The European Antitrust Review 2014 • Section 3: Country chapters
This contribution reviews some of the key developments in the Dutch jurisdiction in 2012 and part of 2013. It covers various aspects of the Dutch competition law and competition law enforcement landscape, including institutional developments, procedural developments, rights of defence, cartels, abuse of dominance, merger control and civil litigation. It aims to look at the jurisdiction from a high-level perspective and highlight some recent occurrences in these areas that stand out.
On 1 April 2013, the Dutch Competition Authority (Nederlandse Mededingingsautoriteit (NMa)) merged with the Netherlands Independent Post and Telecommunications Authority (OPTA) and the Netherlands Consumer Authority to form the Netherlands Authority for Consumers and Markets (ACM). Enforcement of the Dutch Competition Act (DCA) is entrusted to the ACM.
The ACM consists of seven directorates, including the Competition Directorate (Directie Mededinging); the Energy Directorate (Directie Energie); the Telecommunications, Transport and Postal Services Directorate (Directie Telecom, Vervoer en Post); the Consumers Directorate (Directie Consumenten); and the Sanctions and Legal Affairs Directorate (Directie Sancties en Juridische Zaken). Competition law enforcement on the energy markets is assumed by the Energy Directorate, while the energy market for consumers falls under the supervision of the Consumers Directorate. The Sanctions and Legal Affairs Directorate will be entrusted with the imposition of all sanction decisions.
The formal establishment of the ACM does not yet entail any changes to the application of the DCA. Changes in and harmonisation of the procedures and powers of the different divisions of the ACM will be brought about by separate legislation. It is envisioned that this additional legislation will enter into force on 1 January 2014, only after it has gone through the entire legislative process.
The ACM has traditionally focused its enforcement efforts on cartels. That is to say, both cartels in the classical sense, in particular agreements on prices and market sharing, as well as, more recently, the illegal exchange of commercially sensitive information. The ACM’s key priorities for 2013 are, among other topics, addressing problems in essential basic services for consumers such as energy and telecommunication, housing and health care. In addition, we see an increasing focus on the agricultural sector (see also below under cartels).
Noteworthy, finally, is the push within Dutch politics to start imposing targets on the ACM in terms of the minimum total amount of cartel fines the ACM is expected to generate each year. Initially, reference was made to an amount of at least €125 million from 2014 onwards. Although the responsible minister later downplayed somewhat the binding nature of such a target, it cannot be excluded that the ACM will feel inclined to step up its enforcement activities in this area.
Procedural developments and rights of defence
In April 2013 the Appeals Court of The Hague rendered a judgment with important implications for undertakings involved in internal fact finding exercises (case number 200.115.529/01). In this case the ACM had conducted a dawn raid at a certain company and discovered a report from a forensic services firm containing facts about the company which were of interest to the ACM. It then appeared that the underlying documentation on which the report was based was no longer in the possession of the company. As a result the ACM decided to raid the forensic services firm and required them to provide the ACM with the underlying data. In addition, it required the forensic services firm to provide the ACM with a list of names of all other companies for which the forensic services firm had conducted services and that were active in the same sector as the first company that was raided.
The forensic services firm took issue with this course of action by the ACM and initiated interim relief proceedings in which it asked the judge to establish that the ACM violated the principle of proportionality which limits the duty to cooperate. Both this principle and this duty are laid down in the General Administrative Law Act (GALA). On the first point the judge found that the forensic services firm had to provide the data on which the report for its raided client was based. As the data was no longer present at the company itself, this was considered a proportionate course of action by the ACM. However, the judge drew the line when it came to the request to provide a list of all other companies in the sector for which the firm conducted services. On this point the judge found that since the ACM had not yet established whether in relation to those other companies a suspicion of an infringement existed, it would be disproportional to ask the services firm for a list of its clients.
On appeal this ruling was overturned. The Appeals Court found that the mere fact that the ACM may also have retrieved the ultimately desired information from the relevant companies directly did not automatically render the request directed to the forensic services firm as arbitrary or disproportionate. In this context the Appeals Court attributes significance to the fact that the services rendered by the forensic services firm may enable companies to identify and destroy information which is sensitive from a competition law perspective. The only other way to identify the companies in the relevant sector for which the services firm had been active would have been to approach all those companies separately with this question. This would, however, have informed these companies of the ACM’s investigation, which was still to be continued secretly at that point.
