The present-day competition regime in the Netherlands came into force with the enactment of the Competition Act on 1 January 1998 (the Competition Act). The substantive provisions of the Competition Act mirror those of the Treaty on the Functioning of the European Union (TFEU). The Competition Act prohibits anticompetitive agreements and the abuse of a dominant position. In addition, the Competition Act has a system of domestic merger control. The Competition Act established the Netherlands Competition Authority (NMa) as the domestic body responsible for the enforcement of competition law.
On 1 April 2013, the NMa merged with the independent Post and Telecommunication Authority and the Consumer Authority into a single regulator, the Consumer and Market Authority (ACM). The ACM is responsible for the enforcement of competition law, consumer protection law as well as sector-specific regulation in the energy, transport, postal and telecoms sector.
The enforcement procedure in the Netherlands is typically administrative in nature. If the ACM finds that an undertaking has violated the Competition Act, it may take a decision imposing an administrative fine. Since 1 July 2016, such a fine may be up to €900,000 (previously €450,000) or up to 80 per cent of the undertaking’s turnover in the preceding business year (for more details, see Section II, infra). In addition, the ACM may impose fines on individuals to the extent that such individuals were in charge of the prohibited conduct.
As a standard element of Dutch administrative law, an internal appeal may be lodged against the first decision, after which the ACM must reconsider this first decision and take a second decision. The latter decision is open to appeal before the District Court in Rotterdam. A second and final appeal may be brought before the Trade and Industry Appeals Tribunal in The Hague.
Apart from public enforcement by the ACM, competition law cases in the private courts are starting to become more common. That not only includes follow-on actions for damages, but also cases in areas where the ACM is unlikely to act, such as in the field of vertical restraints and abuse of dominance (as also explained in more detail below).
Early in 2016, the ACM identified six strategic themes on which it was to focus in 2016 and 2017: ports and transport, clear prices and conditions, energy markets in transition, healthy collaboration in healthcare markets, competitive neutrality, and the online consumer.
Article 6(1) of the Competition Act provides the prohibition of anticompetitive agreements. Its wording is similar to that of Article 101 TFEU. The provision prohibits agreements between undertakings, decisions of trade associations and concerted practices between undertakings to the extent that they have an anticompetitive object or effect on the Dutch market. Different from Article 101 TFEU, the Dutch prohibition does not require an effect on interstate trade.
Article 6(3) of the Competition Act provides an exception to Article 6(1) of the Competition Act and is similar to the exception laid down in Article 101(3) TFEU. Article 6(3) of the Competition Act holds that the prohibition does not apply to agreements, decisions and concerted practices that (1) contribute to improving the production/distribution of goods or to promoting technical or economic progress, while (2) allowing customers a fair share of the resulting benefit, and which do not (3) impose restrictions that are not indispensable to attain these objectives, and (4) do not eliminate competition in respect of a substantial part of the relevant products and services.
Article 7 of the Competition Act seeks to exempt agreements between small and medium-sized enterprises that would otherwise be prohibited under Article 6(1) of the Competition Act. Article 7(1) of the Competition Act provides that undertakings are allowed to make (otherwise: anticompetitive) agreements if not more than eight undertakings are involved, and the joint year turnover amounts to a maximum of €5.5 million for goods and €1.1 million for services. Article 7(2) of the Competition Act contains the second exemption. It provides that the cartel prohibition does not apply if the aggregate market share of the parties is below 10 per cent. However, this exemption is not applicable if the concerned agreement falls within the scope of Article 101(1) TFEU.
The competition rules before the 1998 Competition Act did provide for criminal sanctions, even though in actual practice there was little, if any, enforcement. By contrast, the current Dutch Competition Act does not contain a criminal sanction regime. Notwithstanding the above, an administrative fine may still be considered as a ‘criminal charge’ within the meaning of the European Convention of Human Rights.
In December 2015, the Senate of the Dutch parliament passed a legislative bill that raised the fine for cartel infringements by 10 per cent of the turnover of all the years of the infringement, up to a maximum of four years (i.e., 40 per cent of the annual turnover). The fine for repeat offenders will be doubled, which can lead to a maximum fine of 80 per cent of the undertaking’s turnover in the preceding business year. The bill entered into force on 1 July 2016.
