The Netherlands Authority for Consumers and Markets (“ACM”) will continue to focus in the near future on detecting and fining cartels. ACM was mild during the lockdown, but chairman of the board Martijn Snoep did warn companies at that time already that they should not go beyond what was necessary to control the crisis. Dawn raids, examinations and hearings have been resumed since June this year. The first blow has now been dealt, in the form of an €82 million fine imposed on four cigarette manufacturers.
The Netherlands – ACM
The ACM loosened the reins somewhat during the lockdown (see also this blog). It allowed supermarkets, for instance, to inform each other of their stocks. Healthcare insurers were allowed to agree on the provision of financial support to healthcare providers. ACM furthermore allowed hospitals, hospital pharmacies and pharmaceutical wholesalers to work together to prevent or limit shortages of essential medicines. The Trade and Industry Appeals Tribunal (“CBb”) mitigated a cartel fine, from €1 million to €10,000, in light of the spirit of the times and the financial problems faced by the company in question. ACM itself proposed that more proportional fine when the parties appeared in court.
But cartels clearly never go unnoticed. ACM imposed fine on four cigarette manufacturers totalling more than €82 million for exchanging information in the form of a hub-and-spoke cartel (see also this blog). According to ACM, the manufacturers adjusted their prices on the basis of information on future prices of competitors that they received via wholesalers. This is one of the highest fines ever imposed by ACM. ACM was given leave to publish the fine decision when the Rotterdam Court ruled that the manufacturers had had ample opportunity to exercise their rights of defence. The publication of decisions by ACM is still giving rise to debate and legal actions. The CBb recently found that Article 12v of the Instellingswet ACM (“ACM Establishment Act”) also obligates ACM to publish a decision in which a breach is established but the cartel fine is not ultimately imposed (for instance on the grounds of leniency or financial strength).
ACM recently raided several companies in the interior design sector. More information on those raids will become available next year. It will come as no surprise to us if fines are also imposed in 2021 on the grounds of public procurement cartels. ACM is also keeping a close eye on tendering cartels. Two roofing contractors were recently fined for making prohibited cartel agreements preceding a tendering procedure. Trade associations must furthermore remain alert to unlawfully (indirectly) giving recommendations on prices. The Royal Dutch Association of Civil-Law Notaries, for instance, was forced at ACM’s insistence to change a recommendation on charging clients a fee per deed.
ACM also created more scope and clarity this past year for agreements between competitors. More civil-law notaries, for instance, may enter into ground lease deeds in Amsterdam in order to develop extra competition incentives. More elbow room has also been created for fee agreements between self-employed persons (see this blog) and sustainability agreements (see this blog). ACM has reported that it will not impose fines as quickly in certain cases. Tomorrow’s Chicken, currently named Today’s Chicken, has also made a comeback. A survey has shown that supermarkets (despite not being allowed to work together) have been able to place more sustainable chicken on the shelves under their own steam.
ACM will most likely soon disclose the outcome of its investigation into price-fixing agreements in the sale of televisions in webstores. Also on ACM’s agenda are a working paper and a procedure regarding algorithms. (Self-learning) algorithms can coordinate parallel behaviour and thereby form a cartel. Techniques such as self-learning algorithms may also be used to achieve supra-competitive prices. As Margrethe Verstager has said: “Companies can’t escape responsibility for collusion by hiding behind a computer program.”
New rulings of the court and the CBb in the cold storage case are also expected in 2021. One of the interesting aspects of that case is that it will shine a light on, for instance, the doctrines of a single breach, restrictive practices and the exchange of information or contact during a due diligence investigation in the incorporation of a joint venture.
Implementation of Directive (EU) 2019/1
Directive (EU) 2019/1 is intended to grant powers to European competition authorities to improve their enforcement. The Directive must be implemented by the Member States by 4 February 2021 at the latest. An amendment to the Dutch Competition Act and the ACM Establishment Act are being prepared with a view to the implementation of the Directive in the Netherlands. The consequences of the legislative proposal for the cartel prohibition and its enforcement appear to be limited. The current Dutch framework are already in keeping with the maximum fine proposed in the Directive. In the future, ACM may impose fines on companies that are not domiciled in the Netherlands. ACM will also be able to collect fines on behalf of other competition authorities (and vice versa). The Directive will furthermore align the conditions for leniency for all the Member States. Leniency rules currently differ among the Member States. Companies will therefore be faced with the same leniency rules when the Directive is implemented. The changes made to the rules will therefore limit the risk of another company in another country being given priority in terms of leniency due to the rules being different. Cartel members will therefore probably be more likely to report the cartels.
Civil practice
The civil courts will continue to rule this coming year on the application of the cartel prohibition. The preliminary relief judge of the Court of Overijssel, for instance, recently found that a non-compete clause in a ten-year partnership contract went beyond what could reasonably be considered necessary. The non‑compete clause was therefore in breach of the cartel prohibition (see also this blog). The Court of Oost-Brabant found that a group of GPs had not breached the cartel prohibition when it refused a GP access to the group on the grounds of poor performance. The preliminary relief judge also ruled that the KNVB’s decision to suspend professional football and not to allow promotion or relegation was not in breach of the cartel prohibition (see also this blog).