The fact that the forensic services firm in this case actually appeared to advertise its ability to ‘clean up’ competition law sensitive documents may have influenced the outcome of the case. However, the case also shows that companies involved in internal fact finding exercises that make use of outside forensic service providers need to be aware of the fact that such service providers are now on the radar of the ACM. Finally, although this was subject to debate in this case and no substantive ruling was given on this point, having outside counsel involved as the ‘formal client’ of the forensic services firm would seem to constitute one measure of prudence in this context.
Right to remain silent
In December 2012 the Trade & Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven (CBB) rendered two landmark judgments (case numbers LJN BY7026 and LJN BY7031) concerning the right to remain silent. The ruling entails that former employees may also invoke the right to remain silent of the company under investigation if the questions of the ACM concern the period of time in which the employee was still employed by the company. Noteworthy in the judgment is the fact that the CBB notes that the duty to cooperate under Dutch law (article 5:20 GALA) is so far-reaching that this justifies, or even requires, that defence rights are not unduly limited.
The judgment is relevant as the ACM regularly interrogates former employees in the context of its cartel investigations, and as it may very well be that such former employee would not be the suspect of an infringement himself as a de facto director either at the time of the interrogation, or at all. In those cases this judgment still allows him or her to be silent in order to avoid incriminating his or her former employer.
The latest development in this area is that the ACM is said to be lobbying for a legislative exclusion of the right to remain silent. In that context it argues that the effectiveness of its powers of investigation would otherwise be jeopardised.
Cartels and case law concerning cartels
The area of cartels has been relatively quiet recently. One explanation appears to lie in the merger of the various regulators to create the ACM, which has demanded a lot of inward-looking attention.
The ACM did impose fines for alleged cartel behaviour in the agricultural sector. Paprika and onion producers were fined an amount totalling €23 million (ACM case 7036). Noteworthy is the fact that in the alleged paprika cartel an undertaking was fined for facilitating the cartel behaviour, inter alia by organising cartel meetings. This is the second time that the ACM has imposed a fine for facilitation. In addition, the ACM fined a number of demolition companies for participation in an alleged bid-rigging cartel (ACM case 7249). A number of taxi service companies were also fined for alleged bid rigging (ACM cases 7130 and 7131).
Furthermore, in the Netherlands, judges are increasingly careful when scrutinising on appeal cartel cases brought by the ACM. By way of example, the District Court of Rotterdam slashed two ACM cases in 2012 in which fines were imposed on undertakings active in the homecare industry (case numbers LJN BW1335 and BW1327). The District Court found that the ACM had insufficiently researched the conditions of competition on the relevant local home care markets in order to sustain its theory that competition actually existed between the homecare providers that were fined. The fact that the District Court is both willing and able to engage in such analysis illustrates the maturing nature of the Dutch jurisdiction when it comes to competition law.
Moreover, the CBB, the highest judicial body reviewing competition law-related administrative decisions, in relation to an older construction case, rejected the argument by the ACM that two bid rigging schemes in two different construction sectors formed part of the same infringement (case number LJN BX7256). It did so on the basis of a very thorough assessment of the characteristics of both schemes, by which it clearly demonstrates that it takes its task of critically reviewing the quality of evidence very seriously.
A little bit older (October 2011), but highly relevant for cartel practice, is the ACM decision following the administrative objection in the Mobile Operators case, which marks the end of the information exchange case that led to the landmark case of the European Court of Justice in T-Mobile (Case C-8/08). In the 2011 ACM decision (ACM case 2658) many considerations are devoted to the application of the so-called Anic test according to which undertakings involved in collusion are to rebut the existence of the causal connection between the collusion and their subsequent market behaviour if they want to escape antitrust liability. The result is a very detailed, and in that sense, to our knowledge, unprecedented, analysis of what would be required for such rebuttal to be successful. In view of the strict standard applied by the ACM, it ultimately reaches the conclusion that the operators have failed to succeed doing so in this case.
Abuse of dominance
There is uncharacteristically little to report on abuse of dominance in relation to the Netherlands. A study published in 2012 looking into the status of the enforcement of the abuse of dominance prohibition in the Netherlands from an international perspective concluded that the ACM, compared to its peers in other European countries, seems rather inactive in terms of the number of investigations it initiates in relation to the abuse of dominance, let alone the number of decisions it takes.
The study suggests a number of explanations for this finding, including the ACM’s focus on cartel enforcement, the presence of sector specific regulation in industries where otherwise the abuse of dominance provision may have a more important role, and the tendency of the ACM to informally settle abuse cases. The minister who commissioned the report has indicated there is no reason for any legislative action. The ACM is, however, requested to communicate as openly as possible on its abuse related activities.
