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Institutional developments; legislative changes
As reported in our previous contribution, on 1 April 2013, the Dutch Competition Authority (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). The enforcement of the Dutch Competition Act (DCA) is now entrusted to the ACM.
Meanwhile, the legislative changes that are to be introduced in the slipstream of the formal establishment of the ACM, including changes in and harmonisation of the procedures and powers of the different divisions of the ACM, have been passed in Parliament. Final approval by the (equivalent of the) Dutch senate has taken place, but the date of the entry into force of the new rules is yet to be determined. Key elements of the changes include an obligation for the ACM to publish the names of alleged offenders (including natural persons) in its fining decisions (whereas it now has discretion to erase such names), as well as an amendment of the Dutch merger control thresholds. Whereas presently a merger is notifiable under the Dutch merger control rules if the undertakings concerned have a combined world-wide turnover of €113.45 million (and each undertaking has more than €30 million in The Netherlands), the former threshold is to be increased to €150 million. Finally, the legislation contains language excluding the former employees of a company under investigation from the circle of individuals being able to invoke to right to remain silent. As reported in our previous contribution, such rule overturns a 2012 ruling of the highest specialised Dutch court dealing with competition matters granting former employees exactly that right.
The ACM itself published two new policy documents setting out its procedure concerning the examination of digital data in the context of dawn raids, and legal professional privilege. The takeaway as regards the former is the fact that the ACM reserves a great deal of discretion as to how it will proceed in terms of the digital investigation during a specific dawn raid. At the same time, a modest novelty lies in the fact that it will no longer conduct searches in large digital data sets at the premises of the undertaking concerned, but instead will take the data to its own premises for these purposes. These searches will be conducted without outside counsel to the undertaking being present, as – according to the ACM – it merely concerns a search through the data without any peeking into actual documents. The document concerning legal professional privilege is more specific in terms of the procedural steps that apply. The framework appears to create a relatively reliable framework ensuring the adequate protection of privileged materials. Note that where it concerns the Dutch competition rules, in-house counsel that are admitted to the Dutch bar also enjoy legal professional privilege (in contrast to the situation under EU law).
The NMa traditionally focused its enforcement efforts on cartels – namely, cartels in the classical sense, particularly agreements on prices and market sharing; and, more recently, the illegal exchange of commercially sensitive information. In doing so, it has generally been perceived during its existence as a tough and relatively effective enforcer of competition rules. The ACM’s priorities, however, appear to have shifted significantly since it commenced it activities. It is now a single regulator with a diverse portfolio of activities and competences, among which the enforcement of the competition rules certainly does not appear to have been at the forefront so far. Instead, the key area of activity both in its communications and actions has been consumer protection. While the competition rules aim to protect the process of competition with a view to protecting the interests of an abstract consumer (without looking at the actual effects on such consumers), the ACM appears fully committed to devoting its resources to protect and educate the consumer in a much more direct way. Examples include a full-fledged media campaign explaining to consumers how switching to another energy supplier could save money. While it is admitted that the ACM has ‘just got started’, practitioners have started wondering whether this shift of focus is here to stay.
Where it does concern the enforcement of competition rules, we see a growing body of cases dealt with under the heading ‘alternative enforcement’, in the context of which companies agree to change their ways in certain regards without a meaningful publicly accessible motivation (like a fining decision) by the regulator becoming available explaining why the existing conduct would violate the competition rules. While this approach may suit the parties directly involved in the case at hand, it may somewhat muddy the waters for others on what may and may not be allowed. It also fails to create a landscape in which the regulator is likely to be held accountable for any possible mistakes in its reasoning or in the use of its powers of investigation.