The Court of Midden-Nederland found that Zilveren Kruis had not breached the cartel prohibition. In 2020, Zilveren Kruis reimbursed 100% of a medicine if it was purchased directly from the manufacturer but applied a deduction if the medicine was purchased at another supplier. The reason for this was that Zilveren Kruis took part in a joint procurement organisation in which healthcare insurers were given a discount on an actual cost basis. In the court’s opinion, it was up to Zilveren Kruis to determine its claims conditions at its discretion.
The burden of proof in reliance on competition law in the IATA judgment will continue to rear its head. It became apparent a number of times again this year that the argument that companies had breached the cartel prohibition had been insufficiently substantiated. The court ruled on Zilveren Kruis’s joint procurement policy that the claimant had not demonstrated of what restriction of competition the procurement group was guilty. The Court of Midden-Nederland found in another case that the State and municipal healthcare services (or the trade organisation in question) had not breached the cartel prohibition in the performance of corona tests. The reason was that claimants had argued without any further explanation or clarification that the cartel prohibition had been breached. That argument had been insufficiently substantiated. Reliance on the cartel prohibition in the case of a non‑compete and non‑solicitation clause also failed before the Court of Rotterdam on the grounds of insufficient substantiation.
The field of tension between the cartel prohibition and patent disputes in the pharma sector also keeps returning in case law. The Advocate General recently referred to the Generics UK judgment in answering the question whether a settlement agreement was void on the grounds of breach of the cartel prohibition. In the Advocate General’s opinion, the Generics judgment confirmed that agreements are deemed to have “the restriction of competition as their objective” only if they are found to cause a sufficient degree of harm to competition, in light of their content, objectives and economic and legal context (see also this blog).
Claims for damages
In 2010, the European Commission (the “Commission”) imposed a fine of almost €800 million on eleven airlines on the grounds of an international airline cartel. That fine decision was initially set aside by the General Court on the grounds of a procedural error. The Commission adopted a new fine decision in 2017. Companies that are harmed by anti-competitive practices such as those in that case may bring the case before the national court and claim damages. The airlines appealed the case before the General Court of the European Union. The claims for damages filed in the Netherlands in response to this airline cartel have not yet been assessed in their entirety by the Amsterdam Court of Appeal because the European Court of Justice has been requested to issue a preliminary ruling on cartel damage claims. That ruling relate to the jurisdiction to rule in civil proceedings between private parties that the European competition rules have been breached, in particular the prohibition of Article 101 of the TFEU, and to award damages to injured parties and grounds of breach of that prohibition.
In Spain, the truck cartel has reared its head again. The Court of Bilbao confirmed that Iveco and CNH Industrial had to pay a claimant an additional 15% on top of the purchase prices of trucks as compensation for their participation in the truck cartel. A large class action against trucks is also still pending in the Netherlands. The judgment in Spain may influence its outcome. Other rulings on claims for damages are also expected in 2021, such as those in the prestressing steel cartel and the sodium chlorate cartel.
ACM has now also been summoned by a number of real estate traders on the grounds of a claim for damages. The ruling in that case is expected in 2021.
European Commission
The Commission recently published its findings on the evaluation of the Vertical Block Exemption and the Guidelines on Vertical Restrictions. The Commission found that the market had changed as a result of the entry of new market players, such as online platforms, and the growth of online sales. In the field of digitalisation, the Commission has initiated a legislative proposal that will give rise to new investigative powers. Those powers will allow the Commission to combat tacit collusion, for instance in the form of price algorithms. Structural competition problems can be dealt with sooner in that manner. More information on the possibilities and impossibilities in sales restrictions can be found in this blog. The horizontal block exemption regulations end on 31 December 2022. These will be evaluated in their turn in Q1 of 2021.
At the start of the pandemic the Commission published a temporary framework for assessing antitrust issues. That did not mean that the Commission was less alert to cartels: it imposed a fine of €6.7 million on the Meliá hotel group for discriminating between customers. Only customers from certain countries could book activities with the tour operator used by Meliá. Procurement cartels do not go unnoticed at a European level either. A fine of €260 million was imposed on four companies that exchanged information on the purchase prices of ethylene. In June, four different investigations into Apple also commenced regarding the App Store (focusing on e-books and music streaming) and mobile payments on the grounds of possible breach of the cartel prohibition. The Commission has furthermore imposed an €18 million fine on two car part suppliers (Brose and Kiekert) for participation in two cartels for the supply of car locking systems in settlement proceedings. Magna, as the whistleblower of the two cartels, was granted immunity from fines.
It would in any event appear that ACM and the Commission will intensify the investigation and fining of cartels, so companies are warned to be on the alert.
Information on dawn raids by ACM can be found at invalacm.nl
