ACM mission and strategy
The core objective of the Netherlands Authority for Consumers and Markets (ACM) is to promote opportunities and options for consumers and business. Opportunities for new products, services, innovation and business. Options for consumers, who are aware of their rights, in order to enable them to make real and thoughtful choices based on proper information, provided by companies who are unambiguous about the products they offer. These conditions provide the basis for well-functioning markets.
To reach these goals, ACM has to be informed on what concerns consumers and businesses. Especially in network sectors, like markets for energy, telecommunication, transport and post, but also in the general fields of competition and consumer rights. Due to its multidimensional nature, ACM combines knowledge in the fields of consumer protection, competition oversight and (network) sector-specific regulation, providing the authority with the opportunity to enhance effectiveness and efficiency in oversight and enforcement.
To detect market problems, ACM executes independent market analyses and presents itself as an organisation that is open to input from the outside world. This openness is one of our core values, and we try to emphasise that by keeping in touch with involved stakeholders, like consumers, business and co-supervisors – both national and international. We stand up to non-complying undertakings that harm markets and consumer interest, while bearing in mind three conditions for intervention: (i) the harm that the problem inflicts on consumers, (ii) the public interest that is at stake, and (iii) whether ACM is able to take action effectively.
ACM was established by the ACM Establishment Act on 1 April 2013, when three separate market authorities – the Netherlands Competition Authority (NMa), the Independent Post and Telecommunications Authority of the Netherlands (OPTA) and the Netherlands Consumer Authority (CA) – were formed into one new Authority for Consumers and Markets. On 1 August 2014, the Streamlining Act came into force. ACM implements over 20 pieces of legislation. The Streamlining Act had the objective of harmonising and simplifying various procedural rules and cutting inefficiencies relating to ACM’s operations. Under the Streamlining Act, some competences that previously only applied to competition enforcement were extended to the areas of consumer protection and sector-specific regulation.
To achieve the mission set out above, ACM is armed with a toolkit of instruments to solve market problems. For instance, ACM is provided with multiple intervention possibilities. Traditionally, one of the ways of solving market problems is of course to sanction those who break the rules. On the grounds of the 2014 ACM Fining Guidelines, we have the right to fine offending undertakings and their executives. Fining can have a distinct deterrent effect. The new authority has a broader scope, due to its multi-purpose character and its broader regulatory framework, which has provided ACM with new enforcement tools.
In its oversight style, ACM is not focused on enforcing or imposing sanctions just for the sake of enforcement. Our interventions are characterised by a specific focus on solving the underlying market and consumer problems, while at the same time taking into account the relevant context and market structure. As a result, the effect of our actions – rather than the type of instrument – is the central indication of success for ACM when we intervene on the market. We aim at choosing the instrument, or a combination of instruments, that is most likely to offer a permanent solution to the problems we face. We wish to tackle the underlying causes of the market problem at hand.
Apart from fines, we may impose orders subject to periodic penalty payments. Commitment decisions are also an important tool. We have the power to impose binding instructions and structural remedies. Another important element of our enforcement practice is our communications policy: ACM is an open organisation. In this role, we also put a lot of effort in drafting informal guidance opinions and engaging in norm-transmitting dialogue with market participants. Moreover, we present more general analyses or perspectives in vision documents and market scans, while we also involve in advocacy through advising governments in cases related to our fields of interest.
A number of court rulings have supported ACM’s use of instruments. The Dutch court has upheld, for instance, ACM’s use of commitment decisions in the Buma/Stemra case, agreeing with ACM that a commitment decision was an effective method of solving the problem in that particular case. Moreover, the Dutch court of final instance issued two rulings confirming that ACM can use mystery shoppers, and wiretapping data provided by the Public Prosecutor, in its investigations.
Last year’s achievements
In 2015 ACM dealt with a variety of market problems. When dealing with hard-core cartels, in the Vinegar case and the Cold Storage case, we issued fines of €1.8 million and €12.5 million respectively. ACM fined the cold-storage firms for cartel activity with the incentive of creating a deterrent effect for the ports and port-related transport market. Where necessary, we pursued individuals for their role in cartel activities. Where we found a merger would likely lead to restricted competition, we prohibited it or accepted remedies to prevent such restriction, as in the De Pers/Mecom merger. We make use of informal opinions and commitment decisions when they lead to a more effective result. Our use of a commitment decision in Buma/Stemra has been upheld by the Dutch court as an effective oversight method.