In terms of actual developments it was a quiet period in which a number of complaints were rejected, for example the complaint lodged by Sandd concerning PostNL, the postal services incumbent and the complaint concerning the real estate activities of Schiphol airport. The former complaint led to a new decision of the ACM in 2012 following an administrative objection by Sandd lodged in response to an earlier decision finding no abuse of a dominant position by PostNL (ACM case 6207). Sandd had argued that a subsidiary of PostNL active on the market for non-time-sensitive advertisement mailings had engaged in predatory pricing. The assessment by the ACM is noteworthy as it entails a detailed analysis of the allocation of PostNL’s costs for the purposes of the relevant costs test typically applied in predatory pricing cases (prices < or > long run average incremental costs (LRAIC)). Ultimately decisive for the rejection of the predatory pricing complaint in this case was the consideration that the costs common to the execution of the universal postal services obligation, resting upon PostNL by virtue of Dutch legislation, and the activities conducted by the relevant PostNL subsidiary would not be taken into account when establishing the LRAIC of conducting the latter activity, which is in line with EU case law. The ACM concluded that the incremental costs, compared to the common costs mentioned above, to conduct the activities on the advisement mailings market were very limited. As a result the ACM found that no predatory pricing had taken place. An appeal is said to be lodged by Sandd before the District Court of Rotterdam.
In terms of the decisional practice of the ACM, special attention is warranted for the kroketten (a typical Dutch snack) merger combining the two largest producers of private label and branded kroketten (ACM case 7313) and the beschuit merger (ACM case 7321) leading to a comparable tie-up on the rusk market. The former transaction was cleared after the parties offered, among other things, to out-license the well-known Van Dobben brand to a competitor. In the latter transaction the remedy offered, the divestment of a production line, was considered insufficient by the ACM as it would not guarantee that the buyer would remain present as a viable competitor on a lasting basis. In the end in both cases the result was the same, as also in the kroketten merger, despite the conditional clearance, the parties decided to call off the transaction, for unknown reasons.
These two cases are interesting to consider jointly as a number of relevant topics feature in both. First, both cases deal with the issue of competition between private label products versus branded products. In both cases the parties were only active on the upstream or wholesale market for the sales of the relevant products to, most notably, supermarkets. And in both cases the ACM considered, after concluding that the private label and branded products should be seen as substitutes on the downstream or retail market, that this competitive relation downstream is also decisive in the commercial reality upstream. There are still Commission precedents where the outcome of a similar analysis has been different; it is therefore interesting to look at these cases in light of this particular issue.
Two other topics featuring in both cases are the competitive process in bidding markets, as supermarkets in both in the kroketten and rusk businesses tend to purchase via the organisation of competitive tenders. This has an impact on the competitive analysis. As such, this is obviously not new but the cases offer some interesting examples of the aforementioned reasoning. Finally, both cases deal with the question to what extent the large supermarkets are able to exert significant buyer power on the producer to an extent that the competition concerns would be alleviated. Interestingly, in these cases buyer power was not considered present to any relevant extent.
Also in the area of merger control, a number of relevant court cases occurred recently. First, the CBB finally offered clarity on the long-debated issue of the stand-still obligation under the Dutch merger control rules (case number LJN BV6874). The CBB held that there is no reason to deviate from the EU approach on this point: a seller will not be liable for a violation of the stand-still obligation. This case marks the end of a long-standing practice of the ACM to also fine sellers if the stand-still obligation was violated.
Further, in 2012 a new development occurred in the veal saga in which the District Court of Rotterdam found that the ACM had sufficiently motivated its position that Dutch purchasers of veal have sufficient alternatives for the merging parties, including foreign alternatives (case number LJN BX1507). At an earlier stage the ACM had failed to explain that position properly, as a result of which complainants against an ACM clearance decision were successful in contesting that previous decision.
Finally, attention is warranted for the Wegener case, in which the District Court of Rotterdam very significantly reduced the fines imposed on Wegener and a number of de facto directors and annulled the fines imposed on two supervisory board members. This judgment is not only relevant when assessing cases in which merger control remedies are allegedly violated, but also offers guidance on the conditions for being held liable as a de facto director. For supervisory board members the case offers some comfort in that respect since, at least in the view of the District Court, it will only be in exceptional cases that their role will make them qualify as such (case number LJN BX8528).These clarifications are especially welcome as the ACM is increasingly fining natural persons as de facto directors in competition cases.
