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Initiating an investigation
Who can initiate an investigation of potential cartel conduct?
The Authority for Consumers and Markets (ACM) is tasked with investigating potential cartel conduct and can initiate investigations.
If an investigation is initiated by complainants or third parties, what rights (if any) do they have?
If a company qualifies as an interested party, it can submit a formal request to the ACM to adopt a decision directed at one or more undertakings. The interested party is entitled to receive a decision within eight weeks, although it has been established in case law that this period can be extended. However, the ACM may prioritise its actions and thus reject a complaint where it believes that it is of no or limited relevance. Where the ACM decides to act on a complaint, complainants may be given access to the case file.
In addition, individuals and companies that do not qualify as interested parties may inform the ACM about an alleged infringement. Such individuals have no right to receive a decision from the ACM and will have no access to the case file.
What obligations does a company have on learning that an investigation has commenced?
No specific obligations arise from the mere fact that an undertaking has learned that an investigation has commenced. However, every legal and natural person must cooperate fully with the ACM with regard to the rightful execution of its powers.
What obligations does a company have if it believes that an investigation is likely?
The only obligation is the duty to cooperate with the ACM in the exercise of its powers.
What are the potential consequences of failing to act or delaying action?
None, unless the company does not cooperate with the investigation. In particular, if a company does not respond to a request for information from the ACM within the given timeframe or fails to present employees for interrogation at the ACM’s request, it may incur a fine of up to €900,000 or 1% of its total worldwide turnover, whichever is higher.
Formal stages of investigation
What are the formal stages of and approximate timeframe for investigations?
A formal investigation starts with the ACM’s reasonable suspicion that an infringement has taken place. There are no strict deadlines during this stage of proceedings. However, according to established case law, where an administrative procedure exceeds two years, this will constitute an undue delay (the only consequence being a lowering of the fine to a maximum of €5,000 per six months). Where the ACM believes that its suspicion is founded, it will issue a statement of objections. The addressees of the statement of objections will subsequently be given access to the ACM’s file, as well as the opportunity to comment on the document in writing and at an oral hearing. The ACM has 13 weeks from the adoption of the statement of objections to decide whether to impose a fine. The ACM may extend this period by another 13 weeks. Thereafter, the ACM must adopt an infringement decision or a decision declaring that no infringement could be established. During the investigation (after the statement of objections has been issued), an undertaking may propose commitments. If the ACM accepts these commitments, the case will be closed by a commitment decision which does not establish an infringement.
What investigative powers do the authorities have?
The ACM’s investigative powers include the power to:
- access premises, land and, with a valid court order, private homes;
- request information, including in oral interviews;
- request data and documents and make copies thereof (this also covers the right to make a forensic image of digital documents); and
- seal premises and objects.
What is the geographic reach of public enforcement actions?
The geographic reach of these enforcement powers is limited to the Netherlands.
When is court approval required to invoke these powers?
A court order is required only to enter a private home without the inhabitant’s permission.
Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?
The ACM can search business premises, vehicles and, with a court order, private homes. A company or private individual is entitled to legal assistance, but ACM officials are not required to await the arrival of legal advisers. Officials are generally prepared to wait approximately 30 minutes for external legal advisers to arrive. The ACM will not start a formal interview without a legal adviser being present.
What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?
Every legal and natural person must cooperate fully with the ACM in the rightful execution of its powers. This implies, among other things, that a company must provide the ACM with all of the information that it requests and cooperate fully when subject to an inspection by the ACM. Failure to cooperate may result in a fine of up to €900,000 or 1% of an undertaking’s total worldwide turnover, whichever is higher.
Until the ACM’s decision to impose a fine becomes final with respect to all of the practices involved in the cartel, a leniency applicant must fully and continuously cooperate as required in the interest of the investigation or the proceedings. This includes the obligation to:
- keep employees available for interviews;
- proactively provide any new evidence at the applicant’s disposal; and
- maintain full secrecy regarding the application and its contents until the ACM has issued a statement of objections.
Failure to comply with the above obligations may result in an annulment of the grant of leniency.
Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?
The ACM’s right to review business information and documents does not extend to legally privileged documents. Unlike under EU law, this privilege also applies to documents from in-house counsel if such in-house counsel is admitted to the Dutch Bar. If the ACM merely assists the European Commission in the context of an EU investigation, regular EU case law applies. As a result, correspondence with in-house counsel cannot benefit from any legal privilege.