The most prominent example of an informal decision stems from the ‘Tomorrow’s Chicken’ case. This case concerned an agreement between supermarkets, producers and processors to replace regular chicken with ‘tomorrow’s chicken’ in Dutch supermarkets. ACM analysed this agreement and concluded that implementation of the agreement would reduce competition on the consumer market for chicken meat. On balance, the benefits for the consumer did not outweigh the costs. This analysis led the involved parties to cancel the implementation and introduce alternative approaches. Another leading example of an informal opinion issued by ACM was on two cooperation agreements concerning cancer treatment. In March, ACM argued that the collective purchase by health insurance companies of proton therapy for the treatment of cancer from a single (proposed) proton centre in the Netherlands could hamper the development of other competing centres. However, there are possibilities for collective purchasing abroad. In May, six hospitals enquired whether they were allowed to collaborate in order to increase the quality of their breast cancer care. They wanted to collectively negotiate with healthcare insurance companies about uniform purchasing conditions. ACM observed that the hospitals were located far from each other and that they did not compete with each other. We concluded that collective bargaining by these hospitals on breast cancer care would not lead to a noticeable decrease in competition. As an open and independent authority, we are resolved to publish and explain our work to consumers, and we challenge attempts to prevent our publication of fining decisions.
Also, ACM took and active role in the healthcare sector, as it precluded a merger between two hospitals for the first time, while also publishing a document that served as a guide for primary healthcare providers who had questions concerning the application of the Competition Act to possibilities for cooperation among care providers. Furthermore, ACM provided insight into its strategy with regard to oversight of vertical agreements, for example, through publishing an information chart for entrepreneurs, which allows them to check the compatibility of their vertical agreements with the competition rules.
In 2015, the Dutch government announced that ACM that a number of specific market oversight tasks in the healthcare sector were to be transferred from the Dutch Healthcare Authority (NZa) to ACM. Depending on the parliamentary process, ACM expects to start performing these new tasks in 2017. For the present, ACM created a temporary healthcare task force on 1 October 2015.
Besides paving the way for new tasks in the healthcare sector in 2017, ACM is also involved in the transition to new forms of energy regulation. We are frequently called upon to offer guidance in semi-regulated sectors on the balance between retaining the benefits of competition for consumers while allowing the state to protect more general public interests. In March 2015, we found that the Dutch Railways NS had put railway undertaking Veolia at a disadvantage in the tender process for the public transport contract in the Dutch province of Limburg. In September 2015, we published oversight principles for primary healthcare in order to reinvigorate a paralysed sector and ensure that care providers are aware of the room they have for cooperation to improve healthcare. ACM issued multiple enforcement decisions under the Dutch Act on Government and Free Markets, mainly in the recreational sector. The violations concerned the incorrect breakdown of costs for services executed by various Dutch municipalities and the Ministry of Defence. In semi-regulated sectors, ACM oversees the balance between retaining the benefits of competition for consumers while allowing the state to protect more general public interests, for example, in public transport tender processes. We also published a study on dominance in the railway sector.
The role of competition in semi-regulated sectors is also reflected in ACM’s priorities for 2016–2017.
ACM priorities 2016–2017
ACM’s priorities for 2016–2017 are set out in the ACM Agenda. This document is based on ACM’s own research, complaints received by ConsuWijzer (ACM’s online consumer portal), dialogue with businesses and consumer organisations, online input on social media and information from the ACM’s website for businesses, consumers and (governmental) organisations. The ACM Agenda sets out six strategic themes on which ACM will focus in the period 2016–2017:
- healthy collaboration in healthcare;
- energy markets in transition;
- online consumers;
- ports and transport;
- clear prices and conditions; and
- competitive neutrality.
Healthy collaboration in healthcare
ACM wishes to make healthcare providers aware of the room that exists for collaboration that offers benefits to consumers, such as collaboration that improves healthcare affordability or the quality of treatment. However, some forms of cooperation lead to market behaviour that does not benefit consumers, such as price fixing and the unnecessary limitation of a patient’s choice of healthcare providers. The relationship between healthcare providers and insurers also causes uncertainty: insurers want to keep the price for care low, and as they have a dominant position in negotiations, this results in pressure on the quality of care and problems for healthcare providers. By publishing market studies and distinct market examples in the period 2016–2017, ACM aims to clarify what it means with ‘healthy collaboration’ and cooperate with the healthcare sector to safeguard the interest of consumers. For instance, one market study will be conducted to assess the competition between health insurers, while another is aimed at the negotiation process between health providers and insurers. ACM is also working on creating a perspective on the joint purchase of expensive medicines by hospitals.
