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Competition Law Newsletter

Competition Law Newsletter

Competition Law Newsletter

01.09.2015 NL law

1. ACM adopted first cartel settlement EU Commission-style decision in natural vinegar case  
2. District Court rejected complaints against Dutch banks' joint cash processing and transportation services
3. District Court judgment interprets strictly the term "public undertaking" in the context  of the Public Enterprises Market Activities Act (Wet Markt en Overheid)
4. Rotterdam District Court upheld commitment decision ending probe into collecting society

1. ACM adopted first cartel settlement EU Commission-style decision in natural vinegar case

On 25 June 2015, the Netherlands Authority for Consumers and Markets ("ACM") adopted several decisions sanctioning natural vinegar producers Burg and Kühne (the "Parties") as well as five of their (former) employees for participating in a cartel. This case reconfirms that the ACM does not shy away from imposing relatively high fines on individuals (up to Euro 135,000 in the case at hand) for cartel infringements. Moreover, this is the first time the ACM adopted a cartel settlement EU Commission-style. While there is no published ACM policy on cartel settlement decisions yet, it is expected that the ACM will announce its approach to cartel settlements later this year.

In the period between 2001 and 2012, the vinegar producers coordinated their prices with the intention to maintain their mutual volume ratios with respect to customers shared by both companies. Where it concerned non-shared customers, the Parties agreed to respect existing customer relationships. These cartel arrangements applied only to a limited number of customers. The Parties also exchanged commercially sensitive information on prices and production to further the cartel.

The cartel arrangements between the Parties came to light after Kühne applied for leniency in November 2012. As a result, Kühne was granted full immunity and avoided a fine of EUR 4.6 million. The ACM imposed a fine of EUR1.8 million on Burg.

The ACM also imposed fines on employees of both companies for exercising de facto leadership over the cartel infringements. The behaviour that constituted the de facto leadership varied from implementing the actual coordination to refraining from ending the infringements. The ACM's decision to impose fines on individuals involved in the cartel behaviour is in accordance with the ACM's published policy but in practice the ACM also continues to issue cartel decisions without imposing fines on the individuals involved.

The fines ultimately imposed on two of Burg's employees amounted to EUR 16,000 and EUR 54,000 respectively. The ACM applied an increase of 20% to the fine of one of the Burg employees, for refusing to cooperate. This individual had invoked his alleged right not to answer questions from the ACM. However, the ACM was of the view that he had no such right in the given circumstances. Originally the ACM intended to prosecute this person individually for this breach. Ultimately the issue of the lack of cooperation was also settled as part of the package. The Kühne employees escaped penalties varying between EUR 22,500 and EUR 135,000, as Kühne's leniency application was also submitted on behalf of the employees.

Interestingly, all fines imposed by the ACM were reduced by 10%, as the Parties including their employees successfully engaged in settlement discussions with the ACM after it sent its statement of objections. Although there is no official framework for cartel settlements in the Netherlands, the ACM seems to have taken on board the EU Commission settlement regime. Opting for settlement, the Parties and the employees each submitted to the ACM a written settlement request containing:

• A clear and unequivocal acknowledgment of liability for the infringements.
• Acknowledgment of the facts and circumstances as well as the legal qualifications thereof in the ACM's statement of objections.
• Acceptance of the administrative fine and the underlying method of setting the fine.
• A confirmation that the Parties were given sufficient opportunity to: i) make their views known to the ACM and ii) access the file.
2. District Court rejected complaints against Dutch banks' joint cash processing and transportation services

On 13 August 2015, the District Court in Rotterdam upheld the decision of the Netherlands Authority for Consumers and Markets ("ACM") ruling that the cooperation between three Dutch banks in the joint venture Geldservice Nederland ("GSN") did not infringe competition rules. GSN was created by the three largest Dutch banks ABN AMRO, ING and Rabobank with the purpose of bundling their cash processing services and jointly purchasing transportation services.

Brink's, a company offering cash processing and transportation services, had lodged a complaint about the initiative with the ACM. The ACM rejected Brink's complaint and decided that the cooperation did not restrict competition. In interim civil proceedings, a civil court also rejected Brink's complaints in the context of a tender of GSN for the joint purchase of cash transportation [see our February 2014 newsletter article].

On appeal, the District Court confirmed the ACM's decision. The District Court considered that the ACM was right to qualify the bundling of the cash processing services as a joint production agreement, as defined in the European Commission Guidelines on horizontal cooperation agreements (the "Guidelines"). On the basis of the Guidelines, the Court considered that the object of the cooperation was to achieve efficiency gains by economies of scale. The conditions for restrictive effects did not apply in this case, among others because the banks did not cooperate on the commercial terms of the services. Also, the Court followed the ACM's finding that the market structure for cash processing services is not susceptible to collusion, as customers for this service generally purchase a wider package of products and services and may switch to another bank for all their products and services in case of a price increase of cash processing services.