The Netherlands has a leniency regime for both companies and individuals. The leniency guidelines grant complete immunity from fines to the first company that presents information to the ACM about a cartel prior to the start of an investigation. Leniency applications must be submitted to the ACM’s leniency office. The leniency applicant must provide the ACM with information that has significant added value, and has to fully cooperate with the ACM’s investigation. Apart from complete immunity for the first successful leniency applicant, three other categories of fine reductions exist, largely depending on timing and the added value of the leniency applicant’s information for the investigation.
The ACM may choose to accept commitments in lieu of further investigating a case. Such a commitment decision needs to ensure that an infringement is either prevented or seized. The ACM may thus take such a decision even where it has found no definitive evidence of an infringement. If the ACM decides to take this route, it must make clear, inter alia, why a commitment decision is more effective from an enforcement perspective. In the case of breach of the commitments, the ACM may impose a fine.
In terms of cartel cases, 2016 has been a quiet year as the ACM has not taken any decisions on newly discovered cartels. The ACM has, however, published two decisions that were taken in 2015. On 23 March 2016, the ACM published its decision of 22 December 2015 to impose fines totalling €12.5 million on four cold-storage firms. The ACM also imposed personal fines on five executives, the highest of which was €144,000.
Cold-storage firms are an important link in the chain of foodstuffs transport. According to the ACM, cold-storage firms play a vital role in the Dutch economy in the port and transport sector, which is one of the six themes the ACM has set its sights on.
Kloosterboer and Van Bon (currently H&S Coldstores), two of the cold-storage firms involved, were holding merger talks between 2006 and 2009. During these talks, which eventually did not lead to a merger, Kloosterboer and Van Bon fixed prices and exchanged competitively sensitive information. Between 2007 and 2009 such behaviour also took place in connection to Kloosterboer’s takeover of Daalimpex, a 100 per cent subsidiary of Eimskip. Shortly after the negotiations were discontinued in 2008, Daalimpex was declared bankrupt. As of February 2009, Kloosterboer continued the activities of Daalimpex.
The ACM considered that the fined undertakings distorted competition in various ways between 2006 and 2009. Besides the exchange of competitively sensitive price information, parties also agreed on price increases and their capacity. Parties further divided the market by allocating tenders.
The ACM imposed fines ranging between €450,000 and €9.6 million on Kloosbeheer (Kloosterboer), Van Bon, Eimskip and Samskip (of which Kloosterboer was a subsidiary). Kloosbeheer declared its participation in the cartel and cooperated with the ACM, which resulted in a 10 per cent reduction in its fine. In August 2016, the ACM granted a similar reduction to Eimskip.
H&S, Samskip and the CEO of Daalimpex appealed the fining decisions that were imposed on them. H&S put forward that the ACM had erred in finding that the parties involved fixed prices, exchanged competitively sensitive information and that the concerted practices had the object of restricting competition. Samskip claimed that the ACM unlawfully obtained evidence and that the violation was not attributable to Samskip. Samskip further argued that the decision of the ACM infringed the principles of equality, defence and proportionality. The CEO of Daalimpex put forward that his actions could not qualify as infringement and that the ACM lacked a legal ground to impose a personal fine on him as he did not qualify as an executive. The ACM rejected all the appeals.
The second case involved the ACM’s decision of 1 June 2015 to fine two manufacturers of prefabricated concrete garage boxes. The two manufacturers, Rekers Betonwerk (Rekers) and Juwel Betonbauteile (Juwel), allegedly colluded by sharing customers, fixing prices and preventing other competitors from becoming more active. Rekers and Juwel also agreed to prevent European producers from entering the Dutch market.
Rekers applied for leniency and fully cooperated with the investigation, thereby receiving full immunity and avoiding a fine that would at least have been €3 million. Juwel did not apply for leniency and received a fine totalling €306,500. Rekers also applied for leniency in Germany.
