NMa Switches to New Enforcement System

The Netherlands Competition Authority (NMa) switched to a new enforcement system on 1 August 2004 with a view to the more efficient application of competition rules. The Competition Act, in line with new European rules, no longer includes a system for granting dispensations for agreements that restrict competition. The fine for failing to cooperate with NMa in an investigation has been increased to a maximum of EUR 450,000 per infringement or 1 percent of annual turnover.

The changes result from the amendment to the Act, which was prepared by Minister Brinkhorst of Economic Affairs and will come into force on 1 August. The competition rules have not changed substantively, although the way in which they are applied has. Under the new system, companies will have to make their own assessment of the extent to which their practices are in compliance with the law. It is not possible, but this is also not necessary, to submit agreements to NMa to obtain a dispensation. Companies are themselves responsible for compliance and NMa is responsible for enforcing the rules. The rules for mergers and acquisitions remain unchanged.

The dispensations, which NMa granted in the past, will continue to apply for a maximum of five years. Current applications for dispensations and administrative appeals will no longer be processed, as stipulated in the amendment to the Act. In ten cases, NMa will not take a decision on the administrative appeal.

The fine for refusing to co-operate with NMa in an investigation has been increased as of 1 August from EUR 4,500 to EUR 450,000 per infringement. If 1% of the turnover of an undertaking is higher than EUR 450,000, this amount of 1% is the maximum fine for failing to co-operate. The fine has been increased to enhance the effectiveness of NMa's investigations.

The amendment to the Competition Act is based on changes to European competition law, the so-called Modernisation. As of 1 May 2004, in addition to the European Commission, national competition authorities may enforce the European prohibition on the abuse of dominant positions. Together with other competition authorities in Europe, NMa combats infringements with cross-border effects. With a view to this, national competition authorities and the Commission co-operate in the European Competition Network (ECN). On 1 May 2004 the possibility of applying to the Commission for a dispensation for agreements that restrict competition with cross-border effects ceased to apply.