended to deviate from the EU merger rules with regard to the duty to notify, particularly since, according to the act's explanatory memorandum, Dutch merger control is modelled on the EU merger control rules. In addition, legal certainty requires that the party to which the duty to notify applies should follow explicitly from the act. Since the notification duty laid down in Article 34 does not explicitly mention the seller, the authority was not authorised to impose a fine on the seller for failure to notify.(5)
This ruling ends the authority's more than decade-long practice of fining the purchaser as well as the seller for failure to notify acquisitions of sole control. On the other hand, in joint control situations, all parties acquiring joint control have a duty to notify. The authority's fining policy in regard of notification of such concentrations remains unaltered.
Since the entry into force of the act in 1998, the authority has fined 10 sellers for failure to notify a concentration for a total amount of approximately €2.7 million. However, most of will be unable to recover their fines from the authority, as they failed to appeal the authority's fining decision within the set six-week timeframe.
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@example.com or firstname.lastname@example.org).
(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 acquiring control of the whole or parts of one or more undertakings (ie, the purchaser).