If there is a dispute concerning the application of legal privilege to a certain document during a dawn raid, ACM officials may briefly review the document to assess whether the claim is justified. A company may refuse such a brief review, in which case the document will be put in a sealed envelope and provided to the ACM’s legal privilege functionary for review. If the legal privilege functionary believes that the claim is justified, the document will be returned to the company without review by the case handlers. Similarly, a company may identify digital files which have been copied by ACM officials as legally privileged. Such claims will also be reviewed by the legal privilege functionary prior to the digital evidence being handed over to the case team.
Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?
An enforcement authority may make use of its powers only to the extent that this is reasonably required for the performance of its duties. In view of the proportionality principle, the ACM cannot systematically search premises and objects or conduct an undirected search of digital files. A court recently ruled that a digital investigation is not undirected where the information is collected through the use of search terms, even where such search terms are broadly formulated and result in the copying of documents that are unrelated to the investigation’s purpose.
What is the process for objecting to an authority’s exercise of its claimed powers?
A company can formally object if it believes that a certain action of ACM officials is unlawful. Under Dutch law, ‘investigative acts’ are regarded as preparatory acts to an ACM decision and thus do not constitute acts that are subject to administrative review and appeal. Consequently, the lawfulness of the exercise of enforcement actions can be established only afterwards in the context of the administrative review and appeal proceedings relating to an eventual decision of the ACM on the merits. Therefore, if a company wants to prevent a certain action from occurring or the ACM from reviewing and using unlawfully acquired information in the context of its investigation, it will need to request interim relief in summary proceedings.
Publicity and confidentiality
What information about investigations will be made publicly available and at which stage(s) of the process?
According to its policy rules on publicity, the ACM will not actively reveal the names of those companies under investigation until it has reached a final decision, although it may choose to announce that it is investigating a particular sector. The Appeals Court of The Hague has even ruled that if the ACM publicises the fact that it has issued a statement of objections to one or more individually named undertakings, this will constitute an infringement of the presumption of innocence. However, as a matter of standard policy, the ACM will answer any specific questions regarding alleged sectors and individual companies under investigation. In addition, the ACM will always issue a press release shortly after adopting a decision imposing a fine and will publish a public version of the full infringement decision in due course.
Is any information automatically confidential and is confidentiality available on request?
Business secrets enjoy absolute protection under Dutch law. The ACM will therefore always ensure that business secrets are neither made public nor provided to third parties. Disputes with the ACM may arise as to whether certain information constitutes a business secret.
Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?
As a member of the European Competition Network (ECN), the ACM constantly cooperates with the competition authorities of other EU member states and the European Commission. The ACM is also a member of the European Competition Authorities (an informal organisation in which the competition authorities within the EEA cooperate and exchange knowledge) and the International Competition Network.
Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?
ECN members can exchange information without the knowledge and permission of the undertakings. Therefore, a waiver from the undertakings is not required. There are no:
- written procedures for the exchange of information with authorities that are not ECN members; or
- public precedents in which the ACM requested waivers for undertakings or individuals to allow for increased cooperation with foreign competition authorities outside the European Union.
How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?
Before issuing a statement of objections, the ACM can abandon a cartel investigation for lack of evidence or priority. Once the ACM has issued a statement of objections, it must take a decision to either:
- impose a fine;
- accept commitments; or
- declare that no infringement could be established.
Undertakings may propose commitments in order to avoid a fine. The ACM may accept commitments if it deems that this will be more efficient than the imposition of a fine. If the ACM chooses to accept commitments, it cannot impose a fine for the infringement.
Since 2015, the ACM has been prepared to accept settlements in some cases, including the Natural Vinegar (2015) and Cold Stores (2016) cartel proceedings. To date, it has not established a formal policy regarding settlements, but its approach regarding settlements is slowly becoming visible. In Natural Vinegar and Cold Stores, the ACM rewarded the parties’ willingness to plead guilty by reducing their fine by 10%. In addition, settlement decisions are usually taken in shortened form, which means that potential claimants in civil actions for damages cannot find a detailed description of the infringements in the decision. A party accepting a settlement must acknowledge not only the infringement, as described by the ACM, but also that it has had sufficient access to file and opportunities to voice its positions. It must also explicitly accept the imposed fine.