Procedural developments and rights of defence
A key judgment concerning the rights of defence was rendered by the district court of Rotterdam in an appeal against a fining decision of the ACM (case ECLI:NL:RBOT:2013:CA3079). The preceding investigation by the ACM found its origin in a criminal investigation conducted by a different public authority in an unrelated environmental matter. In the latter investigation, information relevant for antitrust purposes came to the surface as a result of phone taps that were legitimately installed by the public authority. This information was transferred to the ACM, which claimed that the transfer had taken place in conformity with the applicable legal framework demanding that the public prosecutor – who needs to authorise the transfer – conducts an assessment as to the reasonableness and proportionality of the transfer of information to a different authority. Such assessment needs to be verifiable for a court to ensure that the rights of defence have been safeguarded in the context of the transfer. In this case, the district court found that there was no trace of any verifiable assessment made by the public prosecutor prior to the transfer of the information. In contrast, the public prosecutor appeared to have forwarded the information immediately to the ACM. On that basis, the district court found that the information cannot be used to prove the alleged infringement described in the fining decision. As no other evidence remained to demonstrate the violation, the fines were annulled in their entirety. The ACM has appealed the judgment.
On 3 April 2014, the district court of Rotterdam issued a judgment in a case (ECLI:NL:RBROT:2014:2273) regarding an alleged cartel of producers of insulated glass units. The District Court reversed a fining decision by the ACM against Pilkington and Scheuten Glas. According to the ACM, four undertakings in the insulated glass market had agreed on the use of a minimum price list and price increases during the period 2004–2005. The ACM based its case on leniency statements of two of the undertakings: Saint Gobain and Asahi Glass. However, the District Court considered the leniency statements to be unreliable. First, the district court found that the ACM had asked leading questions and provided considerable information to the leniency applicants before asking questions. Second, the inconsistencies between the statements of the leniency applicants also affected the reliability of the statements. The other evidence could not confirm the allegations to a sufficient degree. The district court also considered that the ACM should not have refused to provide Pilkington access to the full leniency statements in the case file. The court agreed with Pilkington that leniency statements regarding other glass markets and other periods were relevant for the assessment of the reliability of the statements. Therefore, the rights of defence of Pilkington were violated by not providing access.
The cartel prohibition and case law concerning cartels
The area of cartels has again been relatively quiet. The more noticeable developments were covered by ‘alternative enforcement’ rather than the traditional fines for hard-core cartels. Most notably, the ACM adopted a remedy decision addressing ‘signalling’ concerns in the telecommunications industry to conclude what started off as a widely covered cartel investigation into the behaviour of the three mobile operators active in the Netherlands. The widespread interest for this case in the media can be explained by the fact that the sector has a history of infringing conduct (ie, the case that lead to the famous T-Mobile case law of the European Court of Justice), as well as the fact that certain Dutch politicians demanded a tough response by the regulator to what had been described by anonymous informants (not being leniency applicants) as alleged ‘repetitive violations’ by the mobile operators of the competition rules. Three years after the start of the investigation, the case ended last year in said remedy decision. On the condition that senior management of the mobile operations will refrain from making public statements pertaining to changes in prices and other conditions detrimental to consumers (where the internal decision-making process regarding such changes has not yet been finalised and documented), the ACM has closed its case. For outside observers, it must be difficult to conclude anything else than that the ACM cannot have found what some thought the informants must have promised would be there. The decision itself is of interest as it contains some reasoning as to the application of the doctrine of price signalling, which has been rather underdeveloped in the EU so far.
The MasterCard case also forms an apt example of the trend of alternative enforcement. The ACM had received indications from businesses, particularly from retailers, claiming that the tariffs that credit card companies charge for credit card payments were too high. These tariffs apply to all credit card payments, both online and offline. They make up 60 per cent of the costs that retailers incur when customers pay by credit card. The ACM investigated the claims and informed MasterCard of its preliminary findings, as well as the fact that it was open to an ‘informal solution’. MasterCard decided it preferred offering commitments rather than entering a formal procedure. The commitments entail that MasterCard will adjust the interbank tariffs for domestic credit card payments immediately. The current tariff is 0.9 per cent of the transaction. From 1 June 2014, it will be 0.7 per cent; from 1 January 2015, it will be 0.5 per cent; and from 1 January 2016, it will be 0.3 per cent. Since MasterCard has promised to lower its tariffs, ACM no longer sees any reason to carry out further investigations into potential violations of the competition rules by MasterCard.
