An extract from The Merger Control Review, 11th Edition


Dutch merger control is similar to European merger control, certainly as regards the substantive rules. Thus, the Dutch concept of a concentration is similar to the definition of a concentration as laid down in the EU Merger Regulation (EUMR). It includes the acquisition of control and the possibility to influence strategic decisions of the target. Furthermore, the concept of undertakings concerned and the methodology of allocating turnover to the undertakings concerned are identical. Moreover, the European Commission's decision practice and the Commission's Consolidated Jurisdictional Notice are closely followed by the Dutch Authority for Consumers and Markets (ACM) when it comes to, for example, the full functionality of a joint venture or the geographical allocation of turnover.

Mergers meeting the jurisdictional thresholds as laid down in the Dutch Competition Act (DCA) must be notified to the ACM. In general, a concentration must be notified to the ACM if the combined worldwide turnover of all undertakings concerned is more than €150 million in the calendar year preceding the concentration, and at least two of the undertakings concerned each achieved at least a €30 million turnover in the Netherlands. Various sector-specific thresholds are discussed in Section III.

Concentrations meeting the thresholds must be notified prior to completion and may not be implemented during the review period. Failure to notify may result in large fines.

Year in review

i Workload

The ACM received 134 notifications and reached 127 decisions in Phase I in 2019, which is significantly more than the workload in 2018 (107 notifications and 93 Phase I decisions). The majority of notifications resulted in one-page short decisions. Only nine Phase I decisions were substantiated (with reasons, around the same as the seven in 2018 and down from 14 in 2017). In addition, the ACM received seven requests for decisions in Phase II and issued three decisions in Phase II, which shows an increase in workload and increased complexity in comparison to 2018.

Five of the substantiated decisions in Phase I concerned acquisitions within the healthcare (home care, elderly care, rehabilitation care and general hospital care) and pharmacy sectors. Two decisions concerned the food sector, with one acquisition in the field of meat and meat substitutes (including both production and packaging) and one involving the production of private label biscuits, cakes and snacks. Of the two remaining (substantiated) decisions in Phase I, one concerned the clearance (with remedies) of transaction in the childcare and after-school care sector and one acquisition in the insurance sector.

The Phase II decisions concerned acquisitions in the field of educational technology, laundry services (both permitted) and the Dutch postal services (prohibited). Remarkable with respect to the latter is that for the first time, the Dutch Minister of Economic Affairs overruled the ACM by granting permission for the acquisition despite the negative ACM decision.

Similar to 2018, an exemption from the mandatory waiting period was granted three times in 2019.

The ACM did not impose any fines for failure to notify a concentration in 2019.

ii Infringements of formal obligations and legal proceedings

The only judgment regarding merger control in 2019 concerned the ruling of the Trade and Industry Appeals Tribunal (CBb) of 8 October 2019, in which the CBb ruled in favour of the ACM.

This case can be traced back to 2016, when the ACM approved, subject to remedies, the acquisition of Mediq pharmacies by its competitor Brocacef. Brocacef is also active as a pharmaceutical wholesaler. The decision of the ACM was appealed but confirmed by the Rotterdam District Court. This judgment was in turn appealed to the CBb, where the debate focused on the remedies. Brocacef was obliged to sell 89 local pharmacies and was prohibited to enter into a new wholesale relationship with the divested business for two years. The CBb confirmed that the divestment sufficiently limited the horizontal overlap between the parties. The cooling-off period was held to be sufficiently long to ensure that the divested pharmacies created lasting relationships with new wholesalers, which solved the vertical and horizontal issues. The ACM had refused to impose a general prohibition on Brocacef to acquire additional pharmacies after the implementation of the remedies. The CBb agreed that such general prohibition was not required, as any new acquisitions would have no causal link with the notified Mediq transaction and hence could not be addressed by the ACM in this case. Finally, the ACM had required Brocacef to sell some wholesale activities. In the appeal, the claimants submitted that the approved buyer of those activities was not suitable. The CBb held that the ACM had investigated the qualities of the buyer to the requisite degree: the ACM could not have foreseen that the buyer would later run into financial difficulties.

The appellants may have wanted the ACM to create an even more competitive environment through the remedies, but the decision of the CBb shows that the ACM cannot shape the market at will but can only address problems that are actually created by the relevant concentration.

iii Phase I decisions

Insurance company NN Group was allowed to acquire the indemnity and income protection insurance activities of its rival Vivat. Market shares were, depending on the segmentation, between 20 per cent and 50 per cent, but the ACM found sufficient levels of competition due to a lack of capacity restraints and ease of switching for consumers. The ACM investigated the potential impact of bundled offering of insurance products and mortgages, but found that price comparison websites and intermediaries were a guarantee against non-competitive offerings.

In its clearance of an acquisition by Banketgroep (part of Biscuit International), the ACM defined a new market for biscuits, cakes, cookies and between-meal snacks, which comprises several markets that were previously defined separately. The ACM found not just demand-side substitution – as all products are impulse acquisitions – but also supply-side substitution as most products are produced in the same factories or even on the same production lines.

In the Kidsfoundation/Partou case, the ACM had to define, for the first time, the markets for childcare (for children of up to four years old) and after-school childcare (for children aged from four to 13 years old). For both product markets, the ACM included not only professional providers but also registered host families on the supply side, as the latter have to comply with the same regulations as establishments of formal (after-school) childcare providers. The geographical market was defined as an area within 10 minutes' travel time by bicycle from a childcare establishment. For after-school childcare, the ACM took into account an area of eight minutes' travel time by foot and 10 minutes' travel time by bicycle. Here, the starting point is the school, as after-school childcare close to the child's school might be preferred. Vicinity and capacity are deemed important parameters, and on this basis the parties were obliged to divest a number of establishments in Amsterdam.

