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New Dutch Competition Act

On January 1 1998 a new Competition Act (Mededingingswet) came into effect fitting competition and merger control in the Netherlands to European law standards.

The Competition Act is focused on three areas: cartels, abuse of dominant position and merger control. Violations of its provisions are policed by the Netherlands Competition Authority (Nederlandse Mededingingsautoriteit).

Most criteria maintained by the European Commission and the decisions of the European Court of Justice will also be applied by the Authority.

Cartels

This prohibition makes null and void agreements or acts between enterprises and/or entrepreneurs' associations which restrict or harm competition. The de minimis rule was set at a joint net turnover of Fls10 million (US$5 million) for products (Fls2 million for services) if no more than eight enterprises form part of the agreement. Agreements which are exempted under section 85 of the Treaty of Rome remain exempted under the Competition Act. Under a separate Decree, specific categories of agreements may be declared exempt.

The Netherlands Competition Authority, on application, may also grant specific exemptions if the agreement advances technical or economic progress, or the improvement of production or distribution.

Any agreements falling within the scope of this prohibition and which came into effect before the enactment of the Competition Act, must be notified to the Netherlands Competition Authority before April 1 1998. As a transitory measure these agreements stay valid until a decision is taken on them.

Abuse of dominant position

Under section 24 of the Competition Act the abuse of a dominant position by one or more enterprises is prohibited. In theory, this prohibition also covers the supply of goods or services serving a public interest. However, on application, the Netherlands Competition Authority may exempt certain behaviour.

Merger control

Concentrations, such as mergers, takeovers and concentrative joint ventures must be notified to the Netherlands Competition Authority. The de minimis rule was set at a joint annual turnover of Fls250 million, provided at least two of the parties concerned realize a turnover of Fls30 million in the Dutch market. For four weeks after notification the Competition Authority will investigate whether the concentration harms competition. If this is so, a licence must be applied for. The Authority must make its decision within 13 weeks.

A violation of the Competition Act not only incurs civil sanctions, there is also the possibility of administrative fines based on a maximum of 10% of the annual turnover.

The implementation of the Competition Act is expected to create a prodigious amount of work for the Netherlands Competition Authority, in view of the new thresholds and the lack of effective competition rules in the past.

Gerrit-Jan G Bolderman

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