Another interesting development in the area of cartel prohibition concerned the ACM’s position on the Dutch Energy Agreement, which included a deal between energy companies to close down five coal power plants. The ACM assessed whether the output reduction and resulting price increase would be offset by environmental benefits as a result of which this aspect of the agreement at large would be exempted from the cartel prohibition under the Dutch equivalent of article 101(3). The ACM’s assessment addressed the question whether the restriction of competition resulting from the agreement is objectively necessary to realise the associated desired environmental benefits, and whether those benefits sufficiently compensate buyers, who will be paying a higher electricity price because of the restriction of competition. The ACM identified the environmental effects that would benefit buyers and assessed their value at less than half the expected price increase. Hence, it found that the agreement to close down the coal plants could not be exempted from the cartel prohibition. A particularly controversial aspect of the ACM’s reasoning was the fact that it had not taken into account the reduced emission of CO2 that would result from the closing of the plants. As a justification for this, the ACM adduced that benefits enjoyed by other parties than the buyers of energy cannot be taken into account in the assessment. Reduced CO2 emissions will reduce demand for CO2 emission allowances as a result of which the price of these allowances will decrease. This will benefit undertakings (national or European) wanting to emit CO2, but not the buyers of energy. According to the ACM those wider considerations would be part of a social cost-benefit analysis that requires a political, rather than a competition law, assessment.
Finally, an important decision was rendered by the district court of Rotterdam ruling on the appeals initiated by producers of silver onions that had been fined by the ACM for cartel behaviour including quota fixing and the exchange of commercially sensitive information (case ECLI:NL:RBROT:2014:2045). The key aspect of the judgment is the fact that the court sanctioned the ACM’s approach of basing the fine on affected European turnover rather than just Dutch turnover. This is likely to create a shift in the ACM’s general approach of typically only looking at domestic turnover when calculating the fine and may accordingly lead to higher sanctions.
Abuse of dominance
There is characteristically little to report on abuse of dominance in relation to the Netherlands. The ACM did not bring any case under article 102 TFEU or its Dutch equivalent. A civil court did agree with a plaintiff alleging an infringement of the prohibition to abuse a dominant position in the context of network services provided to ‘acquirers’ of credit card payment data (case ECLI:NL:RBMNE:2013:3245). The plaintiff in the case was EMS, which processes data from credit card payments and concludes agreements with merchants to that effect (this is called acquiring). Merchants (eg, retailers or owners of bars and restaurants) are companies that accept credit cards as means of payment for their services or goods. Payments by credit cards at merchants take place using payment terminals (POS) that are connected to a network that transports payment details are transported. Equence, the defendant, owns such a network and contracts with acquirers to transport payment data. Payments can be made with credit cards (eg, a Visa card), the payments of which are subsequently settled with the user; or debit cards (eg, a bank card), in which instance the payments are written-off directly from the customer’s bank account. Importantly, Equence also owns a company providing acquiring services, PaySquare. According to the plaintiff, Equence had abused its dominant position on the market for providing the service of transporting credit card data through a network; a market on which – in the relevant period – only one other player was active with a significantly smaller market share. The alleged abuse consisted of the introduction of a certain procedure within the Equence network that created significant hurdles in practice for merchants to switch from PaySquare (the Equence-owned acquirer) to EMS. Specifically, Equence had effectively installed a ‘waiting period’ when merchants wanted to switch away from PaySquare to another acquirer during which PaySquare could approach the merchant to dissuade him from switching after all. The court agrees with the plaintiff that this behaviour constitutes an abuse and rejects Equence’s reliance on the presence of an objective justification for the conduct. Materially speaking, the consequences for Equence are fairly limited: the court ultimately awarded damages a little bit above €30,000. Nevertheless, a successful damage claim based on article 102 TFEU is exceptional.