Juwel appealed the decision of the ACM on both legal and procedural grounds. Juwel claimed the ACM was biased and had violated the adversarial principle and its duty of care. According to Juwel, the ACM should have taken statements from the (German) directors of Juwel and Rekers during the investigation phase. Juwel also claimed the ACM did not pay sufficient attention to Reker’s business statement.
The ACM rejected these grounds, reasoning that the available evidence justified that it had established violations. The evidence entailed, among others, several written documents and information obtained through interviews it had conducted. With regard to Reker’s business statement, the ACM put forward that it was sufficiently supported by other written evidence, while Juwel’s arguments were not supported by facts or evidence. Therefore, there was no need to interview the directors of Juwel and Rekers during the investigation.
Perhaps the most noteworthy is Juwel’s appeal that the ACM did not pay sufficient attention to Rekers’ illegal practices such as predatory pricing and forcing Dutch representatives of Juwel to participate in the cartel. If Rekers indeed forced Juwel to participate in the cartel, the ACM should not have granted full immunity. The ACM, however, stipulated that it was not sufficient for Juwel to (subjectively) have felt coerced by Rekers. Instead, it should be established objectively that an undertaking has been forced and that the undertaking could not have responded to this force other than by participating in the cartel. The coercion has to be a genuine threat to the existence of the forced undertaking. The ACM concluded that there was no risk of such market exit.
In 2016, the District Court of Rotterdam and the Dutch Trade and Industry Appeals Tribunal delivered 31 rulings concerning administrative appeals of ACM decisions. Judgments of the District Court can be appealed at the Dutch Trade and Industry Appeals Tribunal (CBb), which delivered 12 rulings in 2016.
In March 2016, the CBb upheld the ACM’s decisions to fine participants in the onion growers cartel. The CBb confirmed that the ACM may take an undertaking’s EU-wide turnover into account – as opposed to only national turnover – to calculate cartel fines. The initial fine was imposed by the ACM in 2012, when it found that six undertakings concerted to adjust production capacity, jointly purchased operating assets from competitors and exchanged competitively sensitive information. The infringement lasted 13 years, from 1998 to 2011.
The CBb rendered two judgments in this matter. The CBb’s first judgment referred to the Innolux case and clarified that limits to the ACM’s territorial jurisdiction to enforce the cartel prohibition do not bar the ACM from calculating the level of the fine based on turnover generated within the European Union, as opposed to merely national turnover.
In its second judgment concerning the division of liability between two parent undertakings, a change of control took place in the undertaking that had infringed the cartel prohibition. The former parent company alleged that the imposed fine should be shared with its former subsidiary as the former subsidiary can share the burden with its new parent company. The CBb upheld the District Court’s judgment to uphold the ACM’s decision. The key take-away from this case is that the ACM can impose fines on a parent company following a competition infringement committed by its former subsidiary, even if the ACM does not attribute the fine to the subsidiary itself.
In May 2016, the District Court dismissed the appeal of participants in the launderette cartel. The four participants involved created a joint venture, Rentex, and each concluded franchise agreements with the joint venture. In the agreements, in which Rentex acted as franchisor and the four undertakings as franchisees, each franchisee was exclusively allocated a territory. The franchisees agreed not to supply customers situated outside their allocated territory. The ACM found these agreements to be in breach of the cartel prohibition and imposed fines on the participants of €18.4 million in total. The participants appealed the fining decision, arguing that the agreements under scrutiny were legitimate (vertical) franchise agreements. The Court was not receptive to this argument and considered there was no actual vertical relationship between the companies and Rentex because the agreements were de facto only horizontal in nature. Since there was no franchise relationship whatsoever, the Court dismissed the appeal.
III ANTITRUST: RESTRICTIVE AGREEMENTS AND DOMINANCE
The ACM has recently not been particularly active in the field of restrictive agreements other than cartels. Although the ACM does not seem to consider vertical restraints to be equally problematic compared to various other European competition authorities, it did publish a guidance document specifically covering vertical restraints and providing insights in its strategy and prioritisation in April 2015 (vertical guidance document).2 The vertical guidance document focuses on the expected effects that a vertical restraint may have on consumer welfare and contains various case studies analysing whether or not vertical agreements are harmful.