Energy markets in transition
The increased emphasis on sustainable production, and the development of smart meters have a major impact on consumers, but also on energy companies and network operators. ACM regulates energy markets in transition, where affordability, security of supply and sustainability are central. Furthermore, ACM checks the efficiency of investments from network operators in energy transport aimed at ensuring security of supply and sustainability. ACM also has an active role in the EU-wide discussion on whether a new market model is desirable, in which network operators would be compensated for the availability of production capacity. In a roundtable with stakeholders in national energy markets, the unanimous agreement was that there was no need for such a market model. Still, they argued that the current market model could be made somewhat more flexible, to portray the scarcity in supply more adequately in the wholesale price. In the upcoming period, ACM will advise the Ministry of Economic Affairs on the energy transition, with the goal of establishing 14 per cent sustainable energy at the government in 2020.
The trend of digitalisation offers consumers and businesses opportunities, as it leads to new products and services, including bundled services. However, bundling services may create switching problems, which we want to avert. Also, consumers are often required to share personal information in order to gain access to ‘free’ online services. Central to ACM’s online agenda is preventing competition and consumer problems online. Therefore, ACM looks into whether businesses enlarge their dominant position through collecting and using personal information. Also ACM has tried to make consumers aware of the consequences of granting apps access to their personal data, by starting a campaign through our consumer information portal ConsuWijzer called ‘Each app has its price.’ Moreover, ACM checks if web shops comply with the rules set out for them. At the same time, ACM wants to provide new businesses with the opportunity to offer their services online. Speaking with suppliers of TV shows and consumer organisations provides ACM with the information to assess to what degree the bundling of telecom products is troublesome.
Ports and transport
Companies that operate in ports often work together and cooperation is definitely needed if they want to process the goods quickly and efficiently. However, this collaboration could become harmful for competition and consumers, for example, if companies fix prices that they charge their customers, or if they divide the market among themselves. A lack of competition at Dutch ports or between companies involved in transport from and towards ports could lead to higher prices and less innovation. As a result, Dutch ports could become less competitive, which would not only harm the ports, but the Dutch economy as a whole. Therefore, ACM is thoroughly investigating possible illegal agreements between companies, while at the same time we aim at advising companies in the port and transport sector about the borders of legal collaboration.
Clear prices and conditions
Companies must inform consumers prior to actual purchase about the price and all (unavoidable) additional costs, as well as about what they can and cannot expect from the product. Competition cannot prevail if businesses are unclear about their prices and conditions. In collaboration with interest organisations for businesses and consumers, ACM sees it as its task to make sure that companies adhere to the rules for information provision. ACM is specifically focused on drip pricing in the period 2016–2017. Drip costs are all costs that are not incorporated in the initial price offer of a company, but which are at the same time unavoidable for consumers when purchasing the product. Therefore, it has to be decided which costs in a specific sector are unavoidable and which are additional to be able to judge whether products and services can be offered as a basic product with extra options or has to be offered as an all-in product. Furthermore, ACM aims at gaining insight in the problems consumers are confronted with regarding unclear conditions and prices in telecom contracts.
The Dutch government is a key player in the Dutch economy. Not only as a policymaker, but also in an active role in the market process as either a supervisor, participator, client or owner/shareholder. Given this active role of the government, the roles and rules have to be clear for all stakeholders. In the period 2016–2017, ACM will oversee local governments that are active on markets as a competitor. We protect business owners against unfair competition from government businesses, without losing sight of the public interest. Government institutions that actively participate in markets could disturb the market. By making the government aware of how their interference in the market might affect competition, ACM hopes to guarantee fair competition and enhance the innovatory capacity of the economy. Finally, ACM aims at gaining insight in the concept of ‘public interest’ in legislation and the necessity of governmental market participation.
Overall, 2015 has been a successful year for ACM. After just two years of operation, we had an external evaluation which supported the effectiveness of ACM’s oversight strategy of putting the consumer first. ACM also scored well on efficiency. The cost-reduction goals of the merger that created ACM have been reached. In order to assess the impact of its activities, ACM estimates the outcome of its interventions in monetary terms. ACM bases its outcome estimations on OECD recommendations. In 2015, ACM’s work has generated benefits for consumers of approximately €1.3 billion, which corresponds with €170 per household. ACM’s style of oversight with its emphasis on effect rather than form has attracted media and political attention. An external evaluation conducted in 2015 advised ACM to invest also in ensuring that its interventions have sufficient deterrent effect, and to continue to impro ve lead time performance. The positive results of the external evaluation and recent court cases support the legitimacy of ACM’s approach to market problem.