Hilton Foods/Dalco Food concerned the markets for the production of processed beef and pork products and the markets for the production of meat substitutes and meat alternatives as well as the markets for packaging such products. The ACM saw no impediment to competition as there was little overlap.

Regarding the proposed merger between Stichting Zorggroep Apeldoorn and Stichting Trimenzo, the ACM identified concerns in the market for nursing home care in the municipality of Voorst and required a more thorough investigation of the market in Phase II. The parties subsequently abandoned their merger.

The OLVG hospital received clearance to obtain certain activities from the bankrupt Slotervaartziekenhuis hospital, both serving Amsterdam. OLVG would obtain a strong position, but the ACM held that there was no causal link with the acquisition, as most of Slotervaartziekenhuis's patients would have moved to OLVG even without the acquisition due to its geographical proximity. The acquisition had closed prior to the clearance decision as a result of a waiver in the standstill obligation due to Slotervaartziekenhuis's bankruptcy.

In another hospital bankruptcy case, St Jansdal Hospital received clearance to acquire the bankrupt IJsselmeerziekenhuizen hospital in the town of Lelystad. This is the first case in which the ACM applied its new best practices regarding the analysis of product markets in healthcare sectors, which requires that the consequences of a concentration are analysed by patient groups rather than by market. Indeed, the ACM had concerns for particular patient groups, but St Jansdal was saved by the causal link. The ACM held that, due to the bankruptcy of IJsselmeerziekenhuizen, absent the acquisition by St Jansdal competition and patients would be worse off, and that an acquisition by another interested buyer would not be better.

Brocacef was allowed to acquire 20 pharmacies from Thio. The ACM held that the acquisition did not change the conditions on the market as Thio already had a partnership with Brocacef and did not, in practice, compete with Brocacef.

iv Phase II cases

The proposed acquisition of LipsPlus by its rival CleanLease went into Phase II as the ACM was concerned about the strong position of the parties in the market for the cleaning of hospital laundry. However, in Phase II the ACM allowed the acquisition without remedies. It found that the market shares of the parties had been declining and that smaller competitors exercised considerable pressure on the parties, helped by the tendering processes organised by relevant hospitals.

The acquisition of Iddink by Sanoma notably concerned three markets: the publishing of hardcopy and digital educational materials for secondary schools (Sanoma had a 25 per cent share); the distribution of educational materials (Iddink had a 30 per cent share); and the supply of learning management systems (LMS) (comprising student administration systems and e-portals: Iddink had a 70 to 80 per cent share). The ACM found that the parties could hinder competition by providing (1) better compatibility for Sanoma's materials in Iddink's LMS, and (2) commercially relevant data regarding competing publishers (obtained through Iddink's LMS) to Sanoma. The ACM imposed behavioural remedies for an indefinite duration: competing publishers must be able to connect to Iddink's LMS on fair, reasonable and non-discriminatory terms and must receive access to relevant data from the LMS on equal terms as Sanoma. In addition, Chinese Walls must be erected between Iddink's LMS and Sanoma's publishing branches.

PostNL, the Dutch incumbent postal operator, agreed to acquire its only national competitor, Sandd. The ACM found, after extensive research in Phase II – including the study of many internal documents of the parties – that the acquisition would lead to a price increase of 30 to 40 per cent for business senders and that the prices for consumers would also increase. Importantly, the ACM held that electronic post does not exert pricing pressure on standard post. The ACM was not convinced that, absent the acquisition, one of the two parties would disappear from the market due to the decline of postal volumes. Neither did the ACM believe that the – undisputed – efficiencies resulting from the integration of the networks, would offset the lessening of competition. Finally, the ACM did not believe that the acquisition was necessary for maintaining the Universal Service Obligation. Consequently, it prohibited the acquisition.

Subsequently, the Minister of Economic Affairs used – for the first time ever – its statutory power to overrule the ACM and allowed the acquisition. Notably, the Minister invoked the maintenance of the Universal Service Obligation.

Notably, postal workers' working conditions had deteriorated due to the heavy competition between PostNL and Sandd, which may have played a role in the Ministerial permission for the acquisition.

v Exemptions from the standstill period

The ACM granted two exemptions from the standstill period in 2019, both in the healthcare sector and both resulting from the target being bankrupt or running an immediate risk of going bankrupt. In both cases, the ACM seems to have acted quickly and in a rather pragmatic way.

vi Reports and position papers

In 2019, the Belgian, Dutch and Luxembourg competition authorities jointly published a memorandum on the challenges faced by competition authorities in the digital economy. The memorandum argues, first, that it would be useful for the European Community (EC) to commission an economic study on merger control in the digital sector, especially in relation to dominant platforms with quickly growing user bases. Second, it exhorts competition authorities to provide ex ante guidance to operators in the digital economy. Third, the memorandum invites the EC and national competition authorities to develop an approach that would sidestep the infringement route in a much less formal, fast-track procedure, with the goal of obtaining commitments from relevant parties. Finally, the memorandum suggests the introduction of a new ex ante intervention tool to target specific behaviour of dominant companies in markets with winner-takes-most dynamics. The tool should be ex ante allowing authorities to act before a market has tipped, and non-punitive to prevent long procedures and to obtain concessions from the market operators.

This memorandum is thought to have been strategically introduced to float ideas that the EC could pick up on – as it has indeed done – if they were well received.