The ACM considers that the expected effects of vertical agreements strongly depend on the circumstances of the case. Overall, the vertical guidance document seems to set a high threshold for intervention, even suggesting that, within the framework of selective distribution, a supplier may lawfully engage in resale price maintenance in order to protect margins and limit the possibilities for free riding, especially if the supplier concerned does not have market power.3 That is worthy of note as resale price maintenance is typically viewed as illegal per se (even though the vertical guidance document of course does not prejudice European legislation). Although some considered that the publication of the ACM vertical guidance document would herald renewed enforcement in the area of vertical restraints, so far publicly available information does not confirm any such trend.
Article 24(1) of the Competition Act prohibits the abuse of a dominant position. The Dutch prohibition is substantively the same as in EU competition law (with the exception that the Dutch prohibition does not require an effect on trade between Member States). A dominant position exists where an undertaking can exert market power. As in EU competition law, a rebuttable presumption of dominance exists where the market share of an undertaking exceeds 50 per cent.
In September 2016, the ACM published an article titled ‘Big platforms, big problems?’4 In light of the Commission’s Digital Single Market Strategy research, the article explores how the ACM can effectively monitor effective competition between online platforms. The ACM first explored whether (personal) data collected by online platforms can be a source of market power. It observed that access to significant amounts of data can indeed result in market power. Online platforms are capable of growing exponentially and such growth is often combined with access to vast amounts of data, potentially leading to a significant competitive advantage against smaller competitors. The ACM further assessed whether competition law is an adequate instrument to protect the privacy of platform users. It believes that data protection laws are the primary instrument to protect users of online platforms and that competition law only provides a limited addition to these laws. The ACM concluded that to effectively monitor effective competition between online platforms, it needs to gain more knowledge about the playing field. The dynamics of platform markets and the potential issues in these markets require deeper knowledge. The ACM plans to stay in touch with market participants to identify key drivers for players on the online platform market. The ACM further stipulated that launching market studies will significantly contribute to increasing knowledge.
Sometimes the ACM uses enforcement language akin to abuse, in cases arising from sector-specific regulation (as also discussed in more detail below). In February 2016, the ACM announced that it had imposed an order subject to periodic penalty payments on Dutch postal incumbent PostNL, with a maximum of €2.5 million.5 According to the ACM, PostNL had given preferential treatment to its own customers compared to other postal companies that make use of PostNL’s network. The ACM took the position that discounts that PostNL offers to its customers must also be offered to rival postal companies, in order for PostNL to comply with the Dutch Postal Act.
IV SECTORAL COMPETITION: MARKET INVESTIGATIONS AND REGULATED INDUSTRIES
The ACM is the regulatory authority in the telecoms, energy, post and transport sectors. These sectors often involve natural monopolies (due to the existence of a network that cannot easily be replicated), or include a former incumbent that still holds an important market position. The regulatory regime typically seeks to replicate the conditions of effective competition as much as possible. For example, where a market party is found to have significant market power (SMP) – the regulatory equivalent of dominance – on an upstream wholesale market while its competitors rely on wholesale access to compete on the retail market, the ACM may impose obligations often including rules on cost orientation and non-discrimination. As a final remark, the ACM also has various regulatory powers that are unrelated to market power and apply to all companies active in the sector, as will be shown in the following paragraphs.
In terms of the telecoms sector, the ACM has various tasks such as the registration of telecom companies, the allocation of phone numbers, ensuring that mobile number portability can take place, the protection of various consumer protection clauses and dispute settlement. The ACM’s tasks also include enforcing internet-related legislation, such as Dutch cookie and net neutrality rules.
The ACM also functions as the national regulatory authority within the meaning of the European telecom directives. Every three years, the ACM conducts a so-called market analysis to assess whether a company holds SMP in a given telecom market. In practice, these market analysis decisions usually focus on the position of KPN (the incumbent telecoms operator in the Netherlands).
