Martijn Snoep, the chairman of the Authority for Consumers and Markets (ACM), argues in his blog "Panta rhei, everything flows" that rules and supervision should adapt smoothly with changes in markets. In a world where rules quickly become obsolete, "permanent agility" would be desirable. If the rules of the game are laid down in open norms, then the rules can "move with what is needed for markets to work well," Snoep said.
He may have a point here. Market conditions can change rapidly, and the loopholes that arise as a result can be abused. If the regulator then cannot enforce this for lack of a legal basis, the question quickly arises, "where was the regulator?"
At the same time, the call for more flexibility is as old as the existence of regulators. More importantly, the introduction of open norm also bears risks. Snoep also recognizes this – see the reference to legal certainty in his blog. What we still miss, however, is that he does not attach any concrete goals or consequences to this. Those who request the legislator for (more) flexibility must themselves be willing to deliver when it comes to legal certainty, because that is precisely where things can go wrong.
Legal certainty at risk
Companies need to know in advance the rules of the game by which they must play. Legal certainty is a great good and this is in particular true in punitive administrative law. After all, the ACM can impose very high fines for violations of competition law, including on natural persons. Similarly, for obtaining permits to operate in a particular market, companies should not be completely at the mercy of a regulator's (unpredictable) interpretation of open norms.
Fines and other decisions of the ACM can be challenged afterwards in the administrative courts and in many cases not without success (see here, here, and here). By then, however, much of the harm has already been done. After all, sanction decisions are made public by default, causing immediate and irreversible reputational damage. This is compounded by the tendency of authorities to issue an accompanying press release.
With high fines and negative publicity looming, companies cannot risk testing their interpretation of an open norm in practice by triggering enforcement action. Lawyers have a role here to advise companies by interpreting open norms, but that requires a predictable regulator. The market needs to know what to expect - that is equally necessary for markets to work well.
More open norms require that the ACM itself also acts more predictably
This means that the ACM itself will have to act more uniformly and predictably when using its powers. It also requires the ACM to signal well in advance any fundamental changes in its enforcement policy. A dawn raid, investigation or fine should never be the starting signal for a policy change. A striking example is the investigation by the ACM into so-called ‘vertical price coordination’. The Dutch Financial Times described earlier how vertical agreements were no priority at all for the ACM for decades. However, this did not prevent the ACM from first launching a dawn raid and initiating enforcement (regarding past conduct) and only subsequently launching a public campaign against vertical price fixing.
In a plea for more open norms, regulators should also ask themselves how they will concretely deal with the room given to them by the legislature, in order to guarantee legal certainty. With great(er) power comes great(er) responsibility.
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