In contrast to last year, the reporting period provided little noteworthy developments in the area of merger control. Many merger cases in which at least some substantive issues come up these days relate to the health-care sector, which has been characterised by a wave of consolidation in the last years (notably by hospitals). While such transactions have given rise to a number of prohibition decisions over the past few years, the ACM has approved a number of health-care deals in the reporting period (case 13.0438.24, case 13.1462.22, case 13.0758.24 and case 13.1465.22).
Finally, it is interesting to note the extensive fine-related arguments put forward by the parties in a ‘gun-jumping’ case (ACM case 7491). In this case, the parties to the transaction had violated the standstill-obligation by implementing a transaction prior to obtaining clearance from the ACM. While the parties did not dispute the violation as such, they brought forward a number of mitigating circumstances that they considered should lead to a significant reduction of any fine to be imposed. In this context, they argued that – as soon as they had discovered their omission – they had notified the ACM and provided full transparency on the circumstances of the violation. They also immediately concluded a ‘standstill agreement’ aiming to avoid any actual exercise of control by the acquiring company pending the subsequent investigation of the transaction by the ACM. In addition, the parties argued that the violation had taken place in good faith and was the result of bad legal advice provided by outside counsel. Finally, the parties referred to the fact that this was their first violation of the standstill-obligation. The ACM proved receptive to only two circumstances: the fact that the parties provided full transparency and cooperated with the investigation, and the fact that they agreed upon a standstill agreement. According to the ACM, this warrants a 20 per cent reduction of the fine. Should companies ever find themselves in a similar position of having infringed the standstill obligation, it is useful to be aware of the fact that some damage control ex post facto will still be possible.
Civil antitrust litigation
Follow-on antitrust litigation continues to be a big thing in the Dutch jurisdiction. 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.
A key decision was rendered in the follow-on litigation in the Airfreight case (case ECLI:NL:GHAMS:2013:3013). The court of appeals reversed a ruling by the district court accepting the airline-defendants’ argument that the proceedings should be stayed pending the appeals against the Commission fining decision. The court of appeals found that that ruling was based on an incorrect reading of the ECJ’s Masterfoods judgment relating to the consequences of Commission decisions in national jurisdictions. In brief, the court of appeals noted that Masterfoods allowed a national judge to decide to continue the proceedings pending appeals against the Commission’s decision where the issues debated on in the national proceedings are not dependent on the validity of the Commission’s decision. Where the national proceedings need to deal with factual or legal questions that are dependent on the validity of the Commission decision, there would also need to be a reasonable probability that the Commission decision is invalid before the national court could decide to stay proceedings, according to the Court of Appeals. As the district court had not assessed whether these conditions were met, its ruling is annulled and the defendants will be allowed to demonstrate that they fulfil the criteria for stay of proceedings.
Another interesting procedural matter was at issue in the follow-on litigation in the Elevators case (case CLI:NL:RBROT:2013:5504). The background of the case is a Commission decision dating back to 2007 and fining Kone, Otis, Schindler and ThyssenKrup for their involvement in four national cartels. Interestingly the district court dealing with the follow-on damages action considers itself only partially competent to examine the claims. Only the claims against ThyssenKrup and Kone will be addressed by this court as these companies have subsidiaries with seats in the Netherlands. In relation to the other two defendants, which are established in other member states, the court does not find itself competent. In that context, the court rejects the argument based on article 6 of the EU EEX regulation that such a finding would entail the risk of contrary rulings rendered by courts in various EU jurisdictions. At the heart of this conclusion lies the consideration that the Commission’s decision deals with four separate national cartels with diverging characteristics as a result of which there is an insufficient nexus between the situations of the various defendants as required by this particular legal basis for establishing competence.
In light of the numerous cases still pending before Dutch courts we expect that there will be a lot more to report in this area. Now that some cases are progressing beyond the stage of mere procedural arguments, the contentious issue of the calculation of damages will soon be on the Dutch courts’ plate.
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