If the ACM concludes that a telecom company holds SMP, it may impose regulatory measures on the wholesale level to ensure competition at the retail level. For example, if the ACM sees a risk of excessive tariffs or margin squeeze (Article 6a.7(1) of the Telecommunications Act), it may require that the wholesale tariffs be cost-oriented (Article 6a.7(2) of the Telecommunications Act). The ACM’s market analysis decisions usually have great impact on the telecom companies that are concerned, and – as a result – are highly litigious. The current market analysis decisions (chiefly, the decision on unbundling of the local loop) involve the period between 2016 and 2019.
The ACM also serves as the key regulator for the energy sector. One of its main tasks relates to the transport of energy. The ACM regulates the tariffs of so-called transmission and distribution network operators for provision of access to their network.
The ACM determines the method according to which tariffs are calculated for network access. The applicable tariff is based on the tariff of the previous year. The network operator is allowed to compensate for inflation. The ACM may apply a so-called efficiency discount, according to which the applicable tariff is lowered under the assumption that the network operator increases its efficiency. By contrast, the ACM may allow higher tariffs where network operators increase operational quality through investments.
The regulatory role of the ACM in the energy retail markets is more modest, although it is also active here (e.g., in the acceptance of new energy suppliers and ensuring that retail prices do not become excessive).
The ACM is the competent authority for most of the regulatory rules in the postal sector. Above, we have already described some activities by the ACM in relation to post.
As of 1 January 2014, the Postal Act enables the ACM to conduct a market analysis comparable to those performed in the telecoms sector. If the ACM finds that a specific operator (i.e., PostNL) has SMP on any given postal market in the Netherlands, it may impose specific obligations (Article 13e-13k of the Postal Act).
Finally, the ACM is also active in the transport sector. In terms of rail transport, the ACM examines whether network operators comply with the principle of non-discrimination as to capacity allocation and applicable fees. The most important operators are Prorail, the operator of all major railways, and Keyrail, the operator of a specific railway route for goods linking the port of Rotterdam with Germany.
In terms of aviation, the ACM is active in the regulation of Dutch airports, such as Schiphol (Amsterdam’s international airport). The ACM examines whether airports apply reasonable and non-discriminatory tariffs and conditions for airlines (Article 8.25d(2) of the Aviation Act). Tariffs also need to be cost-oriented (Article 8.25d(4) of the Aviation Act), which means that airports may only charge costs to the extent that they actually relate to aviation or security. The ACM recently confirmed this principle that Amsterdam Airport Schiphol is not allowed to pass on to airlines the costs of the public-transport card readers and ticket machines located on its premises.6
As a final part of transport regulation, Dutch law requires sea vessels calling at a Dutch port to take on a maritime pilot for navigation through that port. The Dutch pilotage company Loodswezen has a statutory monopoly on providing these services. As a result of this market position, the ACM determines a cost allocation system and sets the tariffs that maritime pilots are allowed to charge, thereby ensuring that no excessive fees apply.
V STATE AID
The European state aid rules directly apply in the Netherlands. Articles 107 to 109 TFEU provide substantive and procedural rules on distortions of competition as a result of state measures involving aid to undertakings, irrespective of the precise form in which the aid is provided.
State aid law is thus a matter for European Commission enforcement, rather than enforcement by the ACM. However, the Competition Act does contain specific rules that seek to ensure that governmental bodies themselves do not distort competition. These rules, embodied in Article 25g to 25ma of the Competition Act, are also known as the Act on Government and Free Markets. Both central and decentralised public bodies are subject to the Act on Government and Free Markets.
A key part of this Act on Government and Free Markets is that a public body that enters into economic activities must at least charge the integral costs of that activity (Article 25i(1) of the Competition Act). That provision seeks to prevent activities by public bodies leading to unfair competition with private undertakings where a public body cross-subsidises its economic activities from other public tasks. Another important part of the Act on Government and Free Markets is that governmental bodies may not favour businesses in which they have a say or participate compared to privately owned competitors.
The educational sector and public broadcasters are largely exempt from the rules of the Act on Government and Free Markets. In addition, an exemption applies where the government conducts activities in the public interest or where the European rules on state aid apply.
