“We’ll be handing out more fines”, the new chairman of the Netherlands Authority for Consumers and Markets (“ACM”) has sternly announced. That announcement is undoubtedly a response to the criticism ACM has received for the limited number of cartels it has exposed these past few years. The chairman has announced that fewer cases will be settled informally. The good news for companies is that ACM has promised to process cases faster. The objective of this new policy is for ACM to operate more vigorously. A number of trends in the field of the cartel prohibition are addressed below.
Ports and transport
Ports and transport are one of the themes on ACM’s agenda. ACM wishes companies in the ports to compete more fairly with each other. This has given rise to a number of investigations, but no great successes have been achieved so far. The investigation into the towage sector in the Rotterdam port by the German competition authority, for instance, recently ended in a settlement. Early last year, ACM ended its investigation into the bunker sector. Container terminal ECT was able to avoid a fine by making a commitment regarding planning criteria for barges. A number of investigations are reportedly still pending. ACM was at least given a leg up when the Trade and Industry Appeals Tribunal (“CBb”) ruled that ACM had rightly imposed cartel fines on three ship-generated waste collection companies in the Rotterdam port area on the grounds of price-fixing and market sharing.
Another theme of ACM is the digital economy. Companies are increasingly using data and algorithms to offer innovative products and services. Late last year, ACM started an exploratory market study into the use of price-fixing algorithms. The objective of the study was to give ACM a better understanding of the consequences of the use of such algorithms for the functioning of markets. The market study into algorithms is in keeping with this ACM theme and was announced in InSight 2018. ACM is expected to publish the results in the course of this year. We are curious to see whether ACM has found any indication that the use of price-fixing algorithms can lead to higher prices in practice (due to implicit price fixing).
The Ministry of Economic Affairs and Climate (“EZK”) is now also investigating the future viability of the competition policy in relation to online platforms and the digital economy. Late last year, the “Competition and online platforms” discussion paper was published, in which the Ministry of EZK raised the question whether the principles of competition law are sufficiently flexible to respond to new digital challenges. The question was also raised to what extent it is likely that the dynamics of online platform markets will lead to long-term dominant positions. A number of options are described for possible regulations to safeguard competition on online markets. The document is intended for discussion purposes only and is not (yet) official policy.
ACM launched a number of cartel investigations into tender markets this past year. They apparently relate to the building industry and the (youth) care sector. ACM recently announced that it had also launched an investigation into the procurement market for roof renovation and maintenance. ACM had received tip-offs about companies making possibly illegal agreements prior to the tender processes. ACM carried out dawn raids at several companies and requested information from the contracting authorities involved. More information on a number of those investigations is expected in the course of this year.
It is interesting in this regard that the CBb is expected to rule this year on the fines previously imposed by ACM on a number of companies for bid-rigging arrangements for taxi transport in the Rotterdam region. The court had previously nullified those fines on the grounds of poor market definition, as a result it of which it could not be precluded that the bid-rigging arrangements restricted competition only to a (very) limited extent. It could also not be established whether the claimants could rely on the de minimis provision of Section 7 of the Competition Act. ACM appealed the ruling. A (more or less) similar question is being addressed in the cold-storage case.
ACM has announced that it will more strictly monitor illegal price-fixing and other agreements between competitors on the procurement of products (procurement cartels) and illegal agreements on employment conditions. This is a major development. Competition law is based on the assumption that collective procurement usually leads to lower costs and therefore to increased competition between companies. That was reason for ACM to take a lenient approach to purchasing consortiums in the past. It was already known that wage-fixing agreements between employers are illegal. As in the USA, illegal “no-poach” agreements are also increasingly on the radar.
All professions are subject to ACM supervision. The same applies to us. In response to a complaint, ACM has discovered, for instance, that the emergence of price comparison websites for lawyers is being slowed down by uncertainty about the interpretation of the rules of conduct of the Dutch Bar Association. ACM has urged an amendment. Lawyers are now allowed to pay price comparison websites any reasonable amount for securing an engagement.
General Practioners (“GPs”) should also remain alert. ACM carried out a survey in response to signals from patients who were unable to switch to another GP. The survey showed that GPs who are unfamiliar with the competition rules and their own professional rules on switching GPs are more inclined not to accept patients for reasons that are in breach of the rules. ACM is therefore clarifying the rules in cooperation with the National Association of General Practitioners and the Dutch Federation of Patients.
Even municipalities should take heed. ACM has warned municipalities that they may not make agreements among themselves about the prices and availability of business parks. Municipalities develop business parks and buy and sell land for that purpose. Entrepreneurs such as estate agents and project developers also purchase and sell land. Municipalities are therefore a market player in land transactions and must consequently comply with the Competition Act.
ACM is currently investigating whether it can help vulnerable self-employed persons such as package deliverers, cleaners and taxi drivers to make collective fee agreements with their principals. ACM’s chairman has stated that ACM will investigate whether it is possible within the statutory rules to make an exception for this group to avoid social dumping. It is not yet clear whether ACM is considering clarifying the current de minimis provision of Section 7 of the Competition Act, which allows cooperation up to a collective market share of 10%, or whether it is in favour a (different) statutory relaxation.
Guideline for cooperation among competitors
ACM recently published the new Guideline for cooperation between competitors. In the Guideline, ACM explains what types of cooperation it does and does not consider problematic. The Guideline replaces the 2008 Guidelines on Cooperation between Undertakings. The Guideline is more focused on prohibited open exchange of information (e.g. via the press, trade journals or Internet platforms) and purchase agreements in the field of labour and the hiring of staff. ACM also warned that companies must be reticent when exchanging competitively sensitive information in the run-up to a merger, acquisition or joint venture. The Guideline is closely in line with the Guidelines on Horizontal Cooperation Agreements of the European Commission.
Expansion of powers
ACM will be given greater powers in the short term. With a view to the harmonisation of powers of national competition authorities, the intention is to give ACM the power to enforce temporary behavioural changes of companies (such as a supply obligation or the lifting of a boycott) in the event of a possible infringement. ACM will also be given the power to collect fines imposed on companies that have no assets in the Netherlands.
It would appear that the cartel watchdog has come out of (lengthy) hibernation. Companies should therefore beware.
Information on dawn raids of ACM of the European Commission can be found at invalacm.nl.