Civil antitrust litigation
Pursuant to European law, parties that have suffered harm as a result of an infringement of articles 101 or 102 TFEU have the right to claim compensation (judgments of the ECJ in the Courage case (Case C-453/99) and the Manfredi case (Cases C-295/04 and C-298/04).
Under Dutch law, this right can be exercised by instituting a claim for damages on the basis of the Dutch Civil Code (DCC). The DCC does not contain specific provisions with regard to competition law related claims. On the basis of article 6:97 DCC, full compensation of actual harm is awarded, which includes suffered losses and deprived profits. Punitive damages are not awarded under Dutch civil law. In line with the principle of compensation, defendants are allowed to argue that direct claimants did not suffer harm, given that any overcharge as a result of a cartel is ‘passed-on’ to the next chain in a distribution channel.
An infringement of competition law will qualify as a tort under article 6:162 DCC. Other possible legal grounds for claiming damages are: undue payment (article 6:203 DCC), unjust enrichment (article 6:212 DCC) or breach of contract (article 6:74 DCC).
There are currently a number of large collective follow-on actions pending before the Dutch courts, including actions in relation to infringements on the paraffin wax market, the airfreight market, and the elevator market. Many of these actions were started by professional claimant vehicles that have collected claims by way of cession from companies that were allegedly harmed by the cartel. These proceedings are mostly still in a preliminary phase, dealing with issues like jurisdiction and the question of whether the proceedings should be stayed while an appeal against the decision of the European Commission is pending.
Recently (2013), two landmark judgments were rendered by district courts in follow-on litigation related to the Gas Insulated Switchgear cartel and the Parrafin wax cartel, respectively (case number LJN BZ0403 and case number C/09/414499 / HA ZA 12-293).
The Gas Insulated Switchgear judgment concerns a follow-on claim for damages by the Dutch electricity company, TenneT, against three entities of the ABB-group. The case is one of the first in the Netherlands to deal with substantive issues of civil liability for a cartel infringement.
First of all, the District Court ruled that in principle an entity within a group of companies is liable for cartel damages only if that entity itself was liable of wrongdoing. However, the court held that such wrongdoing exists if an entity was aware of the infringement and was therefore aware, or should have been aware, that it was being used as an instrument for the implementation of a cartel.
Second, the court ruled that TenneT’s claim was brought within the prescribed time limits, thereby rejecting the argument of ABB that a press release indicating that the European Commission had launched an investigation, would constitute sufficient knowledge for the prescription period under Dutch law to start running.
Finally, the court rejected a ‘passing-on’ defence. According to the court, TenneT suffered a loss as soon as it overpaid for the cartelised product. If TenneT managed to recover some or all of the alleged overcharge from its own customers, the damages may be reduced on the basis of ‘compensation for advantage’ (voordeelsverrekening), a Dutch doctrine that allows a defendant to offset a benefit that was conferred onto the claimant through his wrongdoing against the damages owed for that same wrongdoing. While the court and the parties revisit the potential application of that doctrine later in the proceedings, in its interim decision the court openly doubts whether ABB can successfully rely on voordeelsverrekening.
In the Paraffin wax case, regarding jurisdiction, the court ruled that the Dutch courts have jurisdiction to assess the claims against the ‘anchor defendant’ Shell Petroleum NV, since this entity is established in the Netherlands. The court ruled it also has jurisdiction with regard to the other defendants, as there was a sufficiently close relationship between the claims to assess them jointly against all the defendants. The court rejected the argument by Total that a choice-of-forum clause would apply, as this clause was included in a contract with its subsidiary and the mere fact that the parent company is part of the same group of companies as the subsidiary is insufficient to accept that the choice-of-forum clause also applies to the parent company, according to the court.
Finally, the court found that, at this stage, the proceedings do not have to be stayed although there were pending appeal proceedings before the European General Court against the decision on which the damage claims were based. The court considers that it had not yet received the full contents of the decision and the defendants did not yet submit a statement of defence. Therefore, there would not be any risk that the court would take any contradicting judgment. In addition, the court did consider it likely that decisions will have to be made about issues unrelated to the validity of the Commission’s decision, for which there is no risk of contradictory decisions. Moreover, Shell, another alleged participant, did not appeal the Commission decision, as a result of which the assessment of these issues will have to take place irrespective of the outcome of the appeals.
Both judgments have been appealed. The Netherlands seems to have obtained the status of jurisdiction par excellence for follow-on antitrust litigation.
1077 ZZ Amsterdam
The Netherlands Christof Swaak
Tel: +31 20 546 05 86 Floris ten Have
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