In July 2016, the ACM published its decision that the municipality of Hellevoetsluis competed unfairly in the recreation sector. In 2014, the ACM received information that the municipality was charging such low docking fees for its marina berths that it was distorting the level playing field, harming competing (and privately owned) marinas.7 The ACM concluded that the municipality’s calculation of the costs of the berths did not reflect its integral costs, because the docking fees charged by the municipality did not cover these costs, in violation of Article 25i of the Competition Act. The ACM ordered the municipality of Hellevoetsluis to adjust its docking fees.
VI MERGER REVIEW
Chapter 5 of the Competition Act provides the rules of merger control in the Netherlands. Similar to other parts of competition law, the Dutch merger control rules are similar (and complementary) to those of EU merger control. The concepts of a merger (or ‘concentration’) and ‘control’ are equal to those at the EU level. The ACM also conducts its substantive analysis of mergers in line with the Commission’s guidelines. The Dutch and EU merger control systems are also very similar from a procedural perspective – even though not identical. A procedural difference is that, unlike a notification at the EU level, Dutch competition rules do not contain a formal requirement of a pre-notification phase. However, in practice, pre-notification talks are often held in cases that are likely to receive more scrutiny. Another feature of the Dutch system is that the waiting period is suspended from the moment that the ACM sends formal questions to the notifying party, until the moment that those questions have been answered.
The Dutch thresholds are met in case of a concentration where the combined turnover of the undertakings involved exceeded €150 million in the previous calendar year. In addition, at least two of the undertakings involved must each achieve a turnover of at least €30 million in the Netherlands. Mergers that meet these thresholds require mandatory prior notification to the ACM. In line with the ‘one-stop shop’ principle of EU merger control, no notification needs to take place in the Netherlands once a merger has an EU dimension and thus has to be notified with the Commission.
The rules on merger control provide for a two-phase investigation procedure, starting upon notification. The ACM clears most of the cases in the first phase by deciding that no licence is required for the notified transaction. Where the ACM considers that a more in-depth investigation is necessary, it takes a Phase I decision holding that a licence is required. Phase II starts as of the moment the merging parties file a separate application asking for a licence. It seems that, in practice, the ACM uses a somewhat lower threshold to take a case into Phase II, opting for a more in-depth analysis as soon as it cannot exclude competition issues to arise from the merger, rather than the ‘serious concerns’ test by the Commission.
The basic test under Dutch merger control is the same as the one under EU merger control (i.e., whether the concentration will significantly impede effective competition). Similar to the analysis of the Commission, the ACM examines not only the combined market share, but also factors such as the number of competitors and their respective market shares, the existence of countervailing power from suppliers or customers, entry barriers, etc.
Dutch law prohibits the implementation of the anticipated merger concentration before a notification is made and the waiting period has lapsed or, where a licence is required, before an application is submitted and the ACM has granted the licence.
An exception to the obligation to respect the waiting period is the exemption of Article 40 of the Competition Act. This exemption will only be granted in case of overriding reasons and on the request of the party that has made the notification. Overriding reasons are deemed if applying the waiting period would cause irreparable damage to the concentration. Of course, such an exemption does not prejudice the outcome of the ACM’s substantive analysis. The risk is upon the parties if the ACM does, after its examination, find that the – by now already implemented concentration – represents a significant impediment to effective competition. The ACM has recently granted several exemption requests, especially in the field of retail where many bankruptcies have taken place. In those cases, the ACM seems to see ample reason to grant an exemption in order to ensure business continuity of retail stores.
Both Phase I and Phase II decisions can be made subject to conditions or restrictions. The purpose of such conditions or restrictions is to remedy any adverse effects on competition that result from the concentration. Remedies can either be suggested by the parties or by the ACM on its own initiative. There are written guidelines indicating the types of commitments that the ACM deems acceptable and the procedure to follow.
In terms of cases, the ACM approved the merger of Holland Pharma (Pharma) and FACO Beheer (FACO) in a Phase II decision rendered in December 2016.8 The activities of the parties overlap horizontally on the national market for the wholesale supply of drugstore items. The proposed transaction would increase Pharma’s market share on the relevant market from 40–50 per cent to 50–60 per cent. The market’s number two and three, Unipharma and Vriesia, have a market share of 20–30 per cent and 10–20 per cent, respectively. The ACM noted that the parties’ combined market share potentially allows parties to increase their prices or decrease the quality of their products and therefore investigated the likelihood of these effects occuring.