With regard to the joint purchase of transportation services the Court confirmed, again on the basis of the Guidelines, that joint purchasing generally has the potential to lead to efficiency gains. In this case restrictive effects on the downstream market for banking services were unlikely, among others because the costs for transportation services form only a small share of the banks' total costs for banking services. Foreclosure effects were also unlikely considering that GSN was open to non-participating banks and the remaining suppliers on the market for cash transportation services like Brink's.  

The judgement confirms that Dutch courts tend to follow closely the Commission's Guidelines in competition matters. On the basis of these Guidelines joint purchasing agreements can generally be considered compatible with the competition rules provided that generated efficiencies will likely be passed on to customers.
3. District Court judgment interprets strictly the term "public undertaking" in the context  of the Public Enterprises Market Activities Act (Wet Markt en Overheid)

On 19 August 2015, the District Court of the Hague ("District Court") handed down its judgment in a dispute between a Dutch swimming pool and the municipality of Zuidplas. According to Article 25j of the Dutch Competition Act ("DCA"), the government is prohibited from favouring  "public undertakings" over other undertakings. This judgment provides for a strict interpretation of the term "public undertaking", defined in Article 25g DCA.

The prohibition of Article 25j applies only to "public undertakings", that is, undertakings of which a governmental body "determines the policy" or in which a governmental body participates. Moreover, Article 25g DCA delineates four situations that qualify as "determining the policy" of an undertaking, that is when a governmental body (i) has a majority of the voting rights, (ii) is in a position to appoint the majority of the management, (iii) is the parent company or (iv) specific situations laid down in separate policy rules. The District Court ruled that the legal definition of "determining the policy", used to assess whether an undertaking is "public" should be interpreted strictly.

Before the District Court, the swimming pool claimed that the municipality of Zuidplas had infringed Article 25j DCA by giving an unfair advantage to competing swimming pools in the municipality. In this case, however, the District Court stated that the four situations provided in Article 25g DCA are intended to be exhaustive and should be interpreted strictly. Therefore, although amendments to the articles of association and other specific agreements were subject to approval by the municipality and the municipality was involved in the financial accounting of the undertaking concerned, these factors did not qualify as "determining the policy" within the meaning of Article 25g DCA. Consequently, Article 25j DCA did not apply.  

Articles 25j and 25g DCA were introduced in July 2012, by the Public Enterprises Market Activities Act (Wet Markt en Overheid). This is the first time a court rules on the question of whether a governmental body is in a position to "determine the policy" of a public undertaking in the sense of the Public Enterprises Market Activities Act.                           
4. Rotterdam District Court upheld commitment decision ending probe into collecting society

On 27 August 2015, the Rotterdam District Court ("District Court") upheld the Netherlands Authority for Consumers & Markets' (ACM) commitment decision that ended a probe into the collecting society Buma/Stemra. The District Court dismissed the arguments brought by an independent music maker and ruled that the ACM was right to close the antitrust probe.

The ACM's investigation into possible abuse of dominance by Buma/Stemra in music copyright management started in 2012 following a complaint by the independent music maker. In 2014, the ACM decided to close the probe on the basis of commitments offered by Buma/Stemra. These commitments were declared binding by the ACM in its commitment decision dated 3 June 2014. In the decision the ACM considered it did not find an infringement and that any potential risks to competition were removed by Buma/Stemra's commitments.  

The District Court ruled that the decision complied with the applicable criteria for commitment  decisions as laid down in Article 49a of the Dutch Competition Act, now replaced by Article 12h of the ACM Establishment Act (Instellingswet Autoriteit Consument en Markt). The District Court held that the commitment decision ensured that Buma/Stemra would act in accordance with the abuse of dominance prohibition and that the ACM could verify that Buma/Stemra complied with its commitments. Of particular relevance is the fact that the District Court agreed with the ACM that it was in this case more effective to issue a commitment decision instead of continuing the investigation. The District Court noted that a commitment decision allows for an immediate change of the market circumstances contrary to a long and complex procedure.

The judgment represents the first time a court has ruled upon a commitment decision concerning a potential finding of an abuse of dominance. It confirms the ACM's approach as voiced by its Chairman Chris Fonteijn who stated that, where possible, the ACM favours commitment decisions over lengthy and costly investigations. The ACM's approach in turn echoes that of the European Commission in the use of alternatives for classic fining decisions, in particular where it concerns high technology markets that are subject to rapid change. The District Court's judgment is open for appeal to the Trade and Industry Appeals Tribunal ("CBb").


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