NMa Annual Report 2009: Oversight and regulation may benefit from budget cut proposals
Chairman of the Board of the Netherlands Competition Authority (NMa) Pieter Kalbfleisch sees opportunities in some of the budget cut proposals, made by senior government officials, and that are aimed at further strengthening mutual cooperation between regulators. 'We could gain synergy benefits if we worked together effectively in our efforts to remove obstacles to well functioning markets,' Mr. Kalbfleisch explains. 'Our fellow regulators would obviously have to see the added value of cooperation too, and lawmakers must make clear choices as well.' At the same time, Mr. Kalbfleisch is giving a stern warning that effective oversight may suffer again in case of another wave of budget cuts. 'And nobody would be better off then,' says Mr. Kalbfleisch, sending out a warning to politicians and the public.
The 2009 NMa Annual Report explains that, among other things, the NMa is currently dealing with a large number of investigations, including an extensive international investigation into a possible flour cartel, an investigation into the fruit and vegetable industry, another one into foreclosure auctions, a cartel investigation in the demolition contracting industry, and an investigation into possibly illegal agreements between general practitioners. 'These are all investigations we would obviously like to see completed successfully, but that means we must have sufficient resources and people,' says Mr. Kalbfleisch.
Next to carrying out a substantial number of investigations into possible violations of the Dutch Competition Act, the NMa is also charged with statutory tasks with regard to regulation of the energy and transport markets in order to safeguard affordability, reliability and sustainability, and to protect consumers. 'Our work definitely pays off. The economic benefits from the NMa's work to Dutch society in 2009 are estimated at well over EUR 328 million. That is almost seven times the NMa's annual budget,' Mr. Kalbfleisch stresses. The annual report not only contains an overview of the NMa's activities, it also features a special section entirely devoted to the question of balancing oversight and public interests, in which the NMa describes some of the dilemmas it is faced with every day.
In 2009, the NMa imposed fines totaling EUR 5.3 million for violations of the Dutch Competition Act and of energy and transport regulations. Using its expanded fining powers, which came into effect in 2007 when the Competition Act was revised, the NMa, for the first time, was able to impose a higher fine for failure to notify of a merger on time. Another first was imposing a fine on a cartel facilitator. Though the number of fines has increased, the total amount of all fines is lower than that of 2008 (which was EUR 12 million). This discrepancy is explained by the different natures of the cases the NMa handled. Cases vary every year, and so do the turnover totals of the undertakings involved, which, to a large degree, determine the level of the fines. The number of reports establishing a suspicion of an antitrust violation increased in 2009 to 15. However, sanctions are not always imposed in the same year. In addition, the NMa has also assessed 84 concentration cases.
One of the most notable concentration cases of 2009 was the approved merger between two hospitals in the Dutch province of Zeeland, which were Walcheren Hospital in the city of Flushing, and Oosterschelde Hospitals in the cities in Goes and Zierikzee. In its decision, the NMa came to the conclusion that, after the merger, patients in central Zeeland would be left with very few options, and that the merger hospital would virtually have a monopoly position. However, since a merger is necessary to guarantee the continuity of hospital care in this region, the NMa approved this merger, albeit under the strictest of conditions.
Energy
The number of consumers that switch has increased yet another year: in 2009, 12 percent of consumers switched, compared to 9 percent in 2008. Furthermore, 29 percent indicate that they are not averse to switching, compared to 23 percent in 2008. Switching can result in big savings for consumers: depending on the type of contract, savings can be as high as EUR 180 for natural gas and EUR 140 for electricity, according to the 2009 Monitor Energy Markets. The NMa has taken various steps to increase consumer confidence in the energy market, including setting requirements the network operators' administrations need to meet, and ensuring that switching energy providers goes smoothly.
Transport
The NMa is also charged with sector-specific oversight on the transport markets. One of the results in this industry in 2009 was settling a dispute, which resulted in Amsterdam Airport Schiphol having to lower its airport tariffs by EUR 3.5 million, which it charges the airlines using the airport. In July 2009, the NMa was faced with the proposal to increase the tariffs for 2010 with 19.27 percent compared with 2009. The NMa urged the pilots to lower the proposed increase to 1.4 percent. In the end, the NMa has set the new 2010 pilotage tariffs 2.8 percent lower than the 2009 tariffs.