After an in-depth investigation, the ACM concluded that the merger will not lead to a significant impediment of effective competition on the market for the wholesale supply of drugstore items. According to the ACM, Unipharma and Vriesia will exert sufficient competitive pressure on the merged entity.
Besides horizontal overlap, there are also vertical links between Pharma and FACO because besides supplying drugstore items to their own retail outlets, Pharma and FACO also supply independent drugstores and other retailers such as pharmacies, supermarkets and online stores. The ACM concluded that post-transaction sufficient choice remains for both consumers as competing retailers buying drugstore items from the merging entities.
Another important case in 2016 involved the takeover of Mediq by its competitor Brocacef. Mediq and Brocacef are both active in the pharmacy sector in the Netherlands, with wholly-owned pharmacies and associated pharmacies (franchisees and partners) in the Netherlands. Brocacef and Mediq are also active at the wholesale level, as they supply pharmacies, hospitals and other care institutions with pharmaceutical products. In its Phase I decision of July 2015, the ACM found that the merger may indeed be anticompetitive, potentially giving Brocacef market power on the retail market for public pharmacies and the wholesale market for pharmaceutical products to hospitals. The ACM considered that a more in-depth Phase II investigation is necessary into the expected effects of the anticipated merger in particular in relation to consumers (who, the ACM found, may be unwilling to travel far enough in order to go to pharmacies other than those of the merged entity) as well as on hospitals and health insurers. In August 2015, the parties applied for a licence in order to obtain clearance in Phase II.
After a lengthy investigation the ACM conditionally cleared the merger. Prior to the transaction, Brocacef and Mediq each supplied full ranges of medicines to hospitals. Apart from Brocacef and Mediq, there is only one other competitor in the market. To safeguard competition on the market for the supply of medicine to hospitals, the ACM required Brocacef to sell Mediq’s wholesale company Distrimed.
Furthermore, the combined entity had to divest 89 pharmacies to address competition concerns in local markets. In its assessment, the ACM also considered the position of health insurers and noted that they too have an interest in pharmacies belonging to different competitors. Regional dominance of pharmacies increases their bargaining power in contract negotiations with insurers, which could result in price increases and therefore a negative impact on consumers.
Brocacef appealed the ACM’s approval decision because it did not agree with the number of pharmacies it was required to divest. Besides launching substantive proceedings, Brocacef requested a preliminary injunction before the District Court of Rotterdam. The District Court dismissed the injunction on the grounds that there was no imminent need to interfere and the ACM’s decision was not evidently unlawful. Brocacef will thus have to wait for a judgment in the substantive proceedings.
Finally, in February 2016 the CBb delivered a ground-breaking judgment in which it overturned the ACM’s decision to block the anticipated merger between Continental Bakeries and A.A. ter Beek. The CBb held that the ACM incorrectly concluded that separate product markets exist for the retail sale of rusk to consumers on the one hand and the upstream production and sale to retailers on the other. In the latter market, the combined market share of parties would be significant.
The level of ACM enforcement activity in 2016 seems to have been relatively low. There have been no new cartel cases, and little to no enforcement of other restrictive agreements or abuse-related cases. The ACM does seem to remain quite active in its capacity as a sector-specific regulatory body. Equally, there have been few large merger cases. Of course, this work is demand-driven and any slump is not the ACM’s own doing. Possibly, large mergers related to the Dutch market are increasingly likely to end up in Brussels rather than The Hague. For example, the Vodafone/Liberty Global joint venture was investigated by the Commission. The Commission rejected the ACM’s request to review the merger, as it did regarding the Liberty Global/Ziggo cable merger.
1 Tjarda van der Vijver and Dominique Coumans are associates at Allen & Overy LLP.
3 Vertical guidance document, footnote 34.
6 ACM decision of 14 July 2015, www.acm.nl/nl/publicaties/publicatie/14494/Goedkeuring-