What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?
Neither a commitment nor a settlement requires court approval or approval from any body other than the ACM.
The initiative for proposing commitments must come from the undertakings concerned. An undertaking may propose commitments both before and after a statement of objections has been issued. The ACM generally prefers commitments being offered before issuing a statement of objections. The ACM may accept commitments if it considers these to be more effective than the imposition of an administrative fine. In general, the ACM will not accept commitments regarding hardcore infringements of the cartel prohibition. The ACM cannot accept commitments once it has adopted a decision imposing a fine (and vice versa).
The procedure for settlements is informal and hence unregulated. This also implies that the nature of the settlement negotiations may differ from case to case. Both the ACM and the undertakings concerned may take the initiative of entering into settlement negotiations.
If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?
If no settlement is reached, regular proceedings will resume (please see the “Formal stages of investigation” section above for a description) and the draft settlement documents will no longer be part of the case file. This implies that the undertakings concerned are again free to contest the infringement and dispute the amount of any proposed fine. After these regular proceedings have been terminated, the ACM must issue a full, detailed decision.
Which party must prove its case? What is the relevant standard of proof?
The ACM has the burden of proof in cartel cases and must provide evidence that an infringement took place. Under Dutch administrative law, there is no fixed standard of proof; only the judges’ conviction is decisive. This does not imply that the Dutch administrative courts are not highly critical of the ACM’s evidence gathering and case preparation. ACM decisions are frequently overturned because of the provision of insufficient factual or economic evidence in its decisions.
Is there a hearing? If so, what is the process for submitting evidence and testimony?
Once the ACM has issued a statement of objections, it will organise an oral hearing prior to adopting a decision. The ACM will normally impose a timeframe for the undertakings concerned to submit a written reply to the statement of objections. Hearings are chaired by officials of the ACM’s legal department, who will author the decision. The officials of the ACM’s competition department who drafted the statement of objections are usually also present at the hearing. During the hearing, the undertakings concerned are given the opportunity to expand on their written replies and are usually questioned by the hearing committee. There are no procedural rules on submitting evidence and testimony during (or before or after) an oral hearing organised in preparation of a decision.
What are the accused’s procedural rights?
Employees (but not former employees) of undertakings under investigation have the right not to respond to questions that may lead them to incriminate themselves or the undertaking for which they work. Prior to a request for information, the accused must be informed of his or her right not to self-incriminate.
What is the appeal process?
An undertaking wishing to appeal an ACM decision in court must first submit an application for administrative review to the ACM within six weeks (although the initial request can be pro forma, as Dutch administrative law obliges the ACM to give applicants an extension to provide their reasoning if their request was submitted on time). In administrative review proceedings (which also include an oral hearing), the ACM must reconsider its decision in its entirety and take new facts and circumstances into account. The ACM and the undertakings concerned may agree to skip the review phase; however, the Rotterdam District Court may refer a case back to the ACM if it believes that the original decision did not address all of the arguments put forward by the applicant in its request for review.
An undertaking may appeal a review decision to the Administrative Law Section of the Rotterdam District Court. Again, it must do so within six weeks (with the possibility of initially submitting a pro forma appeal). After the reasoning of the appeal has been received, the court will invite the ACM to submit its defence. Subsequently, the court will organise oral proceedings. Both parties may submit further written documents up to 10 days prior to the date of the oral proceedings. Both the ACM and the undertakings concerned may lodge a (further) appeal against the court’s judgment to the Trade and Industry Appeals Court in The Hague. The rules on procedure are identical to those of the initial appeal proceedings.
To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?
The court has full discretion to review the ACM’s findings of fact, legal assessment and penalties (including the amount of the fine). In case a court annuls a decision imposing a fine, the court will replace the ACM’s decision with its own judgment. Therefore, a court may annul or lower fines imposed by the ACM, which it frequently does.
Penalties for companies
What are the potential penalties for companies involved in a cartel?
The Authority for Consumers and Markets (ACM) may impose administrative fines on undertakings that infringe the cartel prohibition. These fines are calculated in accordance with guidelines. The Competition Act provides that the maximum fine that the ACM can impose will not exceed €900,000 or 10% of the undertaking’s group turnover in the preceding calendar year, whichever is higher.
This maximum is multiplied by the number of years that the cartel was active, with a maximum of four (ie, resulting in a maximum percentage of 40% of the group turnover).
If the undertaking was fined for the same or similar infringement in the five years preceding the statement of objections relating to the infringement under investigation, the maximum fine can be doubled (ie, resulting in a maximum percentage of 80% of the group turnover).
Are there guidelines in place for penalties? If not, how are penalties normally calculated?
Under the ACM Fining Guidelines 2014, the basic amount of the fine reflects the relevant turnover of the undertaking concerned. The relevant turnover will likely relate only to the turnover in relation to the products or services which are the subject of the cartel (this is uncertain, as the guidelines have yet to be applied and – unlike in previous versions – this is no longer expressly stated). The basic amount of the fine is 0% to 50% of the relevant turnover.
The basic amount of the fine is adjusted by taking the gravity and duration of the infringement into consideration. Circumstances of the infringement (eg, aggravating and mitigating circumstances) and the undertaking (eg, lower or no fines may be imposed on companies in financial difficulties) will also be taken into account.
Do the authorities take into account any penalties imposed in other jurisdictions?
The ACM takes penalties imposed in other jurisdictions into consideration. In this respect, it should be noted that a cross-border cartel may often fall within the scope of EU competition law as it will affect trade between EU member states.
The ACM must apply Article 101 of the Treaty on the Functioning of the European Union (TFEU) when applying the cartel prohibition to practices which may affect trade between EU member states. A national competition authority cannot impose a fine if the European Commission enforces Article 101 of the TFEU.
From case law, it follows that the ACM can take EU (non-Dutch) turnover into consideration when calculating the basic amount of a fine. In one case concerning an infringement of both Article 101 of the TFEU and Article 6 of the Competition Act, the ACM appears to have verified with the European Commission and other national competition authorities whether they were planning to fine the companies.
How can a company mitigate its exposure to fines?
There are several ways in which a company can mitigate its exposure to fines.
Undertakings and private individuals may apply for leniency where they can provide evidence of their participation in a cartel. The Authority for Consumers and Markets (ACM) will grant immunity from fines where:
- the applicant is the first to submit a request for immunity from fines with regard to a cartel;
- the application concerns a cartel into which the ACM has yet to launch an investigation;
- the applicant provides the ACM with information in its application that enables the ACM to perform a targeted inspection;
- the applicant has not coerced another undertaking into participating in the cartel; and
- the applicant complies with the obligation to fully and continuously cooperate with the ACM.
In addition, the ACM will grant immunity where:
- the applicant has not coerced another undertaking into participating in the cartel and cooperates with the ACM;
- the application concerns a cartel into which the ACM has already launched an investigation, but the ACM has yet to send a statement of objections to any of the parties involved; and
- the application provides the ACM with documents that:
- stem from the period of the practice in question;
- were not already in the ACM’s possession; and
- enable the ACM to prove the cartel’s existence.
Further, like the European Commission, the ACM has a settlement procedure. Although it has not established a formal policy in this regard, its approach is slowly becoming visible.
The ACM can also adopt a commitment decision if it deems that this will be more efficient than the imposition of a fine. If the ACM chooses to accept commitments, it cannot impose a fine for the infringement.
Finally, where it exceeds what is legally expected, the ACM may consider a company’s cooperation as a mitigating factor when calculating a fine.
Penalties for individuals
What are the potential penalties for individuals involved in a cartel?
The ACM may impose fines on individuals if they qualify as an undertaking and/or gave instructions or exercised a de facto leadership role in relation to a cartel. In the latter case, the maximum fine for individuals is €900,000.
Do the authorities take into account any penalties imposed in other jurisdictions?
To date, the ACM has not taken penalties imposed on individuals in other jurisdictions into account.
Is a company permitted to pay a penalty imposed on its employee?
Under Article 3:40 of the Civil Code, an act that – by its content or necessary implications – violates a legal provision, public morality or public order is null and void. It is still uncertain whether an agreement by which a company obliges itself to pay a penalty imposed on one of its employees would infringe the aforementioned provision. The specific circumstances of the case could be relevant in this respect.
Is a company permitted to continue to employ an employee involved in cartel conduct?
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