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Ministry of Economic Affairs and Climate Policy (EZK) gave preferential treatment to investment fund DVI by providing assistance in connection with fundraising activities

The Dutch Ministry of Economic Affairs and Climate Policy (EZK) has given investment fund Dutch Venture Initiative (DVI) preferential treatment over other investment funds. This has been the conclusion of the Netherlands Authority for Consumers and Markets (ACM) following an objection filed against a previous decision. The ministry helped DVI attract investors. That is not allowed, because DVI is a government organization, which may compete with other investment funds run by private businesses.

Martijn Snoep, Chairman of the Board of ACM, explains: "Government bodies cannot selectively give preferential treatment to its own organizations. That follows from the Dutch law on competitive neutrality, the Dutch Act on Government and Free Markets, which is part of the Dutch Competition Act. That act safeguards a level playing field between government organizations and commercial businesses.”

What was the problem?

DVI invests in funds that, in turn, invest in innovative, fast-growing small and medium-sized businesses (SMBs), primarily in the Netherlands. DVI is a government organization controlled by EZK, as the ministry can determine DVI’s strategy. Since 2012, the ministry has granted subsidies totaling 230 million euros for DVI.

ACM launched an investigation following a report about the ministry’s preferential treatment of DVI. In that investigation, ACM looked into, among other aspects, selective grants of subsidies and other forms of preferential treatment of DVI. In early 2021, ACM failed to establish any violation. The individual that had filed the report filed an objection against that decision.

ACM revises one element of the decision. ACM has come to the conclusion that the ministry (on its own, but also together with a shareholder) has sought to raise investors’ interest in DVI. As such, the ministry provided government organization DVI a service, but not to other competitor businesses. That has impeded fair competition between DVI and private investment funds.

Competitive neutrality: protection against unfair competition by government organizations

Local governments and government organizations may engage in commercial activities, offering products and services on the market. If they do, they will have to comply with the Dutch law on competitive neutrality, the Dutch Act on Government and Free Markets. These rules are in place to protect businesses against unfair competition by the government.

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