NMa: EDON Fined for Infringement of Essent Merger Conditions

The Netherlands Competition Authority (NMa) today imposed a fine of EUR 22,500 on EDON Groep B.V., a part of Essent. The fine was imposed due to an infringement of the conditions subject to which a licence was issued for the realisation of the merger of PNEM/MEGA Groep N.V. and N.V. EDON Groep to form Essent in 1999.

One of the conditions for the merger was that EDON should sell its interest in a company to a buyer approved by NMa. EDON, however, sold its interest in this company before NMa was able to determine whether and announce that the buyer satisfied the criteria stated in the conditions.

This is the first time that NMa has imposed a sanction for a failure to comply correctly with remedies (conditions imposed by NMa) in relation to a concentration. The fine of EUR 22,500 is the maximum fine that NMa may impose if a company does not comply with the conditions subject to which a licence for a concentration is issued.

Guidelines on Remedies

Today NMa published its Guidelines on Remedies. These guidelines relate to the content, submission and implementation of limitations and conditions in relation to concentrations (mergers, acquisitions and certain joint ventures). The guidelines are available on NMa's website (www.nma-org.nl).

If competition concerns arise as a result of the realisation of a concentration, the parties may propose measures aimed at eliminating these concerns. The commitments (remedies) proposed by the parties may be included as limitations and instructions in NMa's decision to approve the concentration. The NMa's guidelines are in line with the policy of the European Commission in this reagard.

In September of this year, NMa published a consultation document with proposed guidelines. Various responses have been received, which have resulted in a number of amendments to the proposed text. These amendments have been included in the definitive guidelines which were published today.

NMa generally checks whether the proposed remedies can be implemented and are effective by means of a market test carried out amongst market players. After NMa has approved the proposed remedies, it continues to supervise compliance with the remedies and, if necessary, enforces them.

Note to the editor:

Procedure for Notifying NMa of Concentrations

NMa must be notified of mergers, acquisitions and certain joint ventures if the joint total worldwide turnover realised by the undertakings involved exceeds EUR 113,450,000, of which at least EUR 30 million must be realised by each of at least two of the undertakings involved.

First phase: After NMa has been notified, within four weeks NMa will assess whether a dominant position may arise or be strengthened as a result of the concentration. If NMa decides that this is the case, a licence is required.

Second phase: If the undertakings apply for a licence, within 13 weeks NMa will carry out an in-depth investigation to assess whether the concentration will, in fact, result in the emergence or strengthening of a dominant position. If this is the case, a licence will not be granted and the merger, acquisition or joint venture may not proceed.

The terms of four and thirteen weeks are suspended if the undertakings are required to provide NMa with more information. In the first phase, the undertakings may avoid the obligation to apply for a licence or the refusal of a licence in the second phase by proposing remedies which eliminate NMa's competition concerns.