ACM is in favor of clear rules when choosing between public interests
The Netherlands Authority for Consumers and Markets (ACM) has achieved impressive results for 2015: ACM’s work has generated benefits for consumers of approximately EUR 1.3 billion. That corresponds with EUR 170 per household. ACM has imposed fines in various cases, totaling more than EUR 24 million, and consumers have submitted over 60,000 indications to consumer information portal Consuwijzer.
These achievements can be found in the ACM 2015 Annual Report. Next to its annual report, ACM has also released InSight (in Dutch: Signaal). In this annual publication, ACM addresses lawmakers directly. In the 2016 edition of InSight, ACM calls for attention to the establishment of clear rules when choosing between public interests. Chris Fonteijn, Chairman of the Board of ACM, explains: “The government should clearly state what public interests are. Any unnecessary lack of clarity can thus be avoided, especially if a company serves both public interests and commercial interests.”
InSight 2016: public interests as the cornerstone of sound government policy
The delicate balancing act between the various public interests is given center stage in InSight 2016. ACM illustrates this balancing act with examples from the corporate arena and government, the energy industry, and health care. Which public interest is given priority if the government interferes in the market with different hats on? In order to serve one public interest, other interests that the government has in its role as a market participant are sometimes impeded. Think of consumer interests and competition interests.
Mr. Fonteijn continues: “Does a company serve a public interest in addition to commercial interests? State these interests explicitly and unequivocally. That way, it thus becomes clear how the different interests relate to one another if there is a conflict of interests, and we will be able to avoid any political and policy discussions about the legitimacy of activities. That obviously also benefits ACM’s oversight activities.”
According to ACM, it is not a desirable situation if promotion of a public interest depends on the success of commercial activities. After all, if the commercial activities are not doing well, the public interest may be jeopardized. Mr. Fonteijn adds: “We have seen examples thereof when the high-speed railway line in the Netherlands was tendered: Dutch Railways NS wished to keep its own monopoly position in the Dutch railway market. The government on the other hand, as the sole shareholder of NS, considered the financial revenues the top priority. As a result, the interests of riders were thus placed second to the commercial interests – with all the negative effects.”
Another example comes from the health care market. ACM has established that self-regulation in the health care market is only able to succeed if the legislature makes the decisions in terms of policy. Mr. Fonteijn explains: “Strike a balance between the various interests. Avoid a situation where ACM must take an unfavorable decision in the interest of competition, because ACM is unable to check the other interests’ benefits, which may well exist. This may not lead to the best possible outcome for patients and the insured. If so, this is not a socially desirable outcome.”
Annual report: some instruments are less visible, but no less effective
In 2015, too, did ACM opt for solutions that were the most effective for market and consumer problems. Some instruments are very visible such as a multimillion euro fine in a natural-vinegar cartel case. However, other instruments are somewhat less visible, but, by no means, no less effective. For example, the court in 2015 was positive about the use of a commitment decision in the case involving Dutch copyright collecting society Buma/Stemra.
Mr. Fonteijn adds: “In 2015, the court confirmed that ACM is allowed to use mystery shoppers. In addition, we informed consumers about their rights when shopping online, but we also imposed an order subject to periodic penalty payments on energy providers that provided incorrect information to consumers.”
In the ‘market analysis decision on unbundled access,’ ACM decided that Dutch telecom company KPN must continue to grant its competitors access to its copper and fiber-optic networks for the next three years. As a result, consumers will continue to have many different providers to choose from. In the energy sector, ACM implemented several measures to improve the utilization of cross-border connection for electricity. ACM made cross-border trading easier with the adoption of new auction rules. As a result of these measures, electricity prices will decrease as the electricity networks will be utilized more efficiently.
In 2015, the Dutch Ministry of Economic Affairs had a study carried out into the extent to which ACM is an effective and efficient regulator. Research agency Kwink came to the conclusion that ACM has realized the savings that the merger had meant to deliver. However, Kwink does call for attention to the reduction of lead times of cases. In 2015, ACM made a lot of investments in reducing them, and this is